Question 1

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

Accepted Answer

A)   net investment for a business.
B)   profit and cost.
C)   value added from the economic activity.
D)   surplus or deficit from the economic activity.E) C) and D)
F) A) and C)

Question 2

GDP excludes:

Accepted Answer

A)   the market value of household production.
B)   the production of illegal goods.
C)   "off-the-books" production.
D)   all of the above.E) C) and D)
F) A) and B)

Question 3

Refer to the data below. Personal income: All figures are in billions of dollars.

Accepted Answer

A)   is $229.
B)   is $253.
C)   is $274.
D)   is $243.E) A) and D)
F) A) and C)

Question 4

Economists define investment to include:

Accepted Answer

A)   any increase in business inventories.
B)   the addition of cash to a savings account.
C)   the purchase of common or preferred stock.
D)   the purchase of any durable good, for example, an automobile or a refrigerator.E) A) and B)
F) B) and C)

Question 5

In calculating GDP by the expenditure approach, we sum up:

Accepted Answer

A)   consumption, investment, government purchases, exports, and imports.
B)   investment, government purchases, consumption, and net exports.
C)   consumption, investment, wages, and rents.
D)   consumption, investment, government purchases, and imports.E) A) and B)
F) A) and C)

Question 6

If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.

Accepted Answer

A) True 
 B)False

Question 7

The GDP tends to:

Accepted Answer

A)   overstate economic welfare because it does not include certain non-market activities such as the productive work of housewives.
B)   understate economic welfare because it includes expenditures undertaken to offset or correct pollution.
C)   understate economic welfare because it does not take into account increases in leisure.
D)   overstate economic welfare because it does not reflect improvements in product quality.E) None of the above
F) A) and C)

Question 8

If the economy adds to its inventory of goods during 2012:

Accepted Answer

A)   gross investment will exceed net investment by the amount of the inventory increase.
B)   this amount should be ignored in calculating 2012's GDP.
C)   this amount should be subtracted in calculating 2012's GDP.
D)   this amount should be included in calculating 2012's GDP.E) None of the above
F) All of the above

Question 9

Gross domestic product (GDP)  is equal to personal consumption expenditures:

Accepted Answer

A)   plus gross investment, minus government spending, and plus net exports.
B)   plus gross investment, plus government spending, and minus net exports.
C)   minus gross investment, plus government spending, and plus net exports.
D)   plus gross investment, plus government spending, and plus net exports.E) All of the above
F) A) and D)

Question 10

A business buys $7,000 worth of resources to produce a product. The business makes 150 units of the product and each of them sells for $90. The value added by the business to these products is:

Accepted Answer

A)   $13,500.
B)   $6,500.
C)   $7,000.
D)   $6,850.E) A) and B)
F) B) and C)

Question 11

A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end. Consumption of private fixed capital in the year was $25 billion. Assuming stable prices, gross investment was:

Accepted Answer

A)   $25 billion.
B)   $50 billion.
C)   $75 billion.
D)   $90 billion.E) C) and D)
F) None of the above

Question 12

Which would be considered an investment according to economists?

Accepted Answer

A)   the buying of shares of Janus mutual funds
B)   the purchase of a new machinery by Ford
C)   the purchase of stock of MacDonald's
D)   the selling of IBM corporate bondsE) None of the above
F) B) and C)

Question 13

An economy is enlarging its stock of capital goods:

Accepted Answer

A)   when net investment exceeds gross investment.
B)   when gross investment exceeds replacement investment.
C)   whenever gross investment is positive.
D)   when replacement investment exceeds gross investment.E) C) and D)
F) All of the above

Question 14

In November 2012, General Motors produced an automobile that was delivered to a local dealership in December 2012. The auto was sold to Sharon Smith for personal use in February of 2013. Following national income accounting practices, this auto would be counted as:

Accepted Answer

A)   consumption in 2012 and consumption in 2012.
B)   consumption in 2012 and investment in 2013.
C)   disinvestment in 2012 and consumption in 2013.
D)   investment in 2012 and disinvestment in 2013.E) C) and D)
F) A) and B)

Question 15

Following is data for a hypothetical economy. The base year is 2002 (Price index = 100) .
 
-Refer to the above data. From 2005 to 2006, prices rose by approximately:

Accepted Answer

A)   2 percent.
B)   4.2 percent.
C)   6 percent.
D)   7 percent.E) None of the above
F) All of the above

Question 16

In the treatment of Canadian exports and imports, national income accountants:

Accepted Answer

A)   subtract exports, but add imports, in calculating GDP.
B)   subtract both exports and imports in calculating GDP.
C)   add both exports and imports in calculating GDP.
D)   add exports, but subtract imports, in calculating GDP.E) None of the above
F) All of the above

Question 17

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

Accepted Answer

A)   net investment for a business.
B)   profit and cost.
C)   value added from the economic activity.
D)   surplus or deficit from the economic activity.E) B) and D)
F) A) and D)

Question 18

The value added by firms A-E from the production of the product described below is:

Accepted Answer

A)   $3,000.
B)   $3,800.
C)   $6,500.
D)   $10,300.E) None of the above
F) C) and D)

Question 19

In an economy, the value of inventories rose from $100 billion in 2012 to $150 billion in 2013. In calculating total investment for 2013, national income accountants would:

Accepted Answer

A)   decrease it by $50 billion.
B)   increase it by $50 billion.
C)   decrease it by $100 billion.
D)   increase it by $150 billion.E) A) and C)
F) C) and D)

Question 20

Following is data for a hypothetical economy. The base year is 2002 (Price index = 100) .
 
-Refer to the above data. Real GDP in 2006 was approximately:

Accepted Answer

A)   $3,433 billion.
B)   $3,743 billion.
C)   $4,023 billion.
D)   $4,031 billion.E) None of the above
F) A) and B)

Exam 5: Measuring the Economys Output

In an economy, the value of inventories rose from $100 billion in 2012 to $150 billion in 2013. In calculating total investment for 2013, national income accountants would:

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Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

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A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end. Consumption of private fixed capital in the year was $25 billion. Assuming stable prices, gross investment was:

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A business buys $7,000 worth of resources to produce a product. The business makes 150 units of the product and each of them sells for $90. The value added by the business to these products is:

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In calculating GDP by the expenditure approach, we sum up:

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Following is data for a hypothetical economy. The base year is 2002 (Price index = 100) . -Refer to the above data. From 2005 to 2006, prices rose by approximately:

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If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.

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Following is data for a hypothetical economy. The base year is 2002 (Price index = 100) . -Refer to the above data. Real GDP in 2006 was approximately:

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Gross domestic product (GDP) is equal to personal consumption expenditures:

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The value added by firms A-E from the production of the product described below is:

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Economists define investment to include:

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The GDP tends to:

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An economy is enlarging its stock of capital goods:

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GDP excludes:

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In the treatment of Canadian exports and imports, national income accountants:

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In November 2012, General Motors produced an automobile that was delivered to a local dealership in December 2012. The auto was sold to Sharon Smith for personal use in February of 2013. Following national income accounting practices, this auto would be counted as:

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If the economy adds to its inventory of goods during 2012:

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Refer to the data below. Personal income: All figures are in billions of dollars.

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Which would be considered an investment according to economists?

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Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

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