Question 1

Transfer payments are an injection into the circular flow of income and expenditure model.​

Accepted Answer

A) True 
 B)False

Question 2

Chain-weighted indexes have less bias compared to fixed-weight indexes.​

Accepted Answer

A) True 
 B)False

Question 3

If the price of a good increases compared to the base year,then the price level also increases.​

Accepted Answer

A) True 
 B)False

Question 4

A farmer grows wheat and sells it to a bakery for $5.The bakery uses the wheat to bake bread and sells it to a distributor for $20.The distributor sells the bread to a supermarket for $30,which then sells the bread to customers for $50.Which of the following is true?​

Accepted Answer

A)  The value added by the distributor is $30.
B)  The value added by the supermarket is more than that added by the bakery.
C)  GDP rises by $50 plus the value added at each stage of production.
D)  Counting the value added at each stage instead of counting the final selling price creates a problem of double counting.
E)  The value added by the farmer is $20 because the wheat,which is worth $5,is necessary for each of the three remaining stages of production.F) A) and D)
G) A) and C)

Question 5

Which of the following is the best indicator of the performance of the national economy?​

Accepted Answer

A)  The budget deficit of the federal government
B)  The stock of capital goods (machinery) in the nation​
C)  The nation's stock of money​
D)  The balance of trade with other nations​
E)  The value of the final goods and services produced in the nation​F) D) and E)
G) A) and D)

Question 6

​The table below shows the current and base-year prices of different goods in a market basket. The consumer price index (CPI) for the current year is _____.​
​
​Table 6.2
​

Accepted Answer

A)  2
B)  50​
C)  55​
D)  182​
E)  200​F) B) and C)
G) D) and E)

Question 7

The final market value of a good is _____.​

Accepted Answer

A)  the sum of the value added at all stages of production
B)  the value added at one stage of production​
C)  greater than the sum of all the values added at all stages of production​
D)  less than the sum of all the values added at all stages of production​
E)  the value added at the final stage of production​F) A) and B)
G) A) and E)

Question 8

Marianne and Laura are both homemakers with children.When Laura starts to work as an unpaid volunteer at a hospital,she hires Marianne to care for her young child.In this context,the gross domestic product (GDP) will _____.​

Accepted Answer

A)  increase
B)  decrease​
C)  remain unaffected​
D)  increase if Marianne cares for the child better than Laura​
E)  increase if Laura treats patients with more sincerity than the other volunteers​F) All of the above
G) A) and B)

Question 9

If a toy store overestimates the demand for a toy in 2004 and,as a result,has an unexpectedly large number of toys in stock at the end of the year,the value of the inventory of these toys will be considered as:​

Accepted Answer

A)  investment in 2004.
B)  investment in 2005.
C)  consumption in 2004.
D)  consumption in 2005.
E)  a part of GDP when the toys are sold.F) C) and D)
G) B) and D)

Question 10

When calculating gross domestic product (GDP) ,double counting can be avoided by:​

Accepted Answer

A)  taxing corporate income.
B)  adding all income taxes to GDP.
C)  calculating GDP using the income as well as the expenditure method.
D)  adding the value of exports to GDP and subtracting the value of imports.
E)  summing the value added at each stage of production.F) A) and D)
G) A) and C)

Question 11

The statement "Gross domestic product (GDP) values all output equally" means that:​

Accepted Answer

A)  household production is treated the same as production by firms.
B)  depreciation of manufactured capital is treated the same as depletion of natural resources.
C)  the purchase of pollution control equipment is valued the same as pollution itself.
D)  leisure time is valued the same as time spent working a job.
E)  the market price of output is the measure of that output's value.F) C) and D)
G) A) and B)

Question 12

Which of the following is a difference between net domestic product (NDP) and gross domestic product (GDP) ?​

Accepted Answer

A)  GDP includes the cost of polluting the environment,while NDP does not.
B)  GDP excludes net taxes,while NDP includes it.
C)  GDP excludes that part of the capital stock used up in the production process,while NDP includes it.
D)  GDP includes all government spending,while NDP excludes government spending.
E)  GDP includes that part of the capital stock used up in the production process,while NDP does not.F) All of the above
G) B) and D)

Question 13

Which of the following is not an example of intermediate goods or services?​

Accepted Answer

A)  Steel used in the manufacture of cars
B)  Pizzas bought at a restaurant​
C)  Legal services hired by a public accounting firm​
D)  Glass used to manufacture sunglasses​
E)  Vegetables used by a restaurant​F) A) and B)
G) None of the above

Question 14

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005.The real GDP _____ between 2001 and 2002.​ ​
Table 6.3
​

Accepted Answer

A)  increased by slightly less than $10 billion
B)  decreased by slightly more than $5 billion​
C)  remained constant​
D)  increased by only about $1 billion​
E)  increased more than $20 billionF) A) and B)
G) A) and E)

Question 15

_____ is measured in terms of current-year prices.​

Accepted Answer

A)  Nominal gross domestic product (GDP) 
B)  GDP price index​
C)  Real gross domestic product (GDP) ​
D)  Arbitrage​
E)  Depreciation​F) A) and B)
G) D) and E)

Question 16

Lois sells ten sweaters she had knitted to a retail store.The gross domestic product (GDP) of her country _____.​

Accepted Answer

A)  will increase
B)  will decrease​
C)  will remain unaffected​
D)  will increase only if the sweaters are as good as the sweaters sold by other retailers​
E)  will increase if the price of each sweater is less than the cost of inputs required​F) A) and B)
G) D) and E)

Question 17

Which of the following is an example of an injection into the circular flow of income and expenditure?​

Accepted Answer

A)  Government spending
B)  Imports​
C)  Disposable income​
D)  Net taxes​
E)  Saving​F) C) and D)
G) A) and C)

Question 18

If the value of exports equals $6.5 billion and the value of imports equals $8.0 billion in a year,then:​

Accepted Answer

A)  together imports and exports add $1.5 billion to the gross domestic product (GDP) 
B)  together exports and imports add $6.5 billion to the gross domestic product (GDP) .
C)  together exports and imports reduce the gross domestic product (GDP) by 1.5 billion
D)  together exports and imports reduce the gross domestic product (GDP) by 1.5 billion.
E)  together exports and imports add nothing to the gross domestic product (GDP) .F) A) and B)
G) A) and C)

Question 19

If the real gross domestic product (GDP) for the base year is $3 trillion,then the nominal gross domestic product (GDP) for that year is _____.​

Accepted Answer

A)  −$.03 trillion
B)  $0.3 trillion​
C)  $3 trillion​
D)  $30 trillion​
E)  $300 trillion​F) A) and B)
G) A) and C)

Question 20

The largest component of aggregate expenditure is _____.​

Accepted Answer

A)  government purchases
B)  transfer payments​
C)  imports​
D)  consumption​
E)  investment​F) A) and B)
G) B) and D)

Exam 6: Tracking the Useconomy

Which of the following is an example of an injection into the circular flow of income and expenditure?​

Correct AnswerverifiedShow Answer

Which of the following is not an example of intermediate goods or services?​

Correct AnswerverifiedShow Answer

Lois sells ten sweaters she had knitted to a retail store.The gross domestic product (GDP) of her country _____.​

Correct AnswerverifiedShow Answer

When calculating gross domestic product (GDP) ,double counting can be avoided by:​

Correct AnswerverifiedShow Answer

If the value of exports equals $6.5 billion and the value of imports equals $8.0 billion in a year,then:​

Correct AnswerverifiedShow Answer

_____ is measured in terms of current-year prices.​

Correct AnswerverifiedShow Answer

​The table below shows the current and base-year prices of different goods in a market basket. The consumer price index (CPI) for the current year is _____.​ ​ ​Table 6.2 ​

Correct AnswerverifiedShow Answer

If the price of a good increases compared to the base year,then the price level also increases.​

Correct AnswerverifiedShow Answer

The statement "Gross domestic product (GDP) values all output equally" means that:​

Correct AnswerverifiedShow Answer

If the real gross domestic product (GDP) for the base year is $3 trillion,then the nominal gross domestic product (GDP) for that year is _____.​

Correct AnswerverifiedShow Answer

A farmer grows wheat and sells it to a bakery for $5.The bakery uses the wheat to bake bread and sells it to a distributor for $20.The distributor sells the bread to a supermarket for $30,which then sells the bread to customers for $50.Which of the following is true?​

Correct AnswerverifiedShow Answer

Marianne and Laura are both homemakers with children.When Laura starts to work as an unpaid volunteer at a hospital,she hires Marianne to care for her young child.In this context,the gross domestic product (GDP) will _____.​

Correct AnswerverifiedShow Answer

Which of the following is the best indicator of the performance of the national economy?​

Correct AnswerverifiedShow Answer

If a toy store overestimates the demand for a toy in 2004 and,as a result,has an unexpectedly large number of toys in stock at the end of the year,the value of the inventory of these toys will be considered as:​

Correct AnswerverifiedShow Answer

The final market value of a good is _____.​

Correct AnswerverifiedShow Answer

Transfer payments are an injection into the circular flow of income and expenditure model.​

Correct AnswerverifiedShow Answer

Which of the following is a difference between net domestic product (NDP) and gross domestic product (GDP) ?​

Correct AnswerverifiedShow Answer

The largest component of aggregate expenditure is _____.​

Correct AnswerverifiedShow Answer

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005.The real GDP _____ between 2001 and 2002.​ ​ Table 6.3 ​

Correct AnswerverifiedShow Answer

Chain-weighted indexes have less bias compared to fixed-weight indexes.​

Correct AnswerverifiedShow Answer

Which of the following is an example of an injection into the circular flow of income and expenditure?

Correct Answer
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Which of the following is not an example of intermediate goods or services?

Correct Answer
verified

Lois sells ten sweaters she had knitted to a retail store.The gross domestic product (GDP) of her country _____.

Correct Answer
verified

When calculating gross domestic product (GDP) ,double counting can be avoided by:

Correct Answer
verified

If the value of exports equals $6.5 billion and the value of imports equals $8.0 billion in a year,then:

Correct Answer
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_____ is measured in terms of current-year prices.

Correct Answer
verified

The table below shows the current and base-year prices of different goods in a market basket. The consumer price index (CPI) for the current year is _____. Table 6.2

Correct Answer
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If the price of a good increases compared to the base year,then the price level also increases.

Correct Answer
verified

The statement "Gross domestic product (GDP) values all output equally" means that:

Correct Answer
verified

If the real gross domestic product (GDP) for the base year is $3 trillion,then the nominal gross domestic product (GDP) for that year is _____.

Correct Answer
verified

A farmer grows wheat and sells it to a bakery for $5.The bakery uses the wheat to bake bread and sells it to a distributor for $20.The distributor sells the bread to a supermarket for $30,which then sells the bread to customers for $50.Which of the following is true?

Correct Answer
verified

Marianne and Laura are both homemakers with children.When Laura starts to work as an unpaid volunteer at a hospital,she hires Marianne to care for her young child.In this context,the gross domestic product (GDP) will _____.

Correct Answer
verified

Which of the following is the best indicator of the performance of the national economy?

Correct Answer
verified

If a toy store overestimates the demand for a toy in 2004 and,as a result,has an unexpectedly large number of toys in stock at the end of the year,the value of the inventory of these toys will be considered as:

Correct Answer
verified

The final market value of a good is _____.

Correct Answer
verified

Transfer payments are an injection into the circular flow of income and expenditure model.

Correct Answer
verified

Which of the following is a difference between net domestic product (NDP) and gross domestic product (GDP) ?

Correct Answer
verified

The largest component of aggregate expenditure is _____.

Correct Answer
verified

The table below shows the price indexes and the nominal gross domestic product (GDP) for an economy from 2001 to 2005.The real GDP _____ between 2001 and 2002. Table 6.3

Correct Answer
verified

Chain-weighted indexes have less bias compared to fixed-weight indexes.

Correct Answer
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