[QUESTION]
63. For the purposes of calculating GDP using the expenditure approach, which of the following
payments is not included in the government expenditures component?
A. Social Security payments
B. The wages paid by a local government to its road crew
C. The wages paid by a state government to the workers in its welfare department
D. The federal government’s purchase of a submarine from a shipbuilder
64. For the purposes of calculating GDP using the expenditure approach, which of the following
is not included in the government purchases account?
A. Government purchases of pencils
B. The payroll of the federal government
C. Welfare payments to the poor
D. The government’s purchase of a computer
65. Refer to the table shown.
What is the economy’s GDP?
A. $6.5 trillion
B. $7.1 trillion
C. $6.7 trillion
D. $6.1 trillion
66. Refer to the table shown.
What are the economy’s net exports?
A. -$0.4 trillion
B. $0.2 trillion
C. $1.0 trillion
D. -$0.2 trillion
67. Refer to the table below. What is the economy’s gross domestic product?
A. $10.5 trillion
B. $11.1 trillion
C. $11.7 trillion
D. $12.3 trillion
68. GDP is $7 trillion. If consumption is $3.5 trillion, investment is $1.4 trillion, and
government purchases are $2.1 trillion, then:
A. exports are equal to imports.
B. exports exceed imports.
C. imports exceed exports.
D. net exports cannot be determined from the available information.
69. Depreciation:
A. estimates the decrease in value of capital goods due to wear and tear over the year.
B. is the reduction in business inventories per year.
C. represents a firm’s expenditure to add to its capital stock.
D. is the decline in the value of a firm’s stock.
70. If gross investment is $2,593 billion and net investment is $873 billion, depreciation is:
A. $873 billion.
B. $1,720 billion.
C. $2,593 billion.
D. $3,466 billion.
71. Net domestic product equals:
A. consumption + investment + government purchases + net exports – net foreign factor income.
B. consumption + investment + government purchases + net exports – depreciation.
C. consumption + investment + government purchases + net exports – profits.
D. consumption + investment + government purchases + net exports – change in inventories.
72. If depreciation is zero, then net domestic product:
A. exceeds gross domestic product.
B. equals gross domestic product.
C. is less than gross domestic product.
D. cannot be defined.
73. Net domestic product:
A. is a better measure of output than gross domestic product because it controls for depreciation.
B. is a worse measure of output than gross domestic product because it is distorted by
depreciation.
C. cannot be computed since economists have no measure of depreciation.
D. increases as depreciation increases.
74. While net domestic product (NDP) is theoretically a better measure of economic activity
than gross domestic product (GDP), GDP is used more frequently because:
A. consumption, which is included in NDP but not GDP, is difficult to measure.
B. investment, which is included in NDP but not GDP, is difficult to measure.
C. net exports, which are included in NDP but not GDP, are difficult to measure.
D. depreciation, which is included in NDP but not GDP, is difficult to measure.
75. Refer to the table shown.
What are the economy’s net exports?
A. -$0.4 trillion
B. $0.4 trillion
C. $0.8 trillion
D. There is not sufficient information to compute net exports
76. Refer to the table shown.
What is the economy’s net domestic product?
A. $6.2 trillion
B. $6.6 trillion
C. $7.0 trillion
D. Net domestic product cannot be computed without the data for net exports
77. GNP is the:
A. aggregate output of the citizens and businesses of an economy in a one year period.
B. aggregate final output of the citizens and businesses of an economy in a one year period.
C. total market value of all goods and services produced in an economy in a one year period .
D. total market value of all final goods and services produced in an economy in a one year
period.
78. Net foreign factor income is:
A. the income earned from the domestic economy by foreign factors.
B. the income earned abroad by domestic factors.
C. the difference between the income earned abroad by domestic factors and the income earned
domestically by foreign factors.
D. the difference between the value of a country’s exports and imports.
79. The difference between gross domestic product (GDP) and gross national product (GNP) is
that GDP:
A. measures the economic activity that occurs within a country while GNP measures the
economic activity of all the people and businesses of a country.
B. measures the economic activity of all the people and businesses of a country, while GNP
measures the economic activity that occurs within a country
C. excludes exports and imports while GNP does not.
D. includes exports and imports while GNP does not.
80. Which of the following is not included in GDP but is included in GNP?
A. A foreign company’s production in the United States
B. Income of a citizen of Germany working in the United States
C. Economic activity of U.S. citizens working abroad
D. Sales of a good by one firm to another firm
81. If substantially more foreign money is invested in Ireland than Irish citizens have invested
abroad, then one will likely expect Irish:
A. net foreign factor income to be positive.
B. net foreign factor income to be zero.
C. GDP to exceed Irish GNP.
D. GNP to exceed Irish GDP.
82. If Saudi Arabia has invested substantially more money in foreign countries than foreigners
have invested in Saudi Arabia, then we might expect Saudi:
A. net foreign factor income to be negative.
B. net foreign factor income to be zero.
C. GDP to exceed Saudi GNP.
D. GNP to exceed Saudi GDP.
83. If U.S. GNP exceeds GDP by approximately $133 billion,
A. U.S. factor income earned abroad exceeded foreign factor income by $133 billion.
B. U.S. factor income earned abroad was $133 billion less than foreign factor income.
C. U.S. depreciation was $133 billion.
D. U.S. depreciation was -$133 billion.
84. To move from gross domestic product (GDP) to gross national product (GNP), one must:
A. add depreciation to GDP.
B. subtract depreciation from GDP.
C. subtract net foreign factor income from GDP.
D. add net foreign factor income to GDP.
85. What is GDP using the information shown?
A. 6,400
B. 7,500
C. 9,400
D. 10,470
86. What is net exports using the information shown?
A. -100
B. 100
C. 850
D. 950
87. What is GDP using the table shown?
A. 5,570
B. 5,600
C. 6,050
D. 6,320
88. What are net exports using the table shown?
A. 170
B. 200
C. 450
D. 650
89. What is GNP using the table shown?
A. 5,570
B. 5,630
C. 6,220
D. 6,250
90. Refer to the following table.
The sum of investment and consumption in this economy is:
A. $3.6 trillion.
B. $3.9 trillion.
C. $4.1 trillion.
D. $6.0 trillion.
91. The income approach to measuring GDP:
A. focuses on how income is spent.
B. uses the factors payments made by businesses to households to estimate GDP.
C. adds up all household expenditures to calculate aggregate income and GDP.
D. ignores how income is earned and focuses instead on how it is used.
92. Aggregate income is a measure of:
A. household and business earnings from the sale of productive resources.
B. the market value of total output.
C. income households have available to spend before paying personal taxes.
D. income households have available to spend after paying personal taxes.
93. Aggregate income is the sum of:
A. employee compensation and profits.
B. employee compensation, rent, and profits.
C. employee compensation, rent, profits, and interest.
D. employee compensation, rent, profits, interest, and transfer payments.
94. Aggregate income includes all of the following except:
A. employee compensation.
B. interest.
C. rent.
D. transfer payments.
95. The largest component of aggregate income is:
A. interest.
B. rents.
C. employee compensation.
D. profits.
96. Which of the following is not included in employee compensation?
A. Salaries
B. Fringe benefits
C. Interest payments from businesses to households
D. Social security taxes paid to the government by employers
97. Payments for the use of land and buildings are included in aggregate accounting as:
A. interest.
B. rents.
C. employee compensation.
D. profits.
98. Payment by firms to landlords for commercial space is counted in aggregate accounting as:
A. interest.
B. rents.
C. employee compensation.
D. profits.
99. Payments for loans by households to firms are known in aggregate accounting as:
A. interest.
B. rents.
C. employee compensation.
D. profits.
100. If a firm sells bonds on the capital market, the amount the firm must pay for the use of
those funds is counted in aggregate accounting as:
A. interest.
B. rents.
C. employee compensation.
D. profits.
101. Payments to the owners of firms are included in aggregate accounting as:
A. profits.
B. rents.
C. employee compensation.
D. interest.
102. The $400 dividend check a stockholder receives is included in aggregate accounting as:
A. profits.
B. rents.
C. employee compensation.
D. interest.
103. Given the following information, we can infer that aggregate income equals:
A. $700.
B. $750
C. $900.
D. $950.
104. Given the following information, aggregate income equals:
A. $2,900.
B. $3,400.
C. $3,900.
D. $4,400.
105. The key to the equality of output and income is:
A. employee compensation.
B. profit.
C. business taxes.
D. transfer payments.
106. If a firm sold $700 worth of goods that cost $800 to produce:
A. aggregate income would no longer equal GDP.
B. aggregate income would be negative.
C. the firm’s loss would not be added to aggregate income.
D. aggregate income would still equal GDP.
107. Given the following information that includes all costs of the firm, we know that:
A. profit is -$200.
B. profit is $200.
C. there is a loss that must be subtracted from final sales so that income equals output.
D. income does not equal the value of final output.
108. Suppose profits are less than zero. From this it follows that:
A. aggregate income exceeds aggregate production.
B. the sum of employee compensation, rents, and interest exceeds aggregate income.
C. aggregate income is less than the value of final output.
D. the sum of employee compensation, rents, and interest equals aggregate income.
109. Double-entry bookkeeping implies that:
A. profits cannot be negative because profit equals the value of final output less costs.
B. profits fill the gap between the sum of employee compensation, rents and interest on the one
hand and the value of final output on the other hand.
C. aggregate income net of profits is less than the value of final output because profit can add or
take away from final output.
D. aggregate income net of profits is greater than the value of final output because profit can add
or take away from final output.
110. According to the aggregate accounting identity:
A. GNP equals GDP.
B. aggregate income equals aggregate production.
C. assets equal liabilities.
D. supply equals demand.
111. A one-time rise in the price level is:
A. inflation if that rise is above 5%.
B. inflation if that rise is above 10%.
C. inflation if that rise is above 15%.
D. not inflation.
112. A price index in its base year:
A. is always greater than 100.
B. is always equal to 100.
C. is always less than 100.
D. cannot be determined without knowing the price level in the base year.
113. A price index in years beyond the base year:
A. is never 100.
B. is always greater than 100.
C. is always less than 100.
D. can be less than, greater than, or equal to 100.
114. The base year is the year:
A. in which prices are unstable.
B. in which prices are lowest.
C. in which prices are highest.
D. that serves as a reference point or benchmark.
115. The total annual market value of a nation’s final output of goods and services computed at
existing prices is called:
A. net national product.
B. aggregate income.
C. nominal GDP.
D. real GDP.