1.
National income accountants can avoid multiple counting by:
A.
including transfers in their calculations.
B.
counting both intermediate and final goods.
C.
only counting final goods.
D.
only counting intermediate goods.
2.
GDP may be defined as:
the monetary value of all goods and services (final, intermediate, and non-market) produced in a given year.
total resource income less taxes, saving, and spending on exports.
the economic value of all economic resources used in the production of a year's output.
the market value of all final goods and services produced within a nation in a specific year.
3.
Which of the following is a final good or service?
diesel fuel bought for a delivery truck
fertilizer purchased by a farm supplier
a haircut
Chevrolet windows purchased by a General Motors assembly plant
4.
Tom Atoe grows tomatoes for home consumption. This activity is:
excluded from GDP in order to avoid double counting.
excluded from GDP because an intermediate good is involved.
productive but is excluded from GDP because no market transaction occurs.
included in GDP because it reflects production.
5.
GDP can be calculated by summing:
consumption, investment, government purchases, exports, and imports.
investment, government purchases, consumption, and net exports.
consumption, investment, wages, and rents.
consumption, investment, government purchases, and imports.
6.
Which of the following is not economic investment?
the purchase of a drill press by the Ajax Manufacturing Company
the purchase of 100 shares of AT&T by a retired business executive
construction of a suburban housing project
the piling up of inventories on a grocer's shelf
7.
If depreciation exceeds gross investment:
the economy's stock of capital may be either growing or shrinking.
the economy's stock of capital is shrinking.
the economy's stock of capital is growing.
net investment is zero.
8.
If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock:
may have either increased or decreased.
increased by $55 billion.
increased by $65 billion.
decreased by $55 billion.
9.
Answer the next question(s) on the basis of the following national income data for the economy. All figures are in billions. Personal consumption expenditures$400 Government purchases128 Gross private domestic investment88 Net exports7 Net foreign factor income earned in the U.S.0 Consumption of fixed capital43 Indirect business taxes50 Compensation of employees369 Rents12 Interest15 Proprietors' income52 Corporate income taxes36 Dividends24 Undistributed corporate profits22
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The gross domestic product for the above economy is:
$584.
$592.
$609.
$623.
10.
Refer to the above data. Net domestic product is:
$520.
$580.
$573.
11.
Refer to the above data. The national income is:
$561.
$548.
E.
$530.
12.
Which of the following best defines national income?
income received by households less personal taxes
the before-tax income received by households
all incomes earned by U.S. resource suppliers for their current contributions to production
the market value of the annual output net of consumption of fixed capital
13.
The term "real GDP" refers to:
the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income.
GDP data which embody changes in the price level, but not changes in physical output.
GDP data which reflect changes in both physical output and the price level.
GDP data which have been adjusted for changes in the price level.
14.
Real GDP measures:
current output at current prices.
current output at base year prices.
base year output at current prices.
base year output at current exchange rates.
15.
A price index is:
a comparison of the price of a market basket from a fixed point of reference.
a comparison of real GDP in one period relative to another.
the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period.
a ratio of real GDP to nominal GDP.
16.
The GDP price index:
includes fewer goods and services than the consumer price index.
is identical to the consumer price index.
is another term for the producer price index.
includes all goods comprising the nation's domestic output.
17.
If nominal GDP rises:
real GDP may either rise or fall.
we can be certain that the price level has risen.
real GDP must fall.
real GDP must also rise.
18.
Answer the next question(s) on the basis of the following information: NominalPrice YearGDPindex 1$550140 2560135 3576120 4586117 5604108
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In the economy above, real GDP for year 3 is:
$512.
$428.
$480.
$691.
19.
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Refer to the above diagram. The base year used in determining the price indices for this economy:
cannot be determined from the information given.
is some year before 1992.
is more recent than 1992.
is 1992.
20.
The GDP tends to:
overstate economic welfare because it does not include certain nonmarket activities such as the productive work of housewives.
understate economic welfare because it includes expenditures undertaken to offset or correct pollution.
understate economic welfare because it does not take into account increases in leisure.
overstate economic welfare because it does not reflect improvements in product quality.