econ ch 4

Wages and salaries are examples of: A. consumption. B. labor income. C. capital income. D. profits.

B. labor income.

A measure of GDP in which quantities produced are valued at current-year prices is called: A. real GDP. B. nominal GDP. C. base GDP. D. physical GDP.

B. nominal GDP.

Capital income includes: A. profits, rent, and interest. B. wages and salaries. C. earnings of the self-employed. D. capital gains from stock sales.

A. . profits, rent, and interest.

Spending on durable goods, nondurable goods, and services is included in: A. consumption expenditures. B. investment. C. government purchases. D. net exports.

A. consumption expenditures.

Consumption spending includes spending on: A. durables, nondurables, and services. B. stocks, bonds, and other financial instruments. C. capital goods, residential housing, and changes in inventories. D. goods and services by federal, state, and local governments.

A. durables, nondurables, and services.

The total income of capital and labor must equal the value of total: A. production. B. profits. C. revenue. D. investment.

A. production.

The government expenditure component of GDP includes: A. purchases of final goods and services. B. interest payments on government debt. C. transfer payments. D. payments made to social security recipients.

A. purchases of final goods and services.

Real GDP is measured in ______ prices; nominal GDP is measured in ______ prices. A. current; base-year B. base-year; current C. current; current D. base-year; base-year

B. base-year; current

If prices in the current year are higher on average than in the base year, real GDP in the current year ______ nominal GDP in the current year. A. is greater than B. is less than C. is equal to D. could be greater than or less than

B. is less than

Investment spending includes spending on: A. durables, nondurables, and services. B. stocks, bonds, and other financial instruments. C. capital goods, residential housing, and changes in inventories. D. goods and services by federal, state, and local governments.

C. capital goods, residential housing, and changes in inventories.

An economy produces only 500,000 tables valued at $100 each. Of these, 100,000 are sold to consumers, 200,000 are sold to businesses, 100,000 are sold to the government, and 50,000 are sold abroad. No tables are imported. The unsold tables at the end of the year are held in inventory by the table manufacturers. What is the value of the investment component of GDP? A. $2 billion B. $10 million C. $20 million D. $25 million

D. $25 million

An economy produces 500,000 tables valued at $100 each. Households purchase 100,000 tables, of which 50,000 are imported. Businesses purchase 200,000 domestically produced tables, the government purchases 100,000 domestically produced tables, and 50,000 domestically produced tables are sold abroad. The unsold tables at the end of the year are held in inventory by the table manufacturers. What is value of the investment component of GDP? A. $10 billion B. $20 million C. $25 million D. $30 million

D. $30 million

An economy produces 500,000 tables valued at $100 each. Households purchase 100,000 tables, of which 50,000 are imported. Businesses purchase 200,000 domestically produced tables, the government purchases 100,000 domestically produced tables, and 50,000 domestically produced tables are sold abroad. The unsold tables at the end of the year are held in inventory by the table manufacturers. What is value of GDP? A. $5 million B. $40 million C. $45 million D. $50 million

D. $50 million

Government expenditures include spending by federal, state, and local governments on: A. consumer durables, nondurables, and services. B. stocks, bonds, and other financial instruments. C. capital goods, residential housing, and changes in inventories. D. final goods and services.

D. final goods and services.

Comparisons of economic activity over time should be made using: A. nominal GDP adjusted for unemployment. B. nominal GDP per capita. C. current-dollar GDP. D. real GDP.

D. real GDP.

Consumption expenditures include spending by households on: A. exports. B. inventories. C. residential housing. D. services.

D. services

GDP can be measured as each of the following EXCEPT: A. the market value of production. B. total expenditure on final goods and services. C. incomes of capital and labor. D. total business revenues.

D. total business revenues.