Question 1

Capital consumption allowance refers to

Accepted Answer

A)   capital goods being used up in production through natural wear,obsolescence,and accidental destruction.
B)   people sending money between countries.
C)   the purchase of used factories.
D)   the purchase of goods that allow households to consume more services.E) B) and C)
F) A) and D)

Question 2

The expenditure approach to measuring GDP sums

Accepted Answer

A)   consumption,investment,government purchases,and net exports.
B)   sales,revenues,income,and wages.
C)   profits,compensation of employees,consumption,and investment.
D)   net exports,consumption,wages,and salaries.
E)   consumption,interest,net exports,and federal government purchasesF) A) and E)
G) None of the above

Question 3

List and explain the two different approaches used to measure GDP.

Accepted Answer

The two different approaches are: the ex...

Question 4

Net exports equals

Accepted Answer

A)   exports divided by imports.
B)   the sum of exports and imports.
C)   exports minus imports.
D)   exports during the year.
E)   none of the aboveF) A) and B)
G) C) and D)

Question 5

Real GDP is the value of all __________ goods and services produced in a given year in __________ prices.

Accepted Answer

A)   intermediate; that year's
B)   intermediate; base-year
C)   final; that year's
D)   final; base-yearE) A) and B)
F) None of the above

Question 6

Which of the following would definitely not be included in the measurement of GDP?

Accepted Answer

A)   value of the services of a painter who paints your garage
B)   value of the services of a person who mows his or her own lawn
C)   value of the services of a maid who cleans your house
D)   value of the services of a plumber who fixes your kitchen sinkE) A) and C)
F) A) and B)

Question 7

If in the process of calculating GDP,the market value of all intermediate goods is added to the market value of all final goods,this would

Accepted Answer

A)   overstate the actual value of GDP.
B)   produce the correct value of GDP.
C)   understate the actual value of GDP.
D)   avoid the possible error of double counting.E) All of the above
F) A) and D)

Question 8

The best reason economists take only final goods and services into account when calculating GDP is that

Accepted Answer

A)   this is the way things have always been done,but there is no particular reason why.
B)   they want to avoid the problem of final counting.
C)   they want to avoid the problem of double counting.
D)   this is the only way it can be done.E) B) and C)
F) None of the above

Question 9

-Refer to Exhibit 7-1.What is the value of disposable income?

Accepted Answer

A)   $3,618
B)   $4,795
C)   $3,727
D)   $4,207
E)   $4,017F) A) and B)
G) B) and E)

Question 10

When computing national income,which of the following is included in compensation of employees?

Accepted Answer

A)   wages and salaries paid to employees
B)   employers' contributions to Social Security and employee benefit plans
C)   the monetary value of fringe benefits,tips,and paid vacations
D)   all of the aboveE) A) and B)
F) C) and D)

Question 11

Investment equals inventory investment added to

Accepted Answer

A)   business purchases of new capital goods.
B)   purchases of new residential housing.
C)   fixed investment.
D)   business purchases of new capital goods and purchases of new residential housing.
E)   either c or dF) B) and D)
G) D) and E)

Question 12

Suppose the total market value of all final goods and services produced in economy X this year is $4 million.Of the $4 million worth of goods and services,$3 million is sold and $1 million is held in inventory.For this year,the GDP for economy X is

Accepted Answer

A)   $4 million.
B)   $3 million.
C)   $1 million.
D)   $7 million.
E)   none of the aboveF) A) and B)
G) A) and C)

Question 13

A business cycle refers to the

Accepted Answer

A)   continued expansion in Real GDP.
B)   recurrent swings (up and down) in Real GDP.
C)   continued decline in Real GDP.
D)   period when Real GDP grows at unusually high rates.
E)   none of the aboveF) A) and D)
G) C) and E)

Question 14

Which of the following statements is true?

Accepted Answer

A)   Another name for capital consumption allowance is depreciation.
B)   When there are two consecutive quarterly declines in Real GDP the economy is said to be in recession (based on the standard definition) .
C)   In the expansion phase of a business cycle,Real GDP rises beyond the recovery.
D)   a and b
E)   a,b,and cF) C) and D)
G) B) and E)

Question 15

Disposable income is

Accepted Answer

A)   equal to GDP minus the capital consumption allowance.
B)   that portion of personal income that can be used for consumption and saving.
C)   the sum of all payments to suppliers of the factors of production.
D)   equal to national income.
E)   another term for personal income.F) A) and E)
G) A) and D)

Question 16

Suppose that in year 1 every adult in the country works 40 hours a week and GDP is $6.7 trillion.In year 2 every adult in the country works 45 hours a week and GDP is $7.5 trillion.Which of the following statements is true?

Accepted Answer

A)   Per-capita GDP is necessarily higher in year 2 than year 1.
B)   People are "better off" in year 2 than in year 1 because there are more goods and services in year 2 than year 1.
C)   Government transfer payments were higher in year 2 than in year 1.
D)   a and b
E)   none of the aboveF) C) and D)
G) B) and D)

Question 17

Refer to Exhibit 7-3.Consumption is equal to

Accepted Answer

A)   $3,700.
B)   $9,000.
C)   $10,150.
D)   $8,200.
E)   $9,700.F) C) and D)
G) A) and D)

Question 18

Net exports must always be a positive amount.

Accepted Answer

A) True 
 B)False

Question 19

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 2 and year 3?

Accepted Answer

A)   -3.0%
B)   2.6%
C)   14.0%
D)   -2.2%E) A) and B)
F) All of the above

Question 20

Which of the following goods is an intermediate good?

Accepted Answer

A)   lettuce that a restaurant buys to put on sandwiches
B)   tires that a car company buys to put on the cars it produces
C)   a television set that Mai buys to put in her college dorm room
D)   a and b
E)   b and cF) C) and D)
G) B) and D)

Exam 7: Consumer Choice: Maximizing Utility and Behavioral Economics

When computing national income,which of the following is included in compensation of employees?

Correct AnswerverifiedShow Answer

Suppose the total market value of all final goods and services produced in economy X this year is $4 million.Of the $4 million worth of goods and services,$3 million is sold and $1 million is held in inventory.For this year,the GDP for economy X is

Correct AnswerverifiedShow Answer

Net exports equals

Correct AnswerverifiedShow Answer

The expenditure approach to measuring GDP sums

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Refer to Exhibit 7-3.Consumption is equal to

Correct AnswerverifiedShow Answer

List and explain the two different approaches used to measure GDP.

Correct AnswerverifiedThe two different approaches are: the ex...View AnswerShow Answer

If in the process of calculating GDP,the market value of all intermediate goods is added to the market value of all final goods,this would

Correct AnswerverifiedShow Answer

Net exports must always be a positive amount.

Correct AnswerverifiedShow Answer

Suppose that in year 1 every adult in the country works 40 hours a week and GDP is $6.7 trillion.In year 2 every adult in the country works 45 hours a week and GDP is $7.5 trillion.Which of the following statements is true?

Correct AnswerverifiedShow Answer

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 2 and year 3?

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The best reason economists take only final goods and services into account when calculating GDP is that

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Which of the following would definitely not be included in the measurement of GDP?

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Investment equals inventory investment added to

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Which of the following goods is an intermediate good?

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Capital consumption allowance refers to

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A business cycle refers to the

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Disposable income is

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Which of the following statements is true?

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Real GDP is the value of all __________ goods and services produced in a given year in __________ prices.

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-Refer to Exhibit 7-1.What is the value of disposable income?

Correct AnswerverifiedShow Answer

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The two different approaches are: the ex...
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Real GDP is the value of all goods and services produced in a given year in prices.

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