Macro Unit 2

In national income accounting, consumption expenditures include purchases of a. Consumer durable and nondurable goods, but not services b. Both new and used consumer goods c. Consumer nondurable goods and services but not consumer durable goods d. Automobiles for personal use but not houses

d. Automobiles for personal use but not houses

Recurring upswings and downswings in an economy's real GDP over time are called a. Output yo-yos b. Recessions c. Total product oscillations d. Business cycles

d. Business cycles

Economic growth is best defined as an increase in a. Total consumption expenditures b. Wealth in the economy c. Nominal GDP d. Either real GDP or real GDP per capita

d. Either real GDP or real GDP per capita

National income accountants define investment to include A. Any increase in business inventories B. The addition of cash to a savings account C. The purchase of common or preferred stock D. The purchase of any durable good, for example, an automobile of refrigerator

A. Any increase in business inventories

NDP is? A. NI plus net foreign factor income earned in the U.S. plus indirect business B. NI plus corporate income taxes C. GDP deflated for increases in the price level D. GDP minus indirect business taxes

A. NI plus net foreign factor income earned in the U.S. plus indirect business taxes

In national income accounting, government purchases include? A. Purchases by Federal, state, and local governments B. Purchases by the Federal government only C. Government transfer payments D. Purchase of goods for consumption, but not public capital goods

A. Purchases by Federal, state, and local governments

GDP differs from NDP in that A.Gross investment is used in calculating GDP and net investment in used in calculating NDP B.GDP is based on gross exports while NDP is based on net exports C.GDP includes, but NDP excludes, indirect business taxes D.Net investment is used in calculating GDP and gross investment is used in calculating NDP

A.Gross investment is used in calculating GDP and net investment in used in calculating NDP

The total amount of income earned by U.S. resources suppliers in a year is measured by A. Gross domestic product B. National income C. Personal income D. Disposable income

B. National income

Consumption of fixed capital (depreciation) can be determined by A. Adding indirect business taxes to NDP B. Subtracting NDP from GDP C. Subtracting net investment from GDP D. Adding net investment to gross investment

B. Subtracting NDP from GDP

A nation's gross domestic product (GDP): a. Is the dollar value of the total output produced by its citizens, regardless of where they are living b. Is always some amount less than its NDP c. Can be found by summing C+Ig+G+Xn d. Can be found by summing C+S+G+Xn

C. Can be found by summing C+Ig+G+Xn

Suppose the total market value of all final goods and services produced in a particular country in 2004 is $500 billion and the total market value of final goods and services sold is $450 billion. We can conclude that? A. GDP in 2004 is $450 billion B. NDP in 2004 is $450 billion C. GDP in 2004 is $500 billion D. Inventories in 2004 fell by $50 billion

C. GDP in 2004 is $500 billion

In 2003 Trailblazer Bicycle Company produced a mountain bike that was delivered to a retail outlet in November of 2003. The bicycle was sold to E.Z. Ryder in March of 2004. This bicycle counted as? A. Consumption in 2003 and as disinvestment in 2004 B. Disinvestment in 2003 and as consumption in 2004 C. Disinvestment in 2003 and as investment in 2004 D. Investment in 2003 and as disinvestment in 2004

D. Investment in 2003 and as disinvestment in 2004

Kimberly voluntarily quit her job as an insurance agent to return to school full-time to earn an MBA degree. With degree in hand she is now searching for a position in management. Kimberly presently is A.Structurally unemployed B.Not a member of the labor force C.Cyclically unemployed D. Frictionally unemployed

D.Frictionally unemployed

If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock? A. May have either increased or decreased B. Increased by $65 billion C. Increased by $55 billion D. Decreased by $55 Billion

B. Increased by $65 billion

If depreciation exceeds gross investment? A. The economy's stock of capital may be either growing or shrinking B. The economy's stock of capital is shrinking C. The economy's stock of capital is growing D. Net investment is zero

B. The economy's stock of capital is shrinking

The concept of net domestic investment refers to A.Gross domestic investment less net exports B.Total investment less the amount of investment goods used up in producing the year's output C.The difference between the market value and book value of outstanding capital stock D.the amount of machinery and equipment used up in producing the GDP in a specific year

B.Total investment less the amount of investment goods used up in producing the year's output

Which of the following is the final good or service? A. Diesel fuel bought for a delivery truck B. Fertilizer purchased by a farm supplier C. A haircut D. Chevrolet windows purchased by a General Motors assembly plant

C. A haircut

A nation's gross domestic product (GDP): a. Is always some amount less than its C+Ig+G+Xn b. Can be found by summing C+In+S+Xn c. Is the dollar value of the total output produced within the borders of the nation d. Is the dollar value of the total output produced by its citizens, regardless of where they are living

C. Is the dollar value of the total output produced within the borders of the nation

National income accountants can avoid multiple counting by? A. Including transfers in their calculations B. Counting both intermediate and final goods C. Only counting final goods D. Only counting intermediate goods

C. Only counting final goods

Tom Atoe grows tomatoes for home consumption. This activity is? A. Excluded from GDP in order to avoid double counting B. Excluded from GDP because an intermediate good is involved C. Productive but is excluded form GDP because no market transaction occurs D. included in GDP because it reflects production

C. Productive but is excluded form GDP because no market transaction occurs

Which of the following is an intermediate good? A. The purchase of gasoline for a ski trip to Colorado B. the purchase of pizza by a college student C. The purchase of baseball uniforms by a professional baseball team D. The purchase of jogging shoes by a professor

C. The purchase of baseball uniforms by a professional baseball team

Net exports are a. Exports less imports b. That portion of consumption and investment goods sent to other countries c. Imports less exports d. Exports plus imports

a. Exports less imports

Which of the following best measures improvements in the standard of living in a nation? a. Growth of real GDP per capita b. Growth of nominal GDP c. Growth of national income d. Growth of real GDP

a. Growth of real GDP per capita

In calculating GDP, governmental transfer payments, such as social security, or unemployment compensation are a. Counted as consumption spending b. Not counted c. Counted as investment spending d. Counted as government spending

b. Not counted

Gross investment refers to a. Net investment plus net exports b. Private investment minus public investment c. Net investment plus replacement investment d. Net investment after it has been "inflated" for changes in the price level

c. Net investment plus replacement investment

Suppose that inventories were $80 billion in 2003 and $70 billion in 2004. In 2004, accountants would a. Subtract $45 billion (=$90/2) from other elements of investment in calculating total investment b. Add $10 billion to other elements of investment in calculating total investment c. Subtract $10 billion from other elements of investments in calculating total investment d. Add $45 billion (=$90/2) to other elements of investment in calculating total investment

c. Subtract $10 billion from other elements of investments in calculating total investment

Suppose Smith pays $100 to Jones a. We can say with certainty that the GDP has increased, but we cannot determine the amount b. We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased c. We need more information to determine whether GDP has changed d. We can say with certainty that the GDP has increased by $100

c. We need more information to determine whether GDP has changed

GDP can be calculated by summing a. Consumption, investment, wages, and rents b. Consumption, investment, government purchases, exports, and imports c. Consumption, investment, government purchases, and imports d. Investment, government purchases, consumption, and net exports

d. Investment, government purchases, consumption, and net exports