Macroeconomics- Chapter 7 (Glupker)

The agency responsible for compiling the National Income Product Accounts for the U.S. economy is the: A. National Bureau of Economic Research. B. Bureau of Labor Statistics. C. Bureau of Economic Analysis. D. Council of Economic Advisers.

C. Bureau of Economic Analysis.

Which of the following is a final good or service?: A. Chevrolet windows purchased by a General Motors assembly plant B. fertilizer purchased by a farm supplier C. a haircut purchased by a father for his 12-year-old son D. diesel fuel bought for a delivery truck

C. a haircut purchased by a father for his 12-year-old son

When an economy's production capacity is expanding: A. net exports is always a positive amount. B. nominal GDP, but not necessarily real GDP, is rising. C. DI exceeds PI. D. gross domestic investment exceeds depreciation.

D. gross domestic investment exceeds depreciation.

"GDP price index" measures changes in the: A. amount of resources available in the nation. B. value of final output produced in the nation. C. cost of resources employed in the nation. D. prices of the output produced in the nation.

D. prices of the output produced in the nation.

The growth of GDP may understate changes in the economy's economic well-being over time if the: A. amount of leisure decreases. B. distribution of income becomes increasingly unequal. C. environment deteriorates because of pollution. D. quality of products and services improves.

D. quality of products and services improves.

Which of the following is not economic investment?: A. the purchase of a new drill press by the Ajax Manufacturing Company B. construction of a suburban housing project C. the piling up of inventories on a grocer's shelf D. the purchase of 100 shares of AT&T by a retired business executive

D. the purchase of 100 shares of AT&T by a retired business executive

True or False: Real GDP accounts for changes in product quality; nominal GDP does not.

False

True or False: All expenditures on new construction are included as investment in calculating GDP.

True

True or False: Changes in business inventories are included as part of investment in the national income accounts.

True

True or False: GDP tends to understate economic welfare because it does not take into account increases in leisure.

True

True or False: In an economy that is experiencing inflation and output growth, nominal GDP will rise faster than real GDP.

True

True or False: Personal income usually exceeds disposable income.

True

True or False: The value of a price index in the base year is always 100.

True

In national income accounting, the consumption category of expenditures includes purchases of: A. consumer durable goods, consumer nondurable goods, and services. B. changes in business inventories. C. consumer durable goods and consumer nondurable goods but not services. D. both new and used consumer goods.

A. consumer durable goods, consumer nondurable goods, and services.

A nation's gross domestic product (GDP): A. is the dollar value of all final output produced within the borders of the nation during a specific period of time. B. is the dollar value of all final output produced by its citizens, regardless of where they are living. C. can be found by summing C + In + S + Xn. D. is always some amount less than C + Ig + G + Xn.

A. is the dollar value of all final output produced within the borders of the nation during a specific period of time.

Tom Atoe grows fruits and vegetables for home consumption. This activity is: A. productive but is excluded from GDP because no market transaction occurs. B. included in GDP because it reflects production. C. excluded from GDP in order to avoid double counting. D. excluded from GDP because an intermediate good is involved.

A. productive but is excluded from GDP because no market transaction occurs.

The GDP deflator or price index equals: A. real GDP divided by nominal GDP. B. nominal GDP divided by real GDP. C. gross private domestic investment less the consumption of fixed capital. D. gross national product less net foreign factor income earned in the United States.

B. nominal GDP divided by real GDP.

True or False: A product that was produced in 2016 and not sold until 2017 is counted as part of GDP in 2016.

True

The concept of net domestic investment refers to: A. total investment less the amount of investment goods used up in producing the year's output. B. gross domestic investment less net exports. 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.

A. total investment less the amount of investment goods used up in producing the year's output.

The GDP tends to: A. understate economic welfare because it does not take into account increases in leisure. B. overstate economic welfare because it does not include certain non-market activities such as the productive work of housewives. C. overstate economic welfare because it does not reflect improvements in product quality. D. understate economic welfare because it includes expenditures undertaken to offset or correct pollution.

A. understate economic welfare because it does not take into account increases in leisure.

Transfer payments are: A. excluded when calculating GDP because they only reflect inflation. B. excluded when calculating GDP because they do not reflect current production. C. included when calculating GDP because they increase the spending of recipients. D. included when calculating GDP because they are a category of investment spending.

B. excluded when calculating GDP because they do not reflect current production.

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

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

If nominal GDP rises: A. we can be certain that the price level has risen. B. real GDP must also rise. C. real GDP may either rise or fall. D. real GDP must fall.

C. real GDP may either rise or fall.

Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?: A. the services of used-car dealers B. the construction of new houses C. the child-care services provided by stay-at-home parents D. government expenditures on military equipment

C. the child-care services provided by stay-at-home parents

Nominal GDP is: A. money GDP adjusted for inflation. B. the amount of production that occurs when the economy is operating at full employment. C. the sum of all monetary transactions involving final goods and services that occur in the economy in a year. D. the sum of all monetary transactions that occur in the economy in a year.

C. the sum of all monetary transactions involving final goods and services that occur in the economy in a year.

True or False: Welfare payments to low-income families are included in national income.

False