Chapter 24 Macro

Within the circular flow model, the level of total resource income and total spending on output will be approximately equal. Select one: True False

True

A nation's gross domestic product (GDP): Select one: a. is the dollar value of all final output produced within the borders of the nation. 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

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

A

In national income accounting, government purchases include: Select one: a. purchases by Federal, state, and local governments. b. purchases by the Federal government only. c. government transfer payments. d. purchases of goods for consumption, but not public capital goods.

A

The system that measures the economy's overall performance is formally known as: Select one: a. National income accounting b. Business cycle measurement c. GDP assessment d. Final output and income statistics

A

Historically, real GDP has increased less rapidly than nominal GDP because: Select one: a. price indices have not reflected improvements in product quality. b. the general price level has increased. c. technological progress has resulted in more efficient production. d. the general price level has decreased.

B

If depreciation exceeds gross investment: Select one: 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

National income accountants can avoid multiple counting by: Select one: a. including transfer payments in their calculations. b. only counting final goods. c. counting both intermediate and final goods. d. only counting intermediate goods.

B

Nominal GDP is: Select one: a. the sum of all monetary transactions that occur in the economy in a year. b. the sum of all monetary transactions involving final goods and services that occur in the economy in a year. c. the amount of production that occurs when the economy is operating at full employment. d. money GDP adjusted for inflation

B

The growth of GDP may understate changes in the economy's economic well-being over time if the: Select one: a. distribution of income becomes increasingly unequal. b. quality of products and services improves. c. environment deteriorates because of pollution. d. amount of leisure decreases.

B

The concept of net domestic investment refers to: Select one: a. the amount of machinery and equipment used up in producing the GDP in a specific year. b. the difference between the market value and book value of outstanding capital stock. c. gross domestic investment less net exports. d. total investment less the amount of investment goods used up in producing the year's output.

D

Which of the following activities is excluded from GDP, causing GDP to understate a nation's production? Select one: a. the services of health care workers b. the services of military personnel c. the construction of new buildings d. goods and services produced in the underground economy

D

Which of the following transactions would be included in GDP? Select one: a. Mary buys a used book for $5 at a garage sale. b. Nick buys $5000 worth of stock in Microsoft. c. Olivia receives a tax refund of $500. d. Peter buys a newly constructed house

D

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity. Select one: True False

True

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

A

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

B

The value added of a firm is the market value of: Select one: a. a firm's output plus the value of the inputs bought from others. b. a firm's output less the value of the inputs bought from others. c. the firm's output. d. the firm's inputs bought from others.

B

Transfer payments are: Select one: 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 are a category of investment spending. d. included when calculating GDP because they increase the spending of recipients.

B

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

B

The amount of after-tax income received by households is measured by: Select one: a. discretionary income. b. national income. c. disposable income. d. personal income.

C

In national income accounting, consumption expenditures include: Select one: a. purchases of both new and used consumer goods. b. consumer durable goods and consumer nondurable goods, but not services. c. consumer durable goods, consumer nondurable goods, and services. d. changes in business inventories.

C

Net exports are: Select one: a. that portion of consumption and investment goods sent to other countries. b. exports plus imports. c. exports less imports. d. imports less exports.

C

Suppose the total monetary value of all final goods and services produced in a particular country in 2010 is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that: Select one: a. GDP in 2010 is $450 billion. b. NDP in 2010 is $450 billion. c. GDP in 2010 is $500 billion. d. inventories in 2010 fell by $50 billion.

C

Real GDP refers to: Select one: a. the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. b. GDP data that embody changes in the price level, but not changes in physical output. c. GDP data that reflect changes in both physical output and the price level. d. GDP data that have been adjusted for changes in the price level.

D

Exports are subtracted from imports in calculating U.S. GDP because exports are not available for domestic consumption. Select one: True False

False