ECN Practice Quiz 1 Chapter 7 – Flashcards

If U.S. net exports are negative a. U.S. consumers are spending more on foreign goods than they are spending on U.S.goods b. U.S. consumers are spending more on foreign goods than foreign consumers are spending on U.S. goods c. U.S. consumers are spending less on foreign goods than foreign consumers are spending on U.S. goods d. U.S. disposable income is low e. The government must promote imports to balance international trade

U.S. exports are a. not included in U.S. GDP because they are consumed abroad b. included in U.S. GDP because they represent an increase in inventories c. included in U.S. GDP because they are produced domestically d. included in U.S. GDP as government purchases because the government decides what goods may be exported e. not included in U.S. GDP because they are not subject to a tariff

How to get Gross Domestic Product Answer ($11004) personal consumption gross private investment government consumption and gross investment net exports indirect business taxes depreciation self-employment income

If national income accountants fail to make an adequate adjustment for increases in the quality of goods and services over time a. real GDP will overstate the growth rate of real output b. the GDP deflator will underestimate inflation c. the GDP deflator will overestimate inflation d. real GDP will overstate the growth of real output, and the GDP deflator will understate inflation

U.S. GDP and U.S. GNP are related as follows: a. GNP = GDP - Value of exported goods + Value of imported goods b. GNP = GDP + Value of exported goods - Value of imported goods c. GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad d. GNP = GDP + Income earned by foreigners in the U.S. - Income earned by U.S. citizens abroad

When the expenditure approach is used to measure GDP, the major components of GDP are a. employee compensation, corporate profits, depreciation, and indirect business taxes b. consumption, investment, government consumption and gross investment, and net exports c. consumption, investment, indirect business taxes, and depreciation d. employee compensation, rents, interest, self-employment income, and corporate profits

Which of the following will contribute to GDP? a. You find your lost economics textbook b. Your spouse cleans your house every Thursday c. You pay a doctor $200 to treat an arm that you broke in an accident d. You sell an old bicycle for $100

How to get real GDP from 2nd year measured in terms of 1st years prices.. (750) Equation

Simon Kuznets, winner of the 1971 Nobel Prize in economics, is famous for his contributions in a. explaining the importance of international trade in determining output b. developing the basic concepts and measurement procedures used in national income accounting c. changing the United States from gross national product to gross domestic product accounting d. pointing out the superiority of the expenditure approach to measuring GDP

The GDP deflator is designed to a. adjust nominal GDP for changes in the price level b. calculate changes in the price of food and other consumer goods c. adjust nominal GDP for changes in the unemployment rate d. adjust nominal GDP so as to include the problem of externalities

If Honda (a Japan-based firm) produces a car in Ohio and exports it to Japan, in which country's GDP will the car be counted? a. Japan's, because Honda is a Japanese company b. The GDP of the United States because that is where it was built c. Japan's because that is where the car is purchased d. Both Japan and the United States

Which one of the following transactions would be included in GDP? a. Ms. Kim pays $50 for a used picture frame at a neighborhood garage sale b. Ms. Smith pays $5,000 to purchase 100 shares of Microsoft stock c. Mr. Doe donates $500 to his town's junior college scholarship fund d. Ms. Bartolini pays $500 to fix the front end of her car damaged in a recent accident

General Motors Corporation (a U.S.-based firm) produces a Saab vehicle in Sweden, and sells it in the United States. In which country's GDP is it included? a. The United States because GM is a U.S. company b. Sweden and the United States c. The United States because it was sold there d. Sweden because it was produced there

U.S. imports are a. not added to U.S. GDP because they are produced abroad b. not added to U.S. GDP because they are intermediate goods c. added to U.S. GDP because they are consumed domestically d. added to U.S. GDP because they represent an increase in inventories e. added to U.S. GDP as government purchases because the government decides what goods may be imported

Gross domestic product equals the sum of a. all income earned by domestic producers of goods and services minus indirect business taxes and depreciation during the year b. the amount received by firms for consumer goods and services c. the purchases of final goods and services produced domestically during a year d. incomes received by households minus the sale of factor services supplied domestically

Double counting in the resource cost-income approach to GDP refers to a. counting the total value of a final output in addition to the value of the inputs used to make it b. calculating GDP twice using the income and expenditures methods c. corporate income being taxed twice d. adding the value of exports to GDP and subtracting the value of imports e. the amount of income taxes paid to states that is taxable by the federal government

The economist responsible for developing the basic concepts of the national income accounting system is a. Alfred Marshall b. Simon Kuznets c. Adam Smith d. John Maynard Keynes

A business spends $10 million on new capital equipment, and during the same year, $7 million of its existing capital wears out. Which of the following is correct? a. The firm's gross investment is $10 million, and its net investment is $3 million b. The firm's gross investment is $7 million, and its net investment is $10 million c. The firm's gross investment is $3 million, and its net investment is $7 million d. The firm's gross investment is $7 million, and its net investment is $3 million

Which of the following is GDP designed to measure? a.the standard of living of the average citizen b.the total size of the domestic underground economy c.changes in the cost of purchasing the typical consumer market basket of goods from one year to another d.the total market value of goods and services produced domestically during the year

As the general price level in an economy rises, the aggregate quantity demanded of goods and services falls because a. the prices of domestic goods have risen relative to foreign goods, causing exports to fall and imports to rise. b. higher interest rates caused by an increase in the demand for money balances causes a reduction in current investment and consumption. c. the value of money will fall, reducing the real wealth and, thus, the consumption of persons holding money balances. d. all of the above are correct.