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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