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Exam 12: Measuring the Size of the Economy

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Question 51

Multiple Choice

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Assume that household consumption is $500 billion, gross private domestic investment is $200 billion, government expenditure is $200 billion, and net exports are -$10 billion. The GDP is:

A) $910 billion.
B) $900 billion.
C) $890 billion.
D) $700 billion.

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Question 52

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Gross national expenditure (GNE) is equal to:

A) C + I + G + NX.
B) C + I + G - NX.
C) C + I +G.
D) C + I + G + M.

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Question 53

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Capital goods, like factories and machinery, are classified as intermediate goods.

Narrbegin Exhibit 11.1 Expenditure approach $\begin{array}{|l|c|}\hline \text {National income account}&\text {(Billions of dollars) }\\\hline \text { Personal consumption expenditures }(C) & \$ 500 \\\hline \text { Net exports }(X-M) & 50 \\\hline \begin{array}{l}\text { Federal government consumption and gross investment } \\\text { expenditures }(G) \end{array} & 100 \\\hline \begin{array}{l}\text { State and local government consumption and } \\\text { gross investment expenditures }(G) \end{array} & 200 \\\hline \text { Imports } & 15 \\\hline \text { Gross private domestic investment }(I) & 65\\\hline\end{array}$ -As shown in Exhibit 11.1, total spending by government is:

In the circular flow model, the demand arrow represents:

One way that an economy can grow in the long run is by:

National saving can be defined as:

In an economy with persistent inflation:

Narrbegin Exhibit 11.1 Expenditure approach $\begin{array}{|l|c|}\hline \text {National income account}&\text {(Billions of dollars) }\\\hline \text { Personal consumption expenditures }(C) & \$ 500 \\\hline \text { Net exports }(X-M) & 50 \\\hline \begin{array}{l}\text { Federal government consumption and gross investment } \\\text { expenditures }(G) \end{array} & 100 \\\hline \begin{array}{l}\text { State and local government consumption and } \\\text { gross investment expenditures }(G) \end{array} & 200 \\\hline \text { Imports } & 15 \\\hline \text { Gross private domestic investment }(I) & 65\\\hline\end{array}$ -As shown in Exhibit 11.1, total expenditures by businesses for fixed investment and inventories are:

In a closed economy, which of the following must be true?

Flows are measured per period of time, while stocks are measured at a particular point in time.

Which of the following is a shortcoming of GDP?

GDP underestimates our economic wellbeing because:

Consumption includes expenditure on:

If the underground economy is sizeable, then GDP will:

Household consumption expenditures include:

Real GDP means GDP:

Suppose a miller sells flour to a baker for $100. The baker then produces bread from the flour and sells it to Coles for $600. Coles in turn then sells it to the public for $850. The increase in GDP as a result of these transactions will be:

GDP data provides _____ information as to whether a small fraction of the population consumes most of a country's GDP or whether consumption is evenly divided.

Which of the following countries has the highest level of GDP?