Macro Economics Chapter 05 Quiz

Question 1

Which of the following would be counted as a final good for inclusion in GDP?
A: A piece of glass bought this year by a consumer to fix a broken window.
B: A sheet of glass produced this year by Ford for windows in a new car.
C: A tire produced this year and sold to a car make for a new car sold this year.
D: None of the above would be counted in GDP.

Answer 1

A

Question 2

Gross domestic product (GDP) does not include:
A: used goods sold in the current time period.
B: foreign produced goods.
C: intermediate as well as final goods.
D: None of the above would be included.

Answer 2

D

Question 3

Gross private domestic investment:
A: excludes all investment in the United States by foreign firms.
B: includes all capital in the United States.
C: includes net additions to the capital stock plus all new corporate stocks and bonds.
D: includes business expenditures on new factories, tools, and machinery.

Answer 3

D

Question 4

The unreported or illegal production of goods and services in the economy that is not counted in GDP is termed: 
A: money laundering.
B: the underground economy.
C: net personal disposable income.
D: indirect national income.
E: Unreported capital consumption.

Answer 4

B

Question 5

The lower portion of the circular flow model contains factor markets in which households provide:
A: labor, money, and machines.
B: savings, spending, and investment.
C: natural resources, labor, and capital.
D: output of all final goods and services produced.

Answer 5

C

Question 6

In the circular flow model,
A: money flows from the firms to the households through the product market.
B: money flows from the households to the firms through the product market.
C: money flows from the households to the firms through the resource market.
D: money flows from the households to the firms through both the product market and the resource market.
E: resources flow to the households from the firms through the product market.

Answer 6

B

Question 7

Using the expenditure approach, total spending by households for durable goods, nondurable goods, and services is a category called: 
A: gross private domestic investment.
B: capital consumption allowance.
C: personal consumption expenditures.
D: household investment.

Answer 7

C

Question 8

Gross private domestic investment does not include: 
A: spending for new houses.
B: spending to build up inventories.
C: unintentional inventory investment.
D: spending on employee salaries.
E: spending for office supplies.

Answer 8

D

Question 9

GDP does not count: 
A: The estimated value of homemaker production.
B: state and local government purchases.
C: spending for new homes.
D: changes in inventories.

Answer 9

A

Question 10

Because GDP does not account for improvements in the quality of goods, the GDP calculation:
A: tends to overstate the true value of output in the United States.
B: tends to understate the true value of output in the United States.
C: provides an accurate value of output in the United States.
D: provides the best measure of output in the United States.
E: measures the value correctly because price changes always capture the value of quality changes.

Answer 10

B