Question 1

A major appliance is an example of a nondurable good.

Accepted Answer

A) True 
 B)False

Question 2

One important reason economists track business investment is that:

Accepted Answer

A)   it helps them decide which stocks to purchase.
B)   it is a leading indicator of the business cycle.
C)   business investment is an excellent proxy for government investment.
D)   it shows where the economy has been.E) B) and C)
F) C) and D)

Question 3

Martin purchases 500 shares of stock in ABC Company at a price of $10 per share. He pays his stock broker a commission of $50 for helping with the transaction. How much does GDP change as a result of Martin's commission payment?

Accepted Answer

A)   There is no change in GDP.
B)   GDP rises by $5,000.
C)   GDP rises by $5,050.
D)   GDP rises by $50.E) A) and B)
F) A) and C)

Question 4

Company DEF produces gizmos. One particular batch cost $50,000 to produce. Because market conditions were bad at the time of sale, they were sold at a loss for $40,000. The value of the gizmos included in the GDP is:

Accepted Answer

A)   $10,000.
B)   $40,000.
C)   $50,000.
D)   impossible to compute because there is negative profit.E) B) and C)
F) A) and B)

Question 5

If a country experiences a rise in prices but produces the same quantity of output as in the previous year, its nominal GDP will _____ and its real GDP will _____.

Accepted Answer

A)   increase; also increase
B)   decrease; increase
C)   increase; be unchanged
D)   decrease; be unchangedE) None of the above
F) A) and B)

Question 6

The value of cars that the Ford Motor Company produces in a German plant:

Accepted Answer

A)   is a part of U.S. GDP.
B)   is a part of U.S. GNP.
C)   is a part of German GNP.
D)   is not a part of German GDP.E) All of the above
F) C) and D)

Question 7

Income payments to the rest of the world are:

Accepted Answer

A)   zero.
B)   added to the GDP.
C)   subtracted from the GDP.
D)   not included in the GDP.E) B) and D)
F) None of the above

Question 8

Which of the following is a criticism of the national income and product accounts?

Accepted Answer

A)   They do not capture most nonmarket economic activity.
B)   They are too cumbersome to use for policymaking.
C)   They overstate the "green" impact of economic activity.
D)   They are poorly correlated with the business cycle.E) B) and C)
F) All of the above

Question 9

To avoid double-counting output in GDP measures, _____ are excluded in GDP.

Accepted Answer

A)   services such as haircuts
B)   exports
C)   government spending
D)   raw materialsE) C) and D)
F) B) and D)

Question 10

If a car is produced in Detroit in 2013 but not sold until 2014, it should be included in _____ GDP, and its value should be counted in _____.

Accepted Answer

A)   2013's; inventory changes
B)   2013's; durable goods
C)   2014's; durable goods
D)   2014's; personal consumption expendituresE) A) and D)
F) B) and D)

Question 11

The _____ is (are)  equal to the total market value of all final goods and services produced in the United States.

Accepted Answer

A)   national income and product accounts
B)   GDP
C)   consumer price index
D)   the National Bureau of Economic ResearchE) A) and D)
F) A) and C)

Question 12

Net exports equal:

Accepted Answer

A)   all of the goods and services produced minus exports.
B)   all of the goods and services produced plus imports.
C)   exports plus imports.
D)   exports minus imports.E) A) and B)
F) None of the above

Question 13

Which of the following items would be included in the GDP accounts?

Accepted Answer

A)   personal time spent learning how to use accounting software
B)   personally rotating the tires on your neighbor's car
C)   caring for your aged grandmother at home
D)   paying $50 consultation fee over the phone with a psychic adviserE) None of the above
F) B) and D)

Question 14

Macroeconomics studies economic activity from the level of one individual or firm.

Accepted Answer

A) True 
 B)False

Question 15

A recession is always followed by a depression.

Accepted Answer

A) True 
 B)False

Question 16

Changes in inventories are NOT included in the calculation of gross private domestic investment.

Accepted Answer

A) True 
 B)False

Question 17

The Council of Economic Advisers is responsible for defining the turning points in the economy.

Accepted Answer

A) True 
 B)False

Question 18

During a typical economic recovery:

Accepted Answer

A)   inflation declines.
B)   people become pessimistic.
C)   unemployment decreases.
D)   incomes fall.E) B) and C)
F) A) and D)

Question 19

In the simple circular flow model:

Accepted Answer

A)   income is equal to spending.
B)   saving is equal to consumer spending.
C)   factor payments are equal to goods and services.
D)   goods and services are equal to consumer spending.E) All of the above
F) B) and C)

Question 20

Net exports equal:

Accepted Answer

A)   imports minus exports.
B)   imports plus exports.
C)   exports minus imports.
D)   zero, by definition.E) B) and C)
F) A) and B)

Exam 5: Introduction to Macroeconomics

A recession is always followed by a depression.

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The value of cars that the Ford Motor Company produces in a German plant:

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During a typical economic recovery:

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In the simple circular flow model:

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The _____ is (are) equal to the total market value of all final goods and services produced in the United States.

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To avoid double-counting output in GDP measures, _____ are excluded in GDP.

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Income payments to the rest of the world are:

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Company DEF produces gizmos. One particular batch cost $50,000 to produce. Because market conditions were bad at the time of sale, they were sold at a loss for $40,000. The value of the gizmos included in the GDP is:

Correct AnswerverifiedShow Answer

Martin purchases 500 shares of stock in ABC Company at a price of $10 per share. He pays his stock broker a commission of $50 for helping with the transaction. How much does GDP change as a result of Martin's commission payment?

Correct AnswerverifiedShow Answer

Which of the following is a criticism of the national income and product accounts?

Correct AnswerverifiedShow Answer

One important reason economists track business investment is that:

Correct AnswerverifiedShow Answer

If a country experiences a rise in prices but produces the same quantity of output as in the previous year, its nominal GDP will _____ and its real GDP will _____.

Correct AnswerverifiedShow Answer

The Council of Economic Advisers is responsible for defining the turning points in the economy.

Correct AnswerverifiedShow Answer

If a car is produced in Detroit in 2013 but not sold until 2014, it should be included in _____ GDP, and its value should be counted in _____.

Correct AnswerverifiedShow Answer

Macroeconomics studies economic activity from the level of one individual or firm.

Correct AnswerverifiedShow Answer

A major appliance is an example of a nondurable good.

Correct AnswerverifiedShow Answer

Net exports equal:

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Changes in inventories are NOT included in the calculation of gross private domestic investment.

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Net exports equal:

Correct AnswerverifiedShow Answer

Which of the following items would be included in the GDP accounts?

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If a country experiences a rise in prices but produces the same quantity of output as in the previous year, its nominal GDP will _ and its real GDP will _.

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If a car is produced in Detroit in 2013 but not sold until 2014, it should be included in _ GDP, and its value should be counted in _.

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