Macroeconomics Exam review 8

An example of an intermediate good would be a. the bread that goes into a sub sandwich that is sold by Quiznos. b. the soda pop sold by Quiznos. c. a sub sandwich sold by Quiznos. d. the potato chips sold by Quiznos.

A

Depreciation is a. the value of worn-out equipment, machinery, and buildings. b. the value of the decrease in business inventory stocks. c. the value of the addition to the capital stock. d. the decline in the value of the stock market, net of dividends.

A

Increases in real GDP would overstate the increase in the well-being of a country over time if, over that time period, the a. average hours worked per week increased. b. amount of pollution decreased. c. price level increased. d. crime rate decreased.

A

Personal income is defined as a. national income less retained earnings plus transfer payments and plus interest on government bonds. b. national income plus retained earnings less transfer payments and less interest on government bonds. c. national income less depreciation. d. national income less personal taxes.

A

National income is equal to a. personal income minus personal taxes. b. GDP minus depreciation. c. disposable personal income plus depreciation plus personal taxes. d. GNP plus depreciation.

B

The drawback to calculating real GDP using base-year prices is that a. real GDP in one year is not comparable to real GDP in another year. b. relative prices change over time and these are not reflected in base-year prices, and this distorts GDP. c. relative prices change over time and these changes are reflected in base-year prices. d. quality changes are reflected in base-year prices.

B

The purchase of a new house is included in a. consumption expenditures. b. investment expenditures. c. government purchases. d. net exports.

B

Legalizing all forms of illegal activities a. reduces GDP and reduces the size of the underground economy. b. reduces GDP and increases the size of the underground economy. c. increases GDP and reduces the size of the underground economy. d. increases GDP and increases the size of the underground economy.

C

Nominal GDP is GDP in a given year a. adjusted for inflation. b. adjusted for anticipated inflation. c. valued in the prices of that year. d. valued in the prices of the base year. Feedback

C

Real GDP will increase a. only if the price level rises. b. only if the price level falls. c. only if the quantity of final goods and services produced rises. d. if either the price level rises or the quantity of final goods and services produced rises.

C

The underground economy can be described as a. production of intermediate goods and services. b. economic production that includes mining. c. economic activity that is hidden from the government to avoid taxes or because the activity is illegal. d. production of infrastructure that spurs growth in the rest of the economy.

C

Which of the following goods is directly counted in GDP? a. the lettuce that Subway purchases for its sandwiches b. the bread that Subway purchases for its sandwiches c. a 12-inch Subway sandwich purchased by a student d. the plastic bags that Subway purchases to wrap its sandwiches

C

Which of the following is not a durable good? a. furniture b. automobile c. clothing d. refrigerator

C

In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA a. simply counts the total number of goods produced in the market place and then adds them up. b. values goods at their market prices, multiplies them by the quantity produced, and then adds them up. c. simply counts the total number of goods and services produced in the marketplace and then adds them up. d. values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.

D

Real GDP is GDP in a given year a. adjusted only for anticipated inflation. b. adjusted only for unanticipated inflation. c. valued in the prices of that year. d. valued in the prices of the base year.

D

The nominal GDP of the U.S. in 2015 was approximately $17.3 trillion. This means that a. the value of output in 2015 was around $17.3 trillion. b. total income in 2015 was around $17.3 trillion. c. total spending in 2015 was around $17.3 trillion. d. All of these are true.

D

The purchase by a household in China of a CD produced in the United States is included in U.S. a. consumption expenditures. b. investment expenditures. c. government purchases. d. net exports.

D

The size of the underground economy would tend to decrease if the government of a country a. decreased government regulations on businesses. b. made over-the-counter drugs illegal. c. increased income tax rates. d. increased business taxes.

A

Which of the following would increase disposable personal income? a. a decrease in transfer payments received b. a decrease in taxes paid c. a decrease in personal income d. All of these would increase disposable income.

B

Because workers in the United States work fewer hours per week, on average, than they did over 100 years ago, a. workers in the United States are worse off than they were over 100 years ago. b. workers in the United States earn less income than they did over 100 years ago. c. GDP is lower than it would be if U.S. workers worked the same workweek they had 100 years ago. d. GDP is higher than it would be if U.S. workers worked the same workweek they had 100 years ago.

C

Disposable personal income is defined as a. personal income less personal taxes plus indirect sales taxes. b. personal income less transfer payments plus personal taxes. c. personal income less personal taxes. d. personal income less depreciation.

C

Gross national product is defined as a. the value of final goods and services produced within the United States. b. the value of final goods and services produced outside of the United States. c. the value of final goods and services produced by residents of the United States even if the production takes place outside of the United States. d. the value of final goods and services produced within the United States, by United States residents.

C

A transfer payment is a payment by the government to an individual a. for a service. b. for an investment good. c. for a consumption good. d. for which the government does not receive a good or service in return. e. for a debt owed.

D

Gross domestic product is calculated by summing up a. the total quantity of goods and services in the economy. b. the total quantity of goods and services produced in the economy during a period of time. c. the total market value of goods and services in the economy. d. the total market value of final goods and services produced in the economy during a period of time.

D