Question 1

An identity is an equation that

Accepted Answer

A)  describes an equilibrium.
B)  pertains to macroeconomics,not to microeconomics.
C)  must be true because of how the variables in the equation are defined.
D)  involves final goods,not intermediate goods.

Question 2

Which of the following represents a transfer payment?

Accepted Answer

A)  You transfer $1,000 from your bank account to a mutual fund.
B)  The government sends your grandfather his Social Security check.
C)  You make a payment to get legal documents showing you purchased a previously owned home.
D)  Your employer automatically transfers $100 each month from your wages to a non-taxable medical spending account.

Question 3

Which of the following is included in government purchases?

Accepted Answer

A)  unemployment benefits a state pays
B)  Social Security payments the U.S.government makes
C)  the services of a U.S.government attorney valued at the cost of her salary
D)  All of the above are correct.

Question 4

Suppose a country has government expenditures of $3,500,taxes of $2,200,consumption of $9,000,exports of $2,500,imports of $2,700,transfer payments of $750,capital depreciation of $800,and investment of $3,000.GDP equals

Accepted Answer

A)  $24,450.
B)  $11,550.
C)  $15,300.
D)  $20,700.

Question 5

In the economy of Talikastan in 2015,consumption was $6000,exports were $1000,GDP was $10,000,government purchases were $1800,and imports were $1200.What was Talikastan's investment in 2015?

Accepted Answer

A)  $0
B)  $1200
C)  $2400
D)  $5600

Question 6

Transfer payments

Accepted Answer

A)  are payments that flow from government to households.
B)  are not made in exchange for currently produced goods or services.
C)  alter household income,but they do not reflect the economy's production.
D)  All of the above are correct.

Question 7

A stove is produced by a firm in 2014,added to the firm's inventory in 2014,and sold to a household in 2015.It follows that

Accepted Answer

A)  the value of the good is added to the investment category of 2014 GDP,added to the consumption category of 2015 GDP,and subtracted from the investment category of 2015 GDP.
B)  the value of the good is added to the investment category of 2014 GDP,added to the consumption category of 2015 GDP,and not included in the investment category of 2015 GDP.
C)  the value of the good is added to the investment category of 2014 GDP,subtracted from the consumption category of 2015 GDP,and not included in the investment category of 2015 GDP.
D)  the value of the good is added to the investment category of 2014 GDP,subtracted from the consumption category of 2015 GDP,and added to the investment category of 2015 GDP.

Question 8

The Carters' oldest son attends Big State University.He and his parents pay all his fees and tuition.These payments count in GDP as

Accepted Answer

A)  investment.
B)  government spending.
C)  consumption of services.
D)  consumption of durable goods.

Question 9

A good is produced by a firm in 2009,added to the firm's inventory in 2010,and sold to a household in 2010.As a result,on net,

Accepted Answer

A)  2009 GDP increased and 2010 GDP decreased.
B)  2009 GDP decreased and 2010 GDP increased.
C)  2009 GDP did not change and 2010 GDP increased.
D)  2009 GDP increased and 2010 GDP did not change.

Question 10

If a U.S.company buys an electrical generator made in Japan by a Japanese firm,and the Japanese firm uses the payment to buy stocks issued by a U.S.company then

Accepted Answer

A)  U.S.exports and U.S imports increase.
B)  U.S.exports but not U.S.imports increase.
C)  U.S.imports but not U.S.exports increase.
D)  neither U.S.exports nor U.S.imports increase.

Question 11

If a U.S.citizen buys a television made in Korea by a Korean firm,then

Accepted Answer

A)  U.S.net exports decrease and U.S.GDP decreases.
B)  U.S.net exports are unaffected and U.S.GDP decreases.
C)  U.S.net exports are unaffected and U.S.GDP is unaffected.
D)  U.S.net exports decrease and U.S.GDP is unaffected.

Question 12

The U.S.Air Force pays a Turkish citizen $30,000 to work on a U.S.base in Turkey.As a result,

Accepted Answer

A)  U.S.government purchases increase by $30,000;U.S.net exports decrease by $30,000;and U.S.GDP is unaffected.
B)  U.S.government purchases increase by $30,000;U.S.net exports are unaffected;and U.S.GDP increases by $30,000.
C)  U.S.government purchases,net exports,and GDP are unaffected.
D)  U.S.government purchases are unaffected;U.S.net exports decrease by $30,000;and U.S.GDP decreases by $30,000.

Question 13

In the United States in 2015,government purchases of goods and services were

Accepted Answer

A)  larger than consumption,but smaller than investment.
B)  larger than investment,but smaller than consumption.
C)  smaller than both consumption and investment.
D)  larger than both consumption and investment.

Question 14

Government purchases include spending on goods and services by

Accepted Answer

A)  the federal government,but not by state or local governments.
B)  federal and state governments,but not by local governments.
C)  federal,state,and local governments.
D)  federal,state,and local governments,as well as household spending by employees of those governments.

Question 15

A transfer payment is a payment made by

Accepted Answer

A)  consumers,but not in exchange for a tangible product.
B)  firms,but not in exchange for capital equipment.
C)  foreigners,but not in exchange for a domestically-produced good or service.
D)  government,but not in exchange for a currently produced good or service.

Question 16

All of the following are examples of a nondurable good except

Accepted Answer

A)  a pencil.
B)  one gallon of gasoline.
C)  a queen-size bed.
D)  a pair of shoes.

Question 17

Household spending on education is counted in which component or subcomponent of GDP?

Accepted Answer

A)  consumption of durable goods
B)  consumption of nondurable goods
C)  consumption of services
D)  investment

Question 18

Recently,the U.S.national income accounts have switched to calling government purchases

Accepted Answer

A)  government spending and transfer payments.
B)  transfer payments and gross investment by government.
C)  government consumption expenditure and gross investment.
D)  government wages,salaries,and investment expenditure.

Question 19

Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Accepted Answer

A)  Both item (1) and item (2) are included in the consumption component of GDP.
B)  Item (1) is included in the consumption component of GDP,while item (2) is included in the investment component of GDP.
C)  Item (1) is included in the investment component of GDP,while item (2) is included in the consumption component of GDP.
D)  Only item (2) is included in GDP,and it is included in the investment component.

Question 20

When an American household purchases a bottle of Italian wine for $100,

Accepted Answer

A)  U.S.consumption does not change,U.S.net exports decrease by $100,and U.S.GDP decreases by $100.
B)  U.S.consumption does not change,U.S.net exports increase by $100,and U.S.GDP increases by $100.
C)  U.S.consumption increases by $100,U.S.net exports decrease by $100,and U.S.GDP does not change.
D)  U.S.consumption increases by $100,U.S.net exports do not change,and U.S.GDP increases by $100.

Exam 10: Measuring a Nations Income: The Components of GDP

Transfer payments

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In the United States in 2015,government purchases of goods and services were

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The U.S.Air Force pays a Turkish citizen $30,000 to work on a U.S.base in Turkey.As a result,

Correct AnswerverifiedShow Answer

Government purchases include spending on goods and services by

Correct AnswerverifiedShow Answer

Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

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A good is produced by a firm in 2009,added to the firm's inventory in 2010,and sold to a household in 2010.As a result,on net,

Correct AnswerverifiedShow Answer

Recently,the U.S.national income accounts have switched to calling government purchases

Correct AnswerverifiedShow Answer

If a U.S.company buys an electrical generator made in Japan by a Japanese firm,and the Japanese firm uses the payment to buy stocks issued by a U.S.company then

Correct AnswerverifiedShow Answer

When an American household purchases a bottle of Italian wine for $100,

Correct AnswerverifiedShow Answer

A stove is produced by a firm in 2014,added to the firm's inventory in 2014,and sold to a household in 2015.It follows that

Correct AnswerverifiedShow Answer

Which of the following is included in government purchases?

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All of the following are examples of a nondurable good except

Correct AnswerverifiedShow Answer

Suppose a country has government expenditures of $3,500,taxes of $2,200,consumption of $9,000,exports of $2,500,imports of $2,700,transfer payments of $750,capital depreciation of $800,and investment of $3,000.GDP equals

Correct AnswerverifiedShow Answer

If a U.S.citizen buys a television made in Korea by a Korean firm,then

Correct AnswerverifiedShow Answer

Household spending on education is counted in which component or subcomponent of GDP?

Correct AnswerverifiedShow Answer

In the economy of Talikastan in 2015,consumption was $6000,exports were $1000,GDP was $10,000,government purchases were $1800,and imports were $1200.What was Talikastan's investment in 2015?

Correct AnswerverifiedShow Answer

An identity is an equation that

Correct AnswerverifiedShow Answer

The Carters' oldest son attends Big State University.He and his parents pay all his fees and tuition.These payments count in GDP as

Correct AnswerverifiedShow Answer

A transfer payment is a payment made by

Correct AnswerverifiedShow Answer

Which of the following represents a transfer payment?

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