question

During a business cycle expansion, total production _____ and total employment _______ A. Decreases; increases B. Decreases; decreases C. Increases; decreases D. Increases; Increases

answer

D. Increases; increases

question

Which of the following headlines would be more closely related to what macroeconomics study than what micro-economist's study? A. The United auto workers sign a contract raising wages and benefits 7% over the next 3 years B. Avocado prices rise due to a late frost in CA. C. Real GDP grows by 2.3% in the second quarter D. Airlines raise ticket prices in response to rising fuel costs.

answer

C. Real GDP grows by 2.3% in the second quarter

question

Gross Domestic Product is calculated by summing up A. the total quantity of goods and services in the economy B. The total quantity of goods and services produced in the economy during a period of time C. The total market value of final goods and services produced in the economy during a period of time D. The total market value of goods and services in the economy

answer

C. The total market value of final goods and services produced in the economy during a period of time

question

Which of the following goods is directly counted in GDP? A. the plastic bags that Subway purchases to wrap its sandwiches B. the lettuce that Subway purchases for its sandwiches C. a 12 inch Subway sandwich purchased by a student D. the bread that Subway purchases for its sandwiches

answer

C. a 12 inch Subway sandwich purchased by a student

question

Which of the following transactions represents the purchase of a final good? A. Apple computer buys computer processors from Intel B. Delta buys a new European-made jetliner C. Your father buys a new John Deere riding lawn mower D. The purchase of coffee beans by Starbucks

answer

C. Your father buys a new John Deere riding lawn mower

question

Which of the following is not directly counted in GDP? A. Government Purchases B. Investment expenditures C. Consumer goods D. Intermediate goods

answer

D. Intermediate goods

question

In the circular flow model, the value of total production for an economy ____ the value of total expenditure final goods and services A. Equals B. May be greater than or less than C. is greater than D. is less than

answer

A. Equals

question

The nominal GDP of the US in 2012 was approximately 16.2 trillion. This means that A. total spending on final goods and services in 2012 was around 16.2 trillion B. total income in 2012 was around 16.2 trillion C. the value of final output in 2012 was around 16.2 trillion D. All of the above are true

answer

D. All the the above are true

question

Which of the following is not an example of a transfer payment? A. Social security payments to retirees B. unemployment insurance payments C. social security payments to disabled persons D. health insurance payments to an army private

answer

D. health insurance payments to an army private

question

The factors of production include A. transfers B. capital C. wages D. investment

answer

B. capital

question

Investment, as defined by economists, would include the purchase of a A. share of stock in ExxonMobil B. corporate bond C. computer by an accounting firm D. government bond

answer

C. computer by an accounting firm

question

Investment, as defined by economists, would *not* include which of the following? Ford A. adds 1,000 new cars to inventories B. buys U.S. government bonds C. buys a new robotic machine (from a plant in Ohio) to assemble cars D. builds another assembly plant in the United States

answer

B. buys U.S. government bonds

question

The purchase by a Chinese household of a CD produced in the United States is included in US A. investment expenditures B. government purchases C. net exports D. consumption expenditures

answer

C. net exports

question

Which of the following transactions would be included in the official calculation of GDP? A. a student buys a used textbook at the bookstore B. Firestone sells $2 million worth of tires to General Motors C. You wash and wax your fathers car as a favor to him D. you buy a new iPod E. you illegally download music off the internet to put on your new iPod

answer

D. you buy a new iPod

question

A transfer payment is a payment by the government to an individual A. for a consumption goods B. for a service C. for which the government does not receive a good or service in return D. for a debt owed E. for an investment good

answer

C. for which the government does not receive a good or service in return

question

An example of a transfer payment is A. a purchase of a new bridge in Alaska B. a teachers paycheck C. a paycheck for a member of the National Guard D. a welfare payment

answer

D. a welfare payment

question

In the circular flow diagram, ____supply the factors of production, and ___ goods and services A. households; sell B. firms; sell C. firms; buy D. households; buy

answer

D. households; buy

question

Which of the following equations correctly measures GDP in an economy? A. GDP= C+I+G+X B. GDP=C+ net I + G + NX C. GDP= C+G+I - taxes D. GDP= C+I+G+NX

answer

D. GDP= C+I+G+NX

question

Caroline is an artist. She purchases canvas, paints, brushes and accessories for $75. She sells one of her original paintings to an art gallery for $1,500, even though an art lover would pay $4,500 for that painting. How much value does Caroline add? A. $75 B. $1,425 C. $1,500 D. $4,425

answer

B. $1,425

question

GDP understates the total production of final goods and services because of the omission of A. the underground economy B. intermediate goods C. inflation D. exports

answer

A. the underground economy

question

Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry and have 8 children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP? A. GDP will decrease B. GDP will not change C. GDP will increase D. GDP may increase or may decrease depending on inflation

answer

A. GDP will decrease

question

Legalizing all forms of illegal activities A. increases GDP and increases the size of the underground economy B. reduces GDP and the size of the underground economy C. reduces GDP and increases the size of the underground economy D. increases GDP and reduces the size of the underground economy

answer

D. increases GDP and reduces the size of the underground economy

question

The underground economy can be described as A. economic production that includes mining B. production of infrastructure that spurs growth in the rest of the economy C. production of intermediate goods and services D. economic activity that is hidden from the government to avoid taxes or because the activity is illegal

answer

D. economic activity that is hidden from the government to avoid taxes or because the activity is illegal

question

Nominal GDP is GDP in a given year A. adjusted for inflation B. adjusted for anticipated inflation C. valued in the prices of that year D. valued in the prices of the base year

answer

C. valued in the prices of that year

question

Real GDP is GDP in a given year A. adjusted for anticipated inflation B. valued in the prices of that year C. Valued in the prices of the base year D. adjusted for unanticipated inflation

answer

C. Valued in the prices of the base year

question

If the quantity of goods and services produced in the economy decreases A. real GDP would certainly increase B. it may be possible for real GDP to increase C. nominal GDP would certainly increase D. it may be possible for nominal GDP to increase

answer

D. it may be possible for nominal GDP to increase

question

Which of the following could cause nominal GDP to decrease, but real GDP to increase? A. the prce level rises and the quantity of final goods and services produced rises B. the price level rises and the quantity of final goods and services produced falls C. the price level falls and the quantity of final goods and services produced falls D. the price level falls and the quantity of final goods and services produced rises

answer

D. the price level falls and the quantity of final goods and services produced rises

question

Real GDP will increase A. if either the price level rises of the quantity of final goods and services produced rises B. only if the price level rises C. only if the price level falls D. Only if the quantity of final goods and services produced rises

answer

D. Only if the quantity of final goods and services produced rises

question

If real GDP increases we know for sure that A. prices have remained constant B. output has risen C. prices have risen buy output has remained constant D. prices have risen

answer

B. output has risen

question

If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years? A. 270% B. 50% C. 5% D. 2.7%

answer

D. 2.7%

ECON 2101 Test 2 Ch 8-Multiple Choice Questions – Flashcards

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