Macro Exam 4

The nominal GDP of the U.S. in 2012 was appx $16.2 trillion. This means that

all of these are true

Using the table below, calculate GDP using income method

$5987

Refer to Table 10-2. Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nominal GDP for this simple economy equals

$8,750

The following are counted in GDP

A&B (cars)

Which of the following identities are correct?

A, B, C

Which of the following are money?

A, B, C (M1, M2, M3)

Govt purchases for the expenditure method of calculating GDP includes:

A, B, C (fed, state, local)

In a circular flow, taxes are in inflow to the govt. The outflow(s) include:

B&C (govt purchases, transfer payments)

Deficit financing

Both A&D (appropriate for infrastructure; result of congress cutting taxes and spending)

Which of the following would result in GDP for an economy equal to $10 trillion?

C=$5 trillion I=$5 trillion G=$2 trillion NX=($2 trillion)

The budget deficit

Exist when outlays exceed income; increases aggregate demand in short-run and adds to debt in long run

Which of the following equations correctly measures GDP in an economy?

GDP=C+I+G+NX

The federal budget process

Includes the budget of the US govt

The key events in correct order for national income accounting are:

Mercantilism, Quesnay, Rough Measures by UK, Microeconomic Data used

Which of the following transactions represents the purchase of a final good?

Your father buys a new John Deere riding lawn mower.

If the govt's expenditures are less than its tax revenues, then

a budget surplus results

Investment, as defined by economists, would include the purchase of a

computer by an accounting firm

The purchase of a new automobile is included in

consumption expenditures on durable goods

To calculate GDP by the expenditure method, one must add

consumption spending, investment spending, govt spending, and net exports

An economic expansion tends to cause the fed budget deficit to _____ because tax revenues _____ and govt spending on transfer payments _____.

decrease; increase; fall

In the circular flow model, the value of total income for an economy _____ the value of total production.

equals

The following goods are counted in GDP

final goods and services

Which of the following statements are true?

imports are a leak in the circular flow and exports are an injection

A recession tends to cause the federal budget deficit to _____ because tax revenues _____ and govt spending on transfer payments ______.

increase; fall; rises

Which of the following is not directly counted in GDP?

intermediate goods

Which of the following would be directly counted in GDP in 2014?

kitchen cabinets purchased from Home Depot in 2014 to be installed in a house built in 2014

Govt deficits tend to increase during

periods of war and recession

Which of the following would not be included in the expenditure category called investment expenditures?

purchase of shares of preferred stock

GDP is measures:

quarterly by BEA

During recessions, govt expenditures automatically

rise bc of programs such as unemployment insurance and Medicaid

For the fed deficit to be lowered,

the fed govt's expenditures must be lower than its tax revenue

The fed govt debt equals

the total value of US treasury bonds withstanding

The main goal of mercantilism was:

to increase nation's wealth by imposing govt regulation