Question 1

Recent estimates of the size of the underground economy are that it is equivalent of 7.5 percent of GDP.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 7-1
 
-Given the data in Exhibit 7-1,calculate aggregate expenditure.

Accepted Answer

A)   $1,800
B)   $1,900
C)   $2,000
D)   $2,200
E)   $2,300

Question 3

Which of the following is not an injection into the circular flow?

Accepted Answer

A)   saving
B)   domestic exports
C)   government expenditure on goods
D)   transfer payments
E)   investment by firms

Question 4

It is not possible for the government to spend more than it collects in taxes.

Accepted Answer

A) True 
 B)False

Question 5

The value of the films produced in the United States starring Charlie Chaplin that still exist will not be included in this year's U.S.GDP because

Accepted Answer

A)   Charlie Chaplin was not an American citizen
B)   Charlie Chaplin did not make the films this year
C)   the films are no longer being shown and earning revenue
D)   the films no longer have any value except for collectors
E)   films are intermediate goods

Question 6

Which of the following would not be an expenditure on a final good or service?

Accepted Answer

A)   a farmer's purchase of a pound of hamburger
B)   a medical clinic's purchase of flu vaccine
C)   a factory's purchase of a spot welding machine
D)   the purchase of a cup of coffee at a restaurant
E)   a college student's purchase of a textbook for a medieval history class

Question 7

If drug enforcement policies result in price increases for illegal drugs and the quantity sold decreases,GDP will decrease.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would not be included in GDP?

Accepted Answer

A)   you hire someone to fix a leaky faucet
B)   you clean the house before relatives visit
C)   the value of housing services if you own your own home
D)   an unplanned drop in business inventories
E)   the Federal government buys U.S.soybeans to ship to Russia

Question 9

Assume the economy produces five goods.If the prices of three of the goods increase,then the price level must increase.

Accepted Answer

A) True 
 B)False

Question 10

A wholesale nursery purchases six dozen gladiolus bulbs for $5.The nursery sells the six dozen resulting flowers to a wholesale florist for $10.The wholesale florist delivers the flowers to a retail florist for $15.The flowers are sold by the retail florist for $75 to the bereaved Jones family to use at great-grandfather Jones's wake.What is the value added by the retail florist?

Accepted Answer

A)   $10
B)   $15
C)   $25
D)   $60
E)   $75

Question 11

The gross domestic product does capture changes in the

Accepted Answer

A)   prices at which final goods are sold
B)   availability of leisure time
C)   quality of products when prices do not change
D)   availability of new products
E)   All of the answers are correct

Question 12

Which of the following is not a component of aggregate expenditure?

Accepted Answer

A)   exports
B)   investment
C)   imports
D)   transfer payments
E)   government purchases

Question 13

Suppose that the economy is in equilibrium with the government budget in deficit and with exports greater than imports.According to the circular flow model,

Accepted Answer

A)   saving must exceed investment
B)   saving must equal investment
C)   saving must be less than investment
D)   saving could be equal to or less than investment
E)   it is impossible to determine anything about saving and investment using the given information

Question 14

Suppose a loaf of bread sold for $3.00 in 2008.The price of bread then increases to $3.60 in 2009.The price index for bread is

Accepted Answer

A)   ($3.60/$3.00) = 1.20
B)   ($3.00/$3.60) * 100 = 83.33
C)   ($3.60/$3.00) * 100 = 120
D)   ($3.00/$3.00) *100 = 100
E)   ($0.60/$3.00) * 100 = 20

Question 15

If nominal GDP for a particular year is $6 trillion and real GDP for that year is $5 trillion,then the GDP price index for that year is

Accepted Answer

A)   1.2
B)   17
C)   20
D)   83
E)   120

Question 16

Net taxes are indirect business taxes minus transfer payments.

Accepted Answer

A) True 
 B)False

Question 17

Value added is

Accepted Answer

A)   the sum of all income earned by resource suppliers
B)   actual investment minus planned investment
C)   any payment of income that adds to the domestic spending stream
D)   the value of a product minus the cost of materials
E)   the increase in the value of a financial asset such as a stock or bond

Question 18

The two basic markets in the simple circular flow model are the

Accepted Answer

A)   product and resource market
B)   export and product market
C)   export and import market
D)   household market and the business market
E)   business market and the government market

Question 19

Which of the following is a leakage from the circular flow?

Accepted Answer

A)   government purchases of goods and services
B)   saving
C)   transfer payments
D)   exports
E)   consumption expenditures

Question 20

If nominal GDP is $6 trillion in a particular year and base year GDP was $3 trillion,then the GDP price index is 167.

Accepted Answer

A) True 
 B)False

Exam 7: Tracking the US Economy

Suppose that the economy is in equilibrium with the government budget in deficit and with exports greater than imports.According to the circular flow model,

Correct Answer
verified

Suppose a loaf of bread sold for $3.00 in 2008.The price of bread then increases to $3.60 in 2009.The price index for bread is

Correct Answer
verified

If nominal GDP for a particular year is $6 trillion and real GDP for that year is $5 trillion,then the GDP price index for that year is

Correct Answer
verified

It is not possible for the government to spend more than it collects in taxes.

Correct Answer
verified

Which of the following is not an injection into the circular flow?

Correct Answer
verified

Exhibit 7-1 -Given the data in Exhibit 7-1,calculate aggregate expenditure.

Correct Answer
verified

Assume the economy produces five goods.If the prices of three of the goods increase,then the price level must increase.

Correct Answer
verified

If drug enforcement policies result in price increases for illegal drugs and the quantity sold decreases,GDP will decrease.

Correct Answer
verified

Which of the following is a leakage from the circular flow?

Correct Answer
verified

The gross domestic product does capture changes in the

Correct Answer
verified

Which of the following would not be included in GDP?

Correct Answer
verified

If nominal GDP is $6 trillion in a particular year and base year GDP was $3 trillion,then the GDP price index is 167.

Correct Answer
verified

Correct Answer
verified

Recent estimates of the size of the underground economy are that it is equivalent of 7.5 percent of GDP.

Correct Answer
verified

The value of the films produced in the United States starring Charlie Chaplin that still exist will not be included in this year's U.S.GDP because

Correct Answer
verified

The two basic markets in the simple circular flow model are the

Correct Answer
verified

Which of the following would not be an expenditure on a final good or service?

Correct Answer
verified

Value added is

Correct Answer
verified

Which of the following is not a component of aggregate expenditure?

Correct Answer
verified

Net taxes are indirect business taxes minus transfer payments.

Correct Answer
verified

Exam 7: Tracking the US Economy

Suppose that the economy is in equilibrium with the government budget in deficit and with exports greater than imports.According to the circular flow model,

Correct AnswerverifiedShow Answer

Suppose a loaf of bread sold for $3.00 in 2008.The price of bread then increases to $3.60 in 2009.The price index for bread is

Correct AnswerverifiedShow Answer

If nominal GDP for a particular year is $6 trillion and real GDP for that year is $5 trillion,then the GDP price index for that year is

Correct AnswerverifiedShow Answer

It is not possible for the government to spend more than it collects in taxes.

Correct AnswerverifiedShow Answer

Which of the following is not an injection into the circular flow?

Correct AnswerverifiedShow Answer

Exhibit 7-1 -Given the data in Exhibit 7-1,calculate aggregate expenditure.

Correct AnswerverifiedShow Answer

Assume the economy produces five goods.If the prices of three of the goods increase,then the price level must increase.

Correct AnswerverifiedShow Answer

If drug enforcement policies result in price increases for illegal drugs and the quantity sold decreases,GDP will decrease.

Correct AnswerverifiedShow Answer

Which of the following is a leakage from the circular flow?

Correct AnswerverifiedShow Answer

The gross domestic product does capture changes in the

Correct AnswerverifiedShow Answer

Which of the following would not be included in GDP?

Correct AnswerverifiedShow Answer

If nominal GDP is $6 trillion in a particular year and base year GDP was $3 trillion,then the GDP price index is 167.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Recent estimates of the size of the underground economy are that it is equivalent of 7.5 percent of GDP.

Correct AnswerverifiedShow Answer

The value of the films produced in the United States starring Charlie Chaplin that still exist will not be included in this year's U.S.GDP because

Correct AnswerverifiedShow Answer

The two basic markets in the simple circular flow model are the

Correct AnswerverifiedShow Answer

Which of the following would not be an expenditure on a final good or service?

Correct AnswerverifiedShow Answer

Value added is

Correct AnswerverifiedShow Answer

Which of the following is not a component of aggregate expenditure?

Correct AnswerverifiedShow Answer

Net taxes are indirect business taxes minus transfer payments.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified