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Economics MCQ Questions & Answers

Question 1

Which of the following would be classified as a personal consumption expenditure?

Answer

All of the following.
Your purchase of a newly constructed house
Your purchase of a preowned house.
Your purchase of one share of Microsoft stock.
Your purchase of this economics course.

1 points

Question 2

Increased production, but not increased inflation, will result in higher:

Answer

nominal GDP.
money GDP.
real GDP.
current dollar GDP.

1 points

Question 3

GDP includes:

Answer

the negative attributes from erosion and deforested landscape.
all quality improvements resulting from higher quality goods replacing inferior goods.
the cleaning-up expenses associated with pollution.
the value of leisure time.
the illegal activities related to the underground economy.

1 points

Question 4

The GDP chain price index is designed to adjust nominal GDP for changes in:

Answer

the level of transfer payments.
the quality of goods over time.
the costs of economic bads such as pollution and crime.
the general level of prices over time.

1 points

Question 5

The sum of payments made to resource owners for the use of their resources is:

Answer

Gross Domestic Product.
Net Domestic Product.
National Income.
Personal Income.
Disposable personal income.

1 points

Question 6

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

Answer

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

1 points

Question 7

Exhibit 11-5 GDP data (billions of dollars)

Personal consumption expenditures $5,207
Interest 425
Corporate profits 735
Government spending 1,406
Depreciation 830
Rental income 146
Gross private domestic investment 1,116
Compensation of employees 4,426
Exports 870
Imports 965
Indirect business taxes 553
Proprietors’ income 520
Personal taxes 886
Social Security taxes 432
Transfer payments 376

In Exhibit 11-5, personal income (PI) is:

Answer

$6,254 billion.
$6,495 billion.
$6,013 billion.
$7,082 billion.
$7,637 billion.

1 points

Question 8

National income:

Answer

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

1 points

Question 9

Which of the following is true?

Answer

GDP is a “flow” concept.
The purchase prices of both intermediate goods and final goods are included in GDP.
GDP measures economic welfare.
GDP is a measure of changes in the general level of prices.

1 points

Question 10

Which one of the following statements is true in the four-sector circular model?

Answer

Money flows from government to households for taxes.
Money flows from foreign economies to households for exports.
Money flows from government to firms for goods and services.
Money flows from firms to foreign economies for exports.
Money flows from households to foreign economies for resources.

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Economics 1 Answers

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