a. the national income accounts.
QN=1 The accounting framework used in measuring current economic activity is called
a. the national income accounts.
b. the U.S. expenditure accounts.
c. the flow of funds accounts.
d. the balance of payments accounts.
b. product, income, and expenditure approaches.
QN=2 The three approaches to measuring economic activity are the
a. consumer, business, and government approaches.
b. product, income, and expenditure approaches.
c. cost, income, and expenditure approaches.
d. private, public, and international approache
a. value added.
QN=3 The value of a producer's output minus the value of the inputs it purchases from other producers is called the producer's
a. value added.
b. profit.
c. surplus.
d. gross product.
b. $600 million
QN=4 The Bigdrill company drills for oil, which it sells for $200 million to the Bigoil company to be made into gas. The Bigoil company's gas is sold for a total of $600 million. What is the total contribution to the country's GDP from companies Bigdrill
b. $6 million
QN=5 Sam's Semiconductors produces computer chips, which it sells for $10 million to Carl's Computer Company (CCC). CCC's computers are sold for a total of $16 million. What is the value added of CCC?
a. $16 million
b. $6 million
c. $10 million
d. $26 mil
a. $40,000
QN=6 The Compagnie Naturelle sells mounted butterflies, using butterfly bait it buys from another firm for $20,000. It pays its workers $35,000, pays $2,000 in taxes, and has profits of $3,000. What is its value added?
a. $40,000
b. $59,000
c. $3000
d. $3
c. the fundamental identity of national income accounting.
QN=7 The equation total production = total income = total expenditure is called
a. Say's Law.
b. the total identity.
c. the fundamental identity of national income accounting.
d. the goods-market equilibrium condition.
c. treated as part of expenditure.
QN=8 To ensure that the fundamental identity of national income accounting holds, changes in inventories are
a. treated as part of saving.
b. ignored.
c. treated as part of expenditure.
d. counted as consumption.
d. Only to the extent that they are provided for pay
QN=9 To what extent are homemaking and child-rearing accounted for in the government's GDP accounts?
a. Only to the extent that taxes are paid on them
b. Not at all
c. All homemaking and child-rearing are accounted for
d. Only to the extent that they are
c. estimated values of activity in the underground economy.
QN=10 The measurement of GDP includes
a. the benefits of clean air and water.
b. purchases and sales of goods produced in previous periods.
c. estimated values of activity in the underground economy.
d. nonmarket goods such as homemaking and child-rearing
d. A newly constructed house
QN=11 Which of the following is included in U.S. GDP?
a. The purchase of a watch from a Swiss company
b. The sale of a used car
c. The sale of a new car from a manufacturer's inventory
d. A newly constructed house
c. the underground economy.
QN=12 Government statisticians adjust GDP figures to include estimates of
a. the costs of pollution to society.
b. the value of homemaking (work done within the home).
c. the underground economy.
d. child-rearing services provided by stay-at-home parents.
a. they are valued at their cost of production.
QN=13 Because government services are not sold in markets,
a. they are valued at their cost of production.
b. taxes are used to value their contribution.
c. the government tries to estimate their market value and uses this to measure the government's cont
c. goods that are used up in the production of other goods in the same period that they were produced.
QN=14 Intermediate goods are
a. either capital goods or inventories.
b. final goods that remain in inventories.
c. goods that are used up in the production of other goods in the same period that they were produced.
d. capital goods, which are used up in t
b. final goods, because they are not used up during a given year.
QN=15 Capital goods are
a. a type of intermediate good.
b. final goods, because they are not used up during a given year.
c. produced in one year, whereas final goods are produced over a period of more than one year.
d. produced in the same year as the re
a. intermediate goods.
QN=16 Marvin's Metal Company produces screws that it sells to Ford, which uses the screws as a component of its cars. In the national income accounts, the screws are classified as
a. intermediate goods.
b. final goods.
c. inventory.
d. capital goods.
c. capital goods.
QN=17 Father and Son Limited produces lathes, which are purchased by furniture manufacturers all over the world. The standard lathe depreciates over a twenty-five year period. In the national income accounts, the lathes are classified as
a. intermediate g
c. $125,000.
QN=18 Fred the farmer purchased five new tractors at $25,000 each. Fred sold his old tractors to other farmers for $50,000. The net increase in GDP of these transactions was
a. $100,000.
b. $50,000.
c. $125,000.
d. $150,000.
c. office equipment.
QN=19 Inventories include each of the following except
a. unsold finished goods.
b. raw materials held by firms.
c. office equipment.
d. goods in process.
d. GDP = GNP - net factor payments from abroad.
QN=20 GDP differs from GNP because
a. GNP = GDP - net factor payments from abroad.
b. GDP = GNP - capital consumption allowances.
c. GNP = GDP - capital consumption allowances.
d. GDP = GNP - net factor payments from abroad.
a. included in U.S. GNP only for that portion that was attributable to American capital and labor.
QN=21 If an American construction company built a road in Kuwait, this activity would be
a. included in U.S. GNP only for that portion that was attributable to American capital and labor.
b. included in U.S. GDP but not in U.S. GNP.
c. fully included in U
b. $10
QN=22 If C = $500, I = $150, G = $100, NX = $40, and GNP = $800, how much is NFP?
a. -$10
b. $10
c. -$5
d. $5
d. Y = C + I + G + NX.
QN=23 The income-expenditure identity says that
a. Y = C + I + G.
b. Y = C + S + T.
c. Y = C + I + G + NX + CA.
d. Y = C + I + G + NX.
a. Housing purchases
QN=24 Which of the following is not a category of consumption spending in the national income accounts?
a. Housing purchases
b. Nondurable goods
c. Consumer durables
d. Services
c domestic; domestically and abroad
QN=25 Consumer spending is spending by ________ households on final goods and services produced ________.
a. domestic and foreign; domestically and abroad
b. domestic; domestically
c domestic; domestically and abroad
d. domestic and foreign; domestically
c. Government payments for welfare
QN=26 In the expenditure approach to GDP, which of the following would be excluded from measurements of GDP?
a. Government payments for goods produced by firms owned by state or local governments
b. All government payments are included in GDP
c. Governmen
b. gross national product minus depreciation.
QN=27 Net national product equals
a. gross national product minus statistical discrepancy.
b. gross national product minus depreciation.
c. national income plus depreciation.
d. national income minus taxes on production and imports.
c. 900 fish.
QN=28 Monica grows coconuts and catches fish. Last year she harvested 1500 coconuts and 600 fish. She values one fish as having a worth of three coconuts. She gave Rachel 300 coconuts and 100 fish for helping her to harvest coconuts and catch fish, all of
d. 1100 fish.
QN=29 Monica grows coconuts and catches fish. Last year she harvested 1500 coconuts and 600 fish. She values one fish as having a worth of three coconuts. She gave Rachel 300 coconuts and 100 fish for helping her to harvest coconuts and catch fish, all of
a. GNP - taxes + transfers + interest.
QN=30 Private disposable income equals
a. GNP - taxes + transfers + interest.
b. national income - taxes - transfers + interest.
c. national income - taxes + transfers + interest.
d. NNP - taxes + transfers + interest.
b. wealth.
QN=31 The value of a household's assets minus the value of its liabilities is called
a. debt.
b. wealth.
c. income.
d. stock.
b. $2115.
QN=32 In a given year, a country's GDP = $9842, net factor payments from abroad = $890, taxes = $868, transfers received from the government = $296, interest payments on the government's debt = $103, consumption = $8148, and government purchases = $185. T
c. $281.
QN=33 In a given year, a country's GDP = $9841, net factor payments from abroad = $889, taxes = $870, transfers received from the government = $300, interest payments on the government's debt = $104, consumption = $8148, and government purchases = $185. T
d. show a surplus of $50,000.
QN=34 If a local government collects taxes of $500,000, has $350,000 of government consumption expenditures, makes transfer payments of $100,000, and has no interest payments or investment, its budget would
a. show a deficit of $50,000.
b. be in balance w
d. government receipts minus government outlays.
QN=35 The government budget surplus equals
a. government purchases minus transfers.
b. government purchases minus net receipts.
c. government purchases plus transfers.
d. government receipts minus government outlays.
d. GDP + NFP - C - G.
QN=36 National saving equals private saving plus government saving, which in turn equals
a. GDP + C + G.
b. GDP + NFP.
c. C + S + T.
d. GDP + NFP - C - G.
d. investment, the government budget deficit, and the current account.
QN=37 The uses-of-saving identity says that an economy's private saving is used for
a. investment, interest expenses, the government budget deficit, and the current account.
b. investment, interest expenses, and the government budget deficit.
c. investmen
c. Private saving must rise, investment must fall, and/or the current account must fall.
QN=38 The uses-of-saving identity shows that if the government budget deficit rises, then one of the following must happen.
a. Private saving must rise, investment must fall, and/or the current account must rise.
b. Private saving must rise, investment mu
d. -$136 billion
QN=39 Suppose that private saving is $1591 billion, investment is $1945 billion, and the current account balance is -$490 billion. From the uses-of-saving identity, how much is government saving?
a. $134 billion
b. $136 billion
c. -$134 billion
d. -$136 b
QN=40 Suppose that national saving is $1460 billion, investment is $1945 billion, and private saving is $1590 billion. How much is the current account balance?
a. -$489 billion
b. -$485 billion
c. $485 billion
d. $489 billion
QN=40 Suppose that national saving is $1460 billion, investment is $1945 billion, and private saving is $1590 billion. How much is the current account balance?
a. -$489 billion
b. -$485 billion
c. $485 billion
d. $489 billion
c. government saving; the current account
QN=41 In the mid-to-late 1980s, the United States had "twin deficits" because both ________ and ________ were negative.
a. saving; investment
b. the current account; investment
c. government saving; the current account
d. government saving; private saving
b. 190.0%.
QN=42 The country of Old Jersey produces milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon.
[file: figure_02_x01.jpg]
Between Year 1 and Year 2, nominal GDP grew by
a.
c. the value of current-year output in prices of the base year.
QN=43 The value of real GDP in the current year equals
a. the value of current-year output in prices of the current year.
b. the value of base-year output in prices of the base year.
c. the value of current-year output in prices of the base year.
d. the v
c. 60%.
QN=44 The country of Old Jersey produces milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon.
[file: figure_02_x01.jpg]
Between Year 1 and Year 2, the percent change in
a. 81.25%.
QN=45 The country of Old Jersey produces milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon.
[file: figure_02_x01.jpg]
Between Year 1 and Year 2, the GDP deflator (base
c. 5%.
QN=46 If real GDP for 2009 is $6400 billion and real GDP for 2010 is $6720 billion (in 2005 dollars), then the growth rate of real GDP in 2010 is
a. 0%.
b. 50%.
c. 5%.
d. 0.5%.
d. $400 billion.
QN=47 If the price index was 100 in 2000 and 120 in 2010, and nominal GDP was $360 billion in 2000 and $480 billion in 2010, then the value of 2010 GDP in terms of 2000 dollars would be
a. $300 billion.
b. $384 billion.
c. $424 billion.
d. $400 billion.
d. 36%
QN=48 Nominal GDP in 1970 was $1,035.6 billion, and in 1980 it was $2,784.2 billion. The GDP price index was 30.6 for 1970 and 60.4 for 1980, where 1992 was the base year. Calculate the percent change in real GDP in the decade from 1970 to 1980. Round off
c. 37%
QN=49 Nominal personal consumption expenditures in the United States were $1760.4 billion in 1980 and rose to $3839.3 billion in 1990. The price index for personal consumption expenditures was 58.5 for 1980 and 92.9 for 1990, where 1992 was the base year.
c. 5%.
QN=50 Two years ago, the GDP deflator for Old York was 300, and today it is 330.75. Based on this information the annual average inflation rate for the two years was
a. 10.25%.
b. 10%.
c. 5%.
d. 5.125%.
c. 40%
QN=51 If the price index last year was 1.0 and today it is 1.4, what is the inflation rate over this period?
a. 4%
b. -4%
c. 40%
d. 1.4%
c. 2006
QN=52 You are given information on the consumer price index (CPI), where the values given are those for December 31 of each year.
[file: figure_02_x02.jpg]
In which year was the inflation rate the highest?
a. 2007
b. 2008
c. 2006
d. 2009
d. 55.6
QN=53 The consumer price index (CPI) was 180 for 2009 when using 1995 as the base year (1995 = 100). Now suppose we switch and use 2009 as the base year (2009 = 100). What is the CPI for 1995 with the new base year?
a. 18.0
b. 111.2
c. 80.0
d. 55.6
b. changes in Social Security benefits.
QN=54 The CPI may overstate inflation for all the following reasons except
a. problems measuring changes in the quality of goods.
b. changes in Social Security benefits.
c. problems measuring the quality of services.
d. substitution by consumers towards c
a. real interest rate.
QN=55 The nominal interest rate minus the inflation rate is the
a. real interest rate.
b. forward rate.
c. depreciation rate.
d. discount rate.
d. 9%; 1%
QN=56 By Marks buys a one-year German government bond (called a bund) for $400. He receives principal and interest totaling $436 one year later. During the year the CPI rose from 150 to 162. The nominal interest rate on the bond was ________, and the real
b. nominal interest rate minus expected inflation rate.
QN=57 The expected real interest rate (r) is equal to
a. expected nominal interest rate minus inflation rate.
b. nominal interest rate minus expected inflation rate.
c. nominal interest rate minus inflation rate.
d. nominal interest rate plus expected inf
d. less; greater
QN=58 In 2008, inflation exceeded expected inflation. In 2009, expected inflation exceeded inflation. Therefore the real interest rate was ________ than the expected real interest rate in 2008 and the real interest rate was ________ than the expected real
d. greater; less
QN=59 In 2008, expected inflation exceeded inflation. In 2009, inflation exceeded expected inflation. Therefore the real interest rate was ________ than the expected real interest rate in 2008 and the real interest rate was ________ than the expected real
a. 3.3%.
QN=60 If the expected inflation rate was 2.5%, the expected real interest rate was 4.0%, and the actual inflation rate turned out to be 3.2%, then the real interest rate equals
a. 3.3%.
b. 3.2%
c. 4.7%
d. 1.7%
c. 3%; 1%
QN=61 By Marks buys a one-year German government bond (called a bund) for $400. He receives principal and interest totaling $436 one year later. During the year the CPI rose from 150 to 162, but he had thought the CPI would be at 159 by the end of the yea