Question 1

Gross domestic product (GDP) is defined as:

Accepted Answer

A)   the market value of all final goods and services produced within the borders of a nation.
B)   incomes received by all a nation's households.
C)   the quantity of each good and service produced by U.S. residents.
D)   none of the above.

Question 2

Which one of the following would count as investment in the GDP accounts?

Accepted Answer

A)   Purchase of a new airplane by an airline.
B)   Purchase of a U.S. government bond.
C)   Purchase of 100 shares of Wal-Mart stock.
D)   Purchase of an existing house.

Question 3

Which one of the following statements is true?

Accepted Answer

A)   Resources flow from the government to households.
B)   Resources flow from firms to households.
C)   Taxes flow from firms to the government.
D)   Resource payments flow from firms to households
E)   Imports flow from firms to foreign economies.

Question 4

Gross domestic product (GDP) includes:

Accepted Answer

A)   intermediate as well as final goods.
B)   foreign goods as well as domestically produced goods.
C)   used goods sold in the current time period.
D)   only final goods and services.

Question 5

GDP does count:

Accepted Answer

A)   state and local government purchases.
B)   spending for new homes.
C)   changes in inventories.
D)   none of the above.
E)   all of the above.

Question 6

If Lacy buys a smoothie at the corner store,which of the following best relates this transaction to the circular flow model?

Accepted Answer

A)   Goods flow from firms and money flows from households through the product markets.
B)   Resources (land, labor, or capital)  flows from households, and money flows from business in the product markets.
C)   Income flows from the factor markets, and goods flow into the factor markets.
D)   Resources flow into households, and back into the goods and services markets.

Question 7

The GDP of a country can be derived by summing the:

Accepted Answer

A)   expenditures on final goods and services produced domestically during the year.
B)   payments to employees and owners of capital resources and then subtracting depreciation and indirect business taxes.
C)   market value of all goods and services produced domestically during the period and then subtracting net exports from that figure.
D)   income payments to the resource suppliers and net exports.

Question 8

Gross private domestic investment or simply business investment spending (I) :

Accepted Answer

A)   excludes all investment in the United States by foreign firms.
B)   includes all capital in the United States.
C)   includes net additions to the capital stock plus all new corporate stocks and bonds.
D)   includes business expenditures on new factories, tools, and machinery.

Question 9

National income:

Accepted Answer

A)   represents total wages and salaries in an economy.
B)   equals GDP minus indirect business taxes.
C)   equals GDP minus depreciation.
D)   equals C + I + G + (X - M) .
E)   is the value of existing capital stock used up in making goods.

Question 10

Which of the following is a shortcoming of GDP?

Accepted Answer

A)   GDP measures used goods and services.
B)   GDP includes changes in inventories.
C)   GDP includes the value of net exports.
D)   GDP does not make an allowance for leisure time.

Question 11

GDP is a measure of:

Accepted Answer

A)   domestic production.
B)   changes in the general level of prices.
C)   material well-being.
D)   social welfare.

Question 12

Which one of the following is an example of the circular flow model and shows the interdependence of households and firms?

Accepted Answer

A)   Households demand their resources from the firms in the factor markets and, in turn, supply in the product market the goods and services produced by firms.
B)   The firms go to the resource market to supply resources that households demand and, in turn, provide households with the goods and services produced for the product markets.
C)   Households supply their resources to the firms in the factor markets and, in turn, demand in the product market the goods and services produced by the firms.
D)   The firms in the factor markets pay to households in the form of wages, interest, rent and profit-for resources demanded.
E)   The circuit is completed when the payments flow from households, through the product markets, and to the firms for the goods and services they demand.

Question 13

Exhibit 11-5 GDP data (billions of dollars) 
   Personal consumption exgenfitures $5,207 Interest 425 Corporate profits 735 Government 5pending 1,406 Depreciation 830 Rental income 146 Grass private dometic investment 1,116 Compensation of emplayees 4,426 Exparts 870 Imparts 965 Indirect business taxes 553 Proprietars’ income 520 Personal taxes 886 Social Security taxes 432 Transfer payments 376\begin{array} { | l | r | } \hline 	ext { Personal consumption exgenfitures } & \$ 5,207 \\hline 	ext { Interest } & 425 \\hline 	ext { Corporate profits } & 735 \\hline 	ext { Government 5pending } & 1,406 \\hline 	ext { Depreciation } & 830 \\hline 	ext { Rental income } & 146 \\hline 	ext { Grass private dometic investment } & 1,116 \\hline 	ext { Compensation of emplayees } & 4,426 \\hline 	ext { Exparts } & 870 \\hline 	ext { Imparts } & 965 \\hline 	ext { Indirect business taxes } & 553 \\hline 	ext { Proprietars&#x27; income } & 520 \\hline 	ext { Personal taxes } & 886 \\hline 	ext { Social Security taxes } & 432 \\hline 	ext { Transfer payments } & 376 \\hline\end{array} Personal consumption exgenfitures  Interest  Corporate profits  Government 5pending  Depreciation  Rental income  Grass private dometic investment  Compensation of emplayees  Exparts  Imparts  Indirect business taxes  Proprietars’ income  Personal taxes  Social Security taxes  Transfer payments ​$5,2074257351,4068301461,1164,426870965553520886432376​​ 
-In Exhibit 11-5,national income (NI) is:

Accepted Answer

A)   $6,254 billion.
B)   $6,495 billion.
C)   $6,805 billion.
D)   $7,082 billion.
E)   $7,637.7 billion.

Question 14

Which one of the following transactions would be included in GDP?

Accepted Answer

A)   Ms. Kim pays $50 for a used picture frame at a neighborhood garage sale.
B)   Mr. Doe donates $500 to his town's junior college scholarship fund.
C)   Ms. Bartolini pays $500 to fix the front end of her car damaged in a recent accident.
D)   Ms. Smith pays $5,000 to purchase 100 shares of Microsoft stock.

Question 15

Which of the following would count as an investment expenditure in the GDP expenditures approach?

Accepted Answer

A)   General Motors hires 10 electrical engineers.
B)   Boeing purchases a new metal stretching machine used to produce airplane wings.
C)   Ms. Quantum buys 100 shares of Microsoft stock.
D)   A large corporation spends $10,000 per month on long-distance phone charges.

Question 16

The largest component of GDP as measured by the expenditure approach is:

Accepted Answer

A)   wages and salary earnings.
B)   personal consumption.
C)   net profits of corporations.
D)   gross private investment.

Question 17

Personal income minus personal taxes equals disposable personal income.

Accepted Answer

A) True 
 B)False

Question 18

Exhibit 11-5 GDP data (billions of dollars) 
   Personal consumption exgenfitures $5,207 Interest 425 Corporate profits 735 Government 5pending 1,406 Depreciation 830 Rental income 146 Grass private dometic investment 1,116 Compensation of emplayees 4,426 Exparts 870 Imparts 965 Indirect business taxes 553 Proprietars’ income 520 Personal taxes 886 Social Security taxes 432 Transfer payments 376\begin{array} { | l | r | } \hline 	ext { Personal consumption exgenfitures } & \$ 5,207 \\hline 	ext { Interest } & 425 \\hline 	ext { Corporate profits } & 735 \\hline 	ext { Government 5pending } & 1,406 \\hline 	ext { Depreciation } & 830 \\hline 	ext { Rental income } & 146 \\hline 	ext { Grass private dometic investment } & 1,116 \\hline 	ext { Compensation of emplayees } & 4,426 \\hline 	ext { Exparts } & 870 \\hline 	ext { Imparts } & 965 \\hline 	ext { Indirect business taxes } & 553 \\hline 	ext { Proprietars&#x27; income } & 520 \\hline 	ext { Personal taxes } & 886 \\hline 	ext { Social Security taxes } & 432 \\hline 	ext { Transfer payments } & 376 \\hline\end{array} Personal consumption exgenfitures  Interest  Corporate profits  Government 5pending  Depreciation  Rental income  Grass private dometic investment  Compensation of emplayees  Exparts  Imparts  Indirect business taxes  Proprietars’ income  Personal taxes  Social Security taxes  Transfer payments ​$5,2074257351,4068301461,1164,426870965553520886432376​​ 
-In Exhibit 11-5,and using the expenditures approach,gross domestic product (GDP) is:

Accepted Answer

A)   $6,807 billion.
B)   $7,082 billion.
C)   $7,634 billion.
D)   $7,637 billion.
E)   $7,730 billion.

Question 19

Exhibit 11-3 Expenditure approach
 
-As shown in Exhibit 11-3,total expenditures by households for domestically produced goods is:

Accepted Answer

A)   $1,000 billion.
B)   $100 billion.
C)   $600 billion.
D)   $20 billion.

Question 20

In contrast with nominal GDP,real GDP refers to nominal GDP:

Accepted Answer

A)   minus exports.
B)   minus personal income taxes.
C)   corrected for price changes.
D)   corrected for depreciation.

Exam 11: Gross Domestic Product

Which of the following is a shortcoming of GDP?

Correct Answer
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If Lacy buys a smoothie at the corner store,which of the following best relates this transaction to the circular flow model?

Correct Answer
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Which one of the following transactions would be included in GDP?

Correct Answer
verified

National income:

Correct Answer
verified

Gross private domestic investment or simply business investment spending (I) :

Correct Answer
verified

GDP is a measure of:

Correct Answer
verified

GDP does count:

Correct Answer
verified

Correct Answer
verified

Gross domestic product (GDP) is defined as:

Correct Answer
verified

Which one of the following would count as investment in the GDP accounts?

Correct Answer
verified

Gross domestic product (GDP) includes:

Correct Answer
verified

The largest component of GDP as measured by the expenditure approach is:

Correct Answer
verified

In contrast with nominal GDP,real GDP refers to nominal GDP:

Correct Answer
verified

The GDP of a country can be derived by summing the:

Correct Answer
verified

Which one of the following statements is true?

Correct Answer
verified

Which one of the following is an example of the circular flow model and shows the interdependence of households and firms?

Correct Answer
verified

Which of the following would count as an investment expenditure in the GDP expenditures approach?

Correct Answer
verified

Correct Answer
verified

Exhibit 11-3 Expenditure approach -As shown in Exhibit 11-3,total expenditures by households for domestically produced goods is:

Correct Answer
verified

Personal income minus personal taxes equals disposable personal income.

Correct Answer
verified

Exam 11: Gross Domestic Product

Which of the following is a shortcoming of GDP?

Correct AnswerverifiedShow Answer

If Lacy buys a smoothie at the corner store,which of the following best relates this transaction to the circular flow model?

Correct AnswerverifiedShow Answer

Which one of the following transactions would be included in GDP?

Correct AnswerverifiedShow Answer

National income:

Correct AnswerverifiedShow Answer

Gross private domestic investment or simply business investment spending (I) :

Correct AnswerverifiedShow Answer

GDP is a measure of:

Correct AnswerverifiedShow Answer

GDP does count:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Gross domestic product (GDP) is defined as:

Correct AnswerverifiedShow Answer

Which one of the following would count as investment in the GDP accounts?

Correct AnswerverifiedShow Answer

Gross domestic product (GDP) includes:

Correct AnswerverifiedShow Answer

The largest component of GDP as measured by the expenditure approach is:

Correct AnswerverifiedShow Answer

In contrast with nominal GDP,real GDP refers to nominal GDP:

Correct AnswerverifiedShow Answer

The GDP of a country can be derived by summing the:

Correct AnswerverifiedShow Answer

Which one of the following statements is true?

Correct AnswerverifiedShow Answer

Which one of the following is an example of the circular flow model and shows the interdependence of households and firms?

Correct AnswerverifiedShow Answer

Which of the following would count as an investment expenditure in the GDP expenditures approach?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Exhibit 11-3 Expenditure approach -As shown in Exhibit 11-3,total expenditures by households for domestically produced goods is:

Correct AnswerverifiedShow Answer

Personal income minus personal taxes equals disposable personal income.

Correct AnswerverifiedShow Answer

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