Page 76
398.
In the circular-flow diagram, the value of household income (the sum of wages,
dividends, interest, rental income, and transfer payments) equals the sum of:
A)
household tax payments.
B)
consumer spending, private saving, and household tax payments.
C)
the money supply.
D)
transfer payments and household tax payments.
399.
Transfer payments:
A)
are a means by which government raises funds.
B)
are a redistribution of funds from one individual to another individual.
C)
are counted in GDP.
D)
is another term for government taxation.
400.
Wages are:
A)
the income households earn by selling their labor.
B)
the interest earned from bonds.
C)
rent earned from the use of land to firms.
D)
the indirect ownership of the physical capital used by firms.
401.
Disposable income is:
A)
income spent on imports.
B)
household income and government transfers less taxes.
C)
gross income.
D)
government transfer payments.
402.
When a firm buys a new machine for its business, it is considered to be:
A)
consumption.
B)
investment spending.
C)
government spending.
D)
private saving.
403.
GDP for a given period measures the:
A)
money circulating through an economy.
B)
market value of the final goods and services produced within the borders of a
country.
C)
market value of the final goods and services produced by the citizens of a country
regardless of their location.
D)
amount of government spending undertaken.
Page 77
404.
An economy’s gross domestic product is made up of:
A)
consumption, saving, investment, and government spending.
B)
consumption, investment spending, government purchases of goods and services,
and net exports.
C)
consumption, saving, inventories, financial markets, and government spending.
D)
consumption and saving.
405.
Suppose only two countries existed. Country A imported $200 million worth of goods
and services from country B. Country B imported $100 million worth of goods and
services from country A. Net exports for country _____ equal _____.
A)
A; $200 million
B)
B; $200 million
C)
A; –$100 million
D)
B; –$100 million
406.
Including intermediate goods in the GDP calculation is:
A)
the value-added method.
B)
double counting.
C)
deflating the value of GDP.
D)
the expenditure method of GDP calculation.
407.
GDP calculated via factor payments includes:
A)
wages, interest payments, rent, and profits.
B)
taxes, wages, interest payments, and rents.
C)
rents, profits, value-added adjustments, and taxes.
D)
consumption, investment, and government.
408.
Which statement about GDP is FALSE?
A)
GDP can be calculated by summing total market value of all final goods and
services produced in a country in a given year.
B)
GDP can be calculated by summing all factor payments within a country’s borders
in a given year.
C)
GDP can be calculated by summing the value added for all goods and services.
D)
GDP can be calculated by summing government spending and tax revenues.
409.
Value added is equal to the value of a company’s:
A)
sales.
B)
sales minus intermediate goods.
C)
intermediate goods.
D)
payments to labor and capital.
Page 78
410.
Which item is NOT included in the calculation of GDP?
A)
your granny’s monthly Social Security payment
B)
the new textbook you purchase
C)
a cup of coffee from a vendor
D)
the wages you pay to the employee who cleans your house
411.
Double counting would occur if:
A)
GDP were calculated by adding C, I, G, and NX.
B)
used goods were included in the GDP calculation.
C)
imports were subtracted from GDP.
D)
inventories were added to the GDP calculation.
412.
Purchases of imported products are:
A)
subtracted from GDP.
B)
considered domestic spending, since the money is spent by a domestic consumer.
C)
double counting.
D)
not a part of the GDP calculation.
413.
Spending on inputs is _____ of GDP, and investment spending is _____ of GDP.
A)
part; part
B)
not a part; part
C)
part; not a part
D)
not a part; not a part
Page 79
Use the following to answer questions 414-415:
415. (Scenario: Good A and Good B) The town of York produces two goods, good A and good
B. The following is information regarding York’s production of these two goods and their prices
over three years.
In 2010, nominal GDP was _____ nominal GDP in _____.
A) greater than; 2011
B) greater than; 2009
C) equal to; 2011
D) equal to; 2009
414.
(Scenario: Good A and Good B) The town of York produces two goods, good A and
good B. The following is information regarding York’s production of these two goods
and their prices over three years.
With 2009 as the base year, real GDP in 2009 was _____ GDP in _____.
A)
equal to real; 2010
B)
equal to nominal; 2009
C)
greater than real; 2010
D)
greater than nominal; 2011
Page 80
415.
(Scenario: Good A and Good B) The town of York produces two goods, good A and
good B. The following is information regarding York’s production of these two goods
and their prices over three years.
With 2009 as the base year, real GDP was GREATEST in:
A)
2009.
B)
2010.
C)
2011.
D)
its base year always.
416.
Real per capita GDP is:
A)
real GDP divided by the population.
B)
real GDP divided by the amount of capital available in the economy.
C)
not a useful measure of human welfare.
D)
rarely used as a tool to compare countries’ possible resources.
Use the following to answer questions 417-419:
417.
(Scenario: Market Basket) Suppose a market basket consists of the following goods: 50
pens, 25 notepads, and 25 paperclips. Also assume the price per unit of these goods is as
follows for the years noted and 2007 is the base year.
What is the value of the price index in 2011?
A)
100
B)
90
C)
111
D)
132
Page 81
418.
(Scenario: Market Basket) Suppose a market basket consists of the following goods: 50
pens, 25 notepads, and 25 paperclips. Also assume the price per unit of these goods is as
follows for the years noted and 2007 is the base year.
What is the rate of inflation between 2010 and 2011?
A)
–10%
B)
11%
C)
32%
D)
0%
419.
(Scenario: Market Basket) Suppose a market basket consists of the following goods: 50
pens, 25 notepads, and 25 paperclips. Also assume the price per unit of these goods is as
follows for the years noted and 2007 is the base year.
What is the value of the price index in 2010?
A)
100
B)
111
C)
90
D)
0
420.
The GDP deflator is:
A)
also known as the wholesale price index.
B)
equal to 100 in the base year.
C)
the ratio of real GDP for year X divided by nominal GDP for year X times 100.
D)
a measure that tracks price changes for consumer goods.
Answer Key
Page 83
45.
C
46.
C
47.
A
48.
B
49.
A
50.
C
51.
C
52.
A
53.
C
54.
A
55.
B
56.
D
57.
D
58.
B
59.
B
60.
C
61.
B
62.
C
63.
B
64.
C
65.
B
66.
C
67.
A
68.
D
69.
C
70.
A
71.
C
72.
B
73.
C
74.
A
75.
D
76.
A
77.
C
78.
D
79.
C
80.
D
81.
A
82.
C
83.
A
84.
B
85.
D
86.
A
87.
B
88.
D
89.
D
90.
B
Page 84
91.
B
92.
B
93.
A
94.
B
95.
C
96.
A
97.
A
98.
B
99.
A
100.
D
101.
B
102.
D
103.
B
104.
A
105.
B
106.
A
107.
A
108.
B
109.
A
110.
B
111.
D
112.
D
113.
B
114.
B
115.
B
116.
D
117.
B
118.
D
119.
D
120.
A
121.
C
122.
B
123.
C
124.
A
125.
C
126.
C
127.
A
128.
B
129.
B
130.
C
131.
A
132.
C
133.
B
134.
B
135.
C
136.
B
Page 85
137.
D
138.
D
139.
B
140.
A
141.
B
142.
C
143.
C
144.
C
145.
D
146.
D
147.
D
148.
D
149.
B
150.
B
151.
D
152.
A
153.
B
154.
A
155.
A
156.
C
157.
C
158.
A
159.
B
160.
A
161.
D
162.
D
163.
C
164.
B
165.
B
166.
B
167.
C
168.
A
169.
B
170.
A
171.
B
172.
D
173.
B
174.
C
175.
B
176.
A
177.
B
178.
C
179.
B
180.
A
181.
B
182.
D
Page 86
183.
D
184.
C
185.
B
186.
C
187.
C
188.
C
189.
B
190.
D
191.
D
192.
B
193.
C
194.
C
195.
C
196.
C
197.
D
198.
A
199.
B
200.
D
201.
B
202.
C
203.
D
204.
A
205.
D
206.
D
207.
A
208.
B
209.
C
210.
D
211.
A
212.
D
213.
D
214.
C
215.
A
216.
D
217.
A
218.
B
219.
C
220.
C
221.
D
222.
C
223.
A
224.
B
225.
A
226.
C
227.
B
228.
A
Page 87
229.
A
230.
C
231.
A
232.
D
233.
D
234.
A
235.
C
236.
B
237.
D
238.
C
239.
B
240.
B
241.
B
242.
C
243.
D
244.
A
245.
B
246.
B
247.
D
248.
B
249.
C
250.
D
251.
A
252.
B
253.
D
254.
A
255.
B
256.
B
257.
A
258.
D
259.
C
260.
D
261.
D
262.
A
263.
B
264.
C
265.
A
266.
A
267.
B
268.
A
269.
C
270.
D
271.
A
272.
D
273.
C
274.
D
Page 88
275.
C
276.
B
277.
C
278.
C
279.
D
280.
B
281.
C
282.
D
283.
B
284.
D
285.
C
286.
B
287.
D
288.
B
289.
D
290.
B
291.
D
292.
B
293.
A
294.
B
295.
C
296.
D
297.
C
298.
A
299.
C
300.
A
301.
B
302.
A
303.
B
304.
A
305.
A
306.
B
307.
A
308.
B
309.
A
310.
B
311.
B
312.
A
313.
B
314.
A
315.
A
316.
B
317.
A
318.
B
319.
A
320.
A
Page 89
321.
A
322.
A
323.
B
324.
A
325.
B
326.
A
327.
A
328.
B
329.
A
330.
B
331.
B
332.
B
333.
A
334.
B
335.
A
336.
B
337.
A
338.
B
339.
A
340.
A
341.
A
342.
B
343.
B
344.
B
345.
A
346.
B
347.
B
348.
A
349.
B
350.
A
351.
B
352.
A
353.
A
354.
B
355.
A
356.
B
357.
B
358.
B
359.
A
360.
B
361.
A
362.
B
363.
A
364.
B
365.
A
366.
B
Page 90
367.
A
368.
A
369.
B
370.
A
371.
B
372.
A
373.
A
374.
A
375.
B
376.
A
377.
B
378.
A
379.
380.
381.
382.
383.
384.
385.
386.
387.
388.
389.
390.
C
391.
B
392.
A
393.
A
394.
B
395.
A
396.
B
397.
A
398.
B
399.
B
400.
A
401.
B
402.
B
403.
B
404.
B
405.
C
406.
B
407.
A
408.
D
409.
B
410.
A
411.
B
412.
D
Page 91
413.
B
414.
B
415.
C
416.
A
417.
C
418.
B
419.
A
420.
B