Ch 7

Question 0

Gross domestic product measures and reports output

Answer 0

In dollar amounts

Question 1

The agency responsible for compiling the national income product accounts for the US economy is the

Answer 1

Bureau of economic analysis

Question 2

Value added refers to

Answer 2

The difference between the value of a firms output and the value of the inputs that it has purchased from others

Question 3

If depreciation (consumption of fixed capitals) exceeds gross domestic investment, we can conclude that

Answer 3

Net investment is negative

Question 4

Which the following is not economic investment

Answer 4

The purchase of 100 shares of AT&T by a retired business executive

Question 5

The smallest component of aggregate spending in the US is

Answer 5

Net exports

Question 6

Real GDP measures

Answer 6

Current output at base years prices

Question 7

If real GDP falls from one period o another, we can conclude that

Answer 7

None of these necessarily occurred

Question 8

If real disposable income fell during a particular here we can conclude that

Answer 8

None of these necessarily occurred

Question 9

in an economy experiencing a persistently falling price level

Answer 9

Changes in nominal GDP understate changes in real GDP

Question 10

In determining real GDP, economist Adjust nominal GDP by using the

Answer 10

GDP price index

Question 11

Environmental pollution is accounted for in

Answer 11

None of these

Question 12

Within the circular flow model, the level of total resource income and total spending on output will be approximately equal true or false

Answer 12

True

Question 13

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity true or false

Answer 13

True

Question 14

The purchase of Walmart stock is a part of growth investment, but not of net investment true or false

Answer 14

False

Question 15

A nation’s gross domestic product

Answer 15

Can be found by summing C plus I plus G plus X

Question 16

Suppose that total monetary value of all final goods and services produced in a particular country in 2010 is 500 billion and the total monetary value of final goods and services sold is 450 billion. We can conclude that

Answer 16

GDP in 2010 is 500 billion

Question 17

Arthur’s sounds $100 worth of cotton to Bob. Bob turns the continent o’clock, which he sells to Camille for 300. Camille uses the clock to make prom dresses that she sells to Danita for $700 Denita sells the dresses for $1200 to kids attending the prom. The total contribution to GDP of the series of transactions is

Answer 17

$1200

Question 18

Which of the following transactions would be included in GDP

Answer 18

Peter buys a newly constructed house

Question 19

National income accounting, consumption expenditures include

Answer 19

Consumer durable goods, consumer nondurable goods, and services

Question 20

Supposed that GDP was 200 billion in one year and that all other components of expenditures remain the same and your two except for the business inventories increased by 10 billion GDP in year two is

Answer 20

210 billion

Question 21

What is the difference between national income and personal income

Answer 21

National income represents income earned by American-owned resources, while personal income measures received income, whether earned or unearned

Question 22

If nominal GDP rises then

Answer 22

Real GDP may either rise or fall

Question 23

If real GDP rises and the GDP price index has increased

Answer 23

Nominal GDP must have increased

Question 24

The growth of GDP may understate changes in the economy’s economic well-being over time if the

Answer 24

Quality of products and services improves

Question 25

Assume that the size of the underground economy increases both absolutely relatively over time. As a result

Answer 25

GDP will tend to increasingly understate the level of output through time

Question 26

When making a capital stock and reservoir analogy, the

Answer 26

Inflow from the river is gross investment

Question 27

Which of the following is a source of data for the investment component of US GDP

Answer 27

The consensus Bureau’s housing starts survey and housing sales survey

Question 28

True or false real GDP accounts for changes in product quality; nominal GDP does not

Answer 28

False