Question 1

(Consider This) When making a capital stock and reservoir analogy,the:

Accepted Answer

A)   outflow below the dam is gross investment.
B)   inflow from the river is the stock of capital.
C)   level of water in the reservoir is the stock of capital.
D)   level of water in the reservoir is net investment.E) A) and C)
F) A) and B)

Question 2

Answer the question on the basis of the following data.All figures are in billions of dollars.   Proprietors’ Income $20 Compensation of Employees 300 Consumption of Fixed Capital 15 Gross Investment 80 Rents 10 Interest 20 Exports 30 Imports 50 Corporate Profits 25 Taxes on Production and Imports 5 Net Foreign Factor Income 0 Statistical Discrepancy 0\begin{array} { l r } 	ext { Proprietors&#x27; Income } & \$ 20 \	ext { Compensation of Employees } & 300 \	ext { Consumption of Fixed Capital } & 15 \	ext { Gross Investment } & 80 \	ext { Rents } & 10 \	ext { Interest } & 20 \	ext { Exports } & 30 \	ext { Imports } & 50 \	ext { Corporate Profits } & 25 \	ext { Taxes on Production and Imports } & 5 \	ext { Net Foreign Factor Income } & 0 \	ext { Statistical Discrepancy } & 0\end{array} Proprietors’ Income  Compensation of Employees  Consumption of Fixed Capital  Gross Investment  Rents  Interest  Exports  Imports  Corporate Profits  Taxes on Production and Imports  Net Foreign Factor Income  Statistical Discrepancy ​$2030015801020305025500​  Refer to the data.National income is:

Accepted Answer

A)   $395.
B)   $380.
C)   $375.
D)   $360. E) A) and B)
F) B) and C)

Question 3

Answer the question on the basis of the following data.All figures are in billions of dollars.   Proprietors’ Income $20 Compensation of Employees 300 Consumption of Fixed Capital 15 Gross Investment 80 Rents 10 Interest 20 Exports 30 Imports 50 Corporate Profits 25 Taxes on Production and Imports 5 Net Foreign Factor Income 0 Statistical Discrepancy 0\begin{array} { l r } 	ext { Proprietors&#x27; Income } & \$ 20 \	ext { Compensation of Employees } & 300 \	ext { Consumption of Fixed Capital } & 15 \	ext { Gross Investment } & 80 \	ext { Rents } & 10 \	ext { Interest } & 20 \	ext { Exports } & 30 \	ext { Imports } & 50 \	ext { Corporate Profits } & 25 \	ext { Taxes on Production and Imports } & 5 \	ext { Net Foreign Factor Income } & 0 \	ext { Statistical Discrepancy } & 0\end{array} Proprietors’ Income  Compensation of Employees  Consumption of Fixed Capital  Gross Investment  Rents  Interest  Exports  Imports  Corporate Profits  Taxes on Production and Imports  Net Foreign Factor Income  Statistical Discrepancy ​$2030015801020305025500​  Refer to the data.Gross domestic product is:

Accepted Answer

A)   $395.
B)   $380.
C)   $375.
D)   $360. E) All of the above
F) A) and B)

Question 4

Exports are subtracted from imports in calculating U.S.GDP because exports are not available for domestic consumption.

Accepted Answer

A) True 
 B)False

Question 5

(Consider This) Capital is a:

Accepted Answer

A)   flow,whereas gross investment and depreciation are stocks.
B)   flow,as are gross investment and depreciation.
C)   stock,as are gross investment and depreciation.
D)   stock,whereas gross investment and depreciation are flows.E) C) and D)
F) B) and D)

Question 6

Net exports are:

Accepted Answer

A)   that portion of consumption and investment goods sent to other countries.
B)   exports plus imports.
C)   exports less imports.
D)   imports less exports.E) All of the above
F) A) and B)

Question 7

The concept of net domestic investment refers to:

Accepted Answer

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.E) A) and D)
F) B) and D)

Question 8

In determining real GDP,economists adjust the nominal GDP by using the:

Accepted Answer

A)   national productivity index.
B)   wholesale (producers') price index.
C)   GDP price index.
D)   consumer price index.E) C) and D)
F) B) and D)

Question 9

Which of the following is an intermediate good?

Accepted Answer

A)   The purchase of gasoline for a ski trip to Colorado.
B)   The purchase of baseball uniforms by a professional baseball team.
C)   The purchase of a pizza by a college student.
D)   The purchase of jogging shoes by a professor.E) B) and C)
F) A) and B)

Question 10

Real GDP refers to:

Accepted Answer

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 do not reflect changes in both physical output and the price level.
D)   GDP data that have been adjusted for changes in the price level.E) A) and C)
F) A) and D)

Question 11

Assume that the size of the underground economy increases both absolutely and relatively over time.As a result:

Accepted Answer

A)   real GDP will rise more rapidly than nominal GDP.
B)   GDP will tend to increasingly understate the level of output through time.
C)   GDP will tend to increasingly overstate the level of output through time.
D)   the accuracy of GDP will be unaffected through time.E) All of the above
F) A) and D)

Question 12

Answer the question on the basis of the following data.All figures are in billions of dollars.   Gross Investment $18 National Income 100 Net Exports 2 Personal Income 85 Personal Consumption Expenditures 70 Saving 5 Government Purchases 20 Net Domestic Product 105 Statistical Discrepancy 0\begin{array} { l r } 	ext { Gross Investment } & \$ 18 \	ext { National Income } & 100 \	ext { Net Exports } & 2 \	ext { Personal Income } & 85 \	ext { Personal Consumption Expenditures } & 70 \	ext { Saving } & 5 \	ext { Government Purchases } & 20 \	ext { Net Domestic Product } & 105 \	ext { Statistical Discrepancy } & 0\end{array} Gross Investment  National Income  Net Exports  Personal Income  Personal Consumption Expenditures  Saving  Government Purchases  Net Domestic Product  Statistical Discrepancy ​$18100285705201050​  The gross domestic product for the above economy is:

Accepted Answer

A)   $100.
B)   $95.
C)   $110.
D)   $107. E) B) and D)
F) A) and B)

Question 13

If the economy adds to its inventory of goods during some year:

Accepted Answer

A)   gross investment will exceed net investment by the amount of the inventory increase.
B)   this amount should be ignored in calculating that year's GDP.
C)   this amount should be subtracted in calculating that year's GDP.
D)   this amount should be included in calculating that year's GDP.E) None of the above
F) B) and C)

Question 14

Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion.GDP in year 2 is:

Accepted Answer

A)   $180 billion.
B)   $190 billion.
C)   $200 billion.
D)   $210 billion.E) B) and C)
F) A) and D)

Question 15

A nation's gross domestic product (GDP) :

Accepted Answer

A)   can be found by summing C + Ig + 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 + S + G + Xn.
D)   is always some amount less than its NDP.E) B) and C)
F) B) and D)

Question 16

Suppose nominal GDP in 2009 was $100 billion and in 2010 it was $260 billion.The general price index in 2009 was 100 and in 2010 it was 180.Between 2009 and 2010 the real GDP rose by approximately:

Accepted Answer

A)   160 percent.
B)   44 percent.
C)   37 percent.
D)   80 percent.E) B) and C)
F) A) and B)

Question 17

Which of the following is not economic investment?

Accepted Answer

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.E) B) and C)
F) None of the above

Question 18

Environmental pollution is accounted for in:

Accepted Answer

A)   GDP.
B)   PI.
C)   DI.
D)   none of these.E) B) and D)
F) C) and D)

Question 19

Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion.GDP in year 2 is:

Accepted Answer

A)   $180 billion.
B)   $190 billion.
C)   $200 billion.
D)   $210 billion.E) None of the above
F) A) and B)

Question 20

Answer the question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10,B = 30,C = 5.The current year per unit prices of these three goods are A = $2,B = $3,and C = $1. Refer to the information.Nominal GDP in the current year is:

Accepted Answer

A)   $110.
B)   $115.
C)   $45.
D)   $90.E) A) and C)
F) B) and C)

Exam 26: Measuring Domestic Output and National Income

(Consider This) When making a capital stock and reservoir analogy,the:

Correct Answer
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If the economy adds to its inventory of goods during some year:

Correct Answer
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Suppose nominal GDP in 2009 was $100 billion and in 2010 it was $260 billion.The general price index in 2009 was 100 and in 2010 it was 180.Between 2009 and 2010 the real GDP rose by approximately:

Correct Answer
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Exports are subtracted from imports in calculating U.S.GDP because exports are not available for domestic consumption.

Correct Answer
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Environmental pollution is accounted for in:

Correct Answer
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Assume that the size of the underground economy increases both absolutely and relatively over time.As a result:

Correct Answer
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Answer the question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10,B = 30,C = 5.The current year per unit prices of these three goods are A = $2,B = $3,and C = $1. Refer to the information.Nominal GDP in the current year is:

Correct Answer
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In determining real GDP,economists adjust the nominal GDP by using the:

Correct Answer
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Real GDP refers to:

Correct Answer
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Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion.GDP in year 2 is:

Correct Answer
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Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion.GDP in year 2 is:

Correct Answer
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A nation's gross domestic product (GDP) :

Correct Answer
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Net exports are:

Correct Answer
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(Consider This) Capital is a:

Correct Answer
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The concept of net domestic investment refers to:

Correct Answer
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Which of the following is an intermediate good?

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Which of the following is not economic investment?

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Exam 26: Measuring Domestic Output and National Income

(Consider This) When making a capital stock and reservoir analogy,the:

Correct AnswerverifiedShow Answer

If the economy adds to its inventory of goods during some year:

Correct AnswerverifiedShow Answer

Suppose nominal GDP in 2009 was $100 billion and in 2010 it was $260 billion.The general price index in 2009 was 100 and in 2010 it was 180.Between 2009 and 2010 the real GDP rose by approximately:

Correct AnswerverifiedShow Answer

Exports are subtracted from imports in calculating U.S.GDP because exports are not available for domestic consumption.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Environmental pollution is accounted for in:

Correct AnswerverifiedShow Answer

Assume that the size of the underground economy increases both absolutely and relatively over time.As a result:

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10,B = 30,C = 5.The current year per unit prices of these three goods are A = $2,B = $3,and C = $1. Refer to the information.Nominal GDP in the current year is:

Correct AnswerverifiedShow Answer

In determining real GDP,economists adjust the nominal GDP by using the:

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Real GDP refers to:

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Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion.GDP in year 2 is:

Correct AnswerverifiedShow Answer

Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion.GDP in year 2 is:

Correct AnswerverifiedShow Answer

A nation's gross domestic product (GDP) :

Correct AnswerverifiedShow Answer

Net exports are:

Correct AnswerverifiedShow Answer

(Consider This) Capital is a:

Correct AnswerverifiedShow Answer

The concept of net domestic investment refers to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is an intermediate good?

Correct AnswerverifiedShow Answer

Which of the following is not economic investment?

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