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1. In years of economic contraction, firms throughout the economy increase their production of goods and services,
employment rises, and jobs are easy to find.
a.
True
b.
False
2. Macroeconomic statistics include GDP, the inflation rate, the unemployment rate, retail sales, and the trade deficit.
a.
True
b.
False
3. Macroeconomic statistics tell us about a particular household, firm, or market.
a.
True
b.
False
4. Macroeconomics is the study of the economy as a whole.
a.
True
b.
False
5. The goal of macroeconomics is to explain the economic changes that affect many households, firms, and markets
simultaneously.
a.
True
b.
False
6. Microeconomics and macroeconomics are closely linked.
a.
True
b.
False
7. The basic tools of supply and demand are central to microeconomic analysis but are of little use to macroeconomics.
a.
True
b.
False
8. GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society’s
economic well-being.
a.
True
b.
False
9. GDP can measure either the total income of everyone in the economy or the total expenditure on the economy’s output
of goods and services, but GDP cannot measure both at the same time.
a.
True
b.
False
10. For an economy as a whole, income must exceed expenditure.
a.
True
b.
False
11. An economy’s income is the same as its expenditure because every transaction has a buyer and a seller.
a.
True
b.
False
12. GDP is the market value of all final goods and services produced by a country’s citizens in a given period of time.
a.
True
b.
False
13. GDP is the market value of all final goods and services produced within a country in a given period of time.
a.
True
b.
False
14. GDP adds together many different kinds of products into a single measure of the value of economic activity by using
market prices.
a.
True
b.
False
15. U.S. GDP includes the market value of rental housing, but not the market value of owner-occupied housing services.
a.
True
b.
False
16. U.S. GDP excludes the production of most illegal goods.
a.
True
b.
False
17. U.S. GDP includes estimates of the value of items that are produced and consumed at home, such as housework and
car maintenance.
a.
True
b.
False
18. GDP excludes the value of intermediate goods because their value is included in the value of final goods.
a.
True
b.
False
19. Both the value of hamburgers sold by a restaurant and the value of the beef it used to make these hamburgers are
included in GDP.
a.
True
b.
False
20. GDP includes the value of paper clips but does not also count the value of the metal used to make them.
a.
True
b.
False
21. Additions to inventory subtract from GDP, and when the goods in inventory are sold, the reductions in inventory add
to GDP.
a.
True
b.
False
22. If a good produced this quarter goes into inventory, then it is included in this period’s GDP. If it is sold in the next
quarter, it will have no effect on GDP.
a.
True
b.
False
23. While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services
provided by teachers and exterminators.
a.
True
b.
False
24. At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in
current GDP.
a.
True
b.
False
25. When an American doctor opens a practice in Bermuda, his production there is part of U.S. GDP.
a.
True
b.
False
26. If the U.S. government reports that GDP in the third quarter was $16 trillion at an annual rate, then the amount of
income and expenditure during quarter three was $4 trillion.
a.
True
b.
False
27. The government computes measures of income other than GDP because these other measures usually tell different
stories about overall economic conditions.
a.
True
b.
False
28. When an American doctor opens a practice in Bermuda, his production there is part of U.S. GNP.
a.
True
b.
False
29. Disposable personal income is the income that households and noncorporate businesses have left after
satisfying all their obligations to the government.
a.
True
b.
False
30. Expenditures by households on education are included in the consumption component of GDP.
a.
True
b.
False
31. Expenditures by households on education are included in the investment component of GDP.
a.
True
b.
False
32. Most goods whose purchases are included in the investment component of GDP are used to produce other goods in
future periods.
a.
True
b.
False
33. New home construction is included in the consumption component of GDP.
a.
True
b.
False
34. Changes in inventory are included in the investment component of GDP.
a.
True
b.
False
35. If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting
the firm is considered to have “purchased” the good so it will count as part of that period’s investment expenditures.
a.
True
b.
False
36. The investment component of GDP refers to financial investment in stocks and bonds.
a.
True
b.
False
37. The government’s purchases of goods but not its purchases of services are included in GDP.
a.
True
b.
False
38. The government purchases component of GDP includes salaries paid to soldiers but not Social Security benefits paid
to the elderly.
a.
True
b.
False
39. If the value of an economy’s imports exceeds the value of that economy’s exports, then net exports is a negative
number.
a.
True
b.
False
40. If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the
consumption component of U.S. GDP and the net exports component of U.S. GDP.
a.
True
b.
False
41. A consumer buys toys made in China. The value of the toys is included only in the net exports component of GDP.
a.
True
b.
False
42. If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.
a.
True
b.
False
43. The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.
a.
True
b.
False
44. If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is
$800, then GDP is $5700.
a.
True
b.
False
