ECON 232 Chapter 7 Study Quiz
1.
Assume an economy that is producing only one product. Output and price data for a three-year period are as follows. Answer the next question(s) on the basis of these data.
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Refer to the above data. If year 2 is chosen as the base year, the price index for year one is:
A.
80.
B.
100.
C.
120.
D.
20.
2.
Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion. GDP in year 2 is:
$180 billion.
$190 billion.
$200 billion.
$210 billion.
3.
The largest component of national income is:
compensation of employees.
rents.
interest.
corporate profits.
4.
The amount of after-tax income received by households is measured by:
discretionary income.
national income.
disposable income.
personal income.
5.
In national income accounting, government purchases include:
purchases by Federal, state, and local governments .
purchases by the Federal government only.
government transfer payments.
purchases of goods for consumption, but not public capital goods.
6.
Net exports are negative when:
a nation's imports exceed its exports.
the economy's stock of capital goods is declining.
depreciation exceeds domestic investment.
a nation's exports exceed its imports.
7.
Answer the next question(s) on the basis of the following national income data. All figures are in billions of dollars.
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Refer to the above data. The gross domestic product is:
$328.
$402.
$382.
$301.
8.
Value added can be determined by:
summing the profits of all enterprises in the economy.
subtracting the purchase of intermediate products from the value of the sales of final products.
calculating the year-to-year changes in real GDP.
deflating nominal GDP.
9.
In determining real GDP economists adjust the nominal GDP by using the:
national productivity index.
wholesale (producers') price index.
GDP price index.
consumer price index.
10.
Which of the following is the smallest dollar amount in the United States?
disposable income
personal income
gross domestic product
national income
11.
By summing the values added at each stage in the production of some good we obtain:
the price of that good.
the total income generated by that good's production.
the total cost (including profits) of that product.
all of the above.
12.
In national income accounting, consumption expenditures include purchases of:
both new and used consumer goods.
automobiles for personal use, but not houses.
consumer durable and nondurable goods, but not services.
consumer nondurable goods and services, but not consumer durable goods.
13.
The value of U.S. imports is:
added to exports when calculating GDP because imports reflect spending by Americans.
subtracted from exports when calculating GDP because imports do not constitute spending by Americans.
subtracted from exports when calculating GDP because imports do not constitute production in the United States.
added when calculating GDP because imports do not constitute production in the United States.
14.
Suppose the total market value of all final goods and services produced in a particular country in 2011 is $500 billion and the total market value of final goods and services sold is $450 billion. We can conclude that:
GDP in 2011 is $450 billion.
NDP in 2011 is $450 billion.
GDP in 2011 is $500 billion.
inventories in 2011 fell by $50 billion.
15.
The purchase of Wal-Mart stock is a part of gross investment, but not of net investment.
True
False
16.
By summing the dollar value of all market transactions in the economy we would:
be determining the market value of all resources used in the production process.
obtain a sum substantially larger than the GDP.
be determining value added for the economy.
be measuring GDP.
17.
Net exports are:
that portion of consumption and investment goods sent to other countries.
exports plus imports.
exports less imports.
imports less exports.
18.
The fact that nominal GDP has risen faster than real GDP:
suggests that the base year of the GDP price index has been shifted.
tells us nothing about what has happened to the price level.
suggests that the general price level has fallen.
suggests that the general price level has risen.
19.
Answer the next question(s) on the basis of the following national income data for the economy. All figures are in billions.
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The gross domestic product for the above economy is:
$584.
$592.
$609.
$623.
Assume an economy that is producing only one product and that year 3 is the base year. Output and price data for a five-year period are as follows. Answer the next question(s) on the basis of these data.
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Refer to the above data. In determining real GDP, the nominal GDP for:
each year must be multiplied by the relevant price index.
years 1 and 2 must be inflated.
years 4 and 5 must be inflated.
years 1 and 2 must be deflated.
21.
If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock:
may have either increased or decreased.
increased by $65 billion.
increased by $55 billion.
decreased by $55 billion.
22.
Answer the next question(s) on the basis of the following information:
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In the economy above:
the price level is rising faster than nominal GDP.
nominal and real GDP are growing at the same rate.
the growth of nominal GDP understates the growth of real GDP.
the growth of nominal GDP overstates the growth of real GDP.
23.
Use the following table for a hypothetical single-product economy.
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Refer to the above data. Nominal GDP in year 3 is:
$100.
$450.
$225.
$150.
24.
In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because:
of changes in trade deficits and surpluses.
the length of the workweek has declined historically.
the price level may change over time.
depreciation may be greater or smaller than gross investment.
25.
Which of the following is the largest dollar amount in the United States?
26.
GDP differs from NDP in that:
GDP is based on gross exports, while NDP is based on net exports.
GDP includes, but NDP excludes, indirect business taxes.
net investment is used in calculating GDP and gross investment is used in calculating NDP.
gross investment is used in calculating GDP and net investment is used in calculating NDP.
27.
The term "final goods and services" refers to:
goods and services that are unsold and therefore added to inventories.
goods and services whose value has been adjusted for changes in the price level.
goods and services purchased by ultimate users, as opposed to resale or further processing.
the excess of U.S. exports over U.S. imports.
28.
Answer the next question(s) on the basis of the following data. All figures are in billions of dollars.
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The economy characterized by the above data is:
experiencing inflation because disposable income exceeds personal income.
experiencing declining production capacity because net investment is negative.
in a depression because personal income exceeds disposable income.
experiencing expanding production capacity because net private domestic investment is positive.
29.
In a typical year which of the following measures of aggregate output and income is likely to be the smallest?
30.
Which of the following is an intermediate good?
the purchase of gasoline for a ski trip to Colorado
the purchase of a pizza by a college student.
the purchase of baseball bats by a professional baseball team.
the purchase of jogging shoes by a professor
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