Deck 2: The Data of Macroeconomics

Question 1

The economic statistic used to measure the level of prices is:

A) GDP.
B) CPI.
C) GNP.
D) real GDP.

Answer 1

CPI.

Question 2

The statistic used by economists to measure the value of economic output is:

A) the CPI.
B) GDP.
C) the GDP deflator.
D) the unemployment rate.

Answer 2

GDP.

Question 3

GDP is the market value of all ______ goods and services produced within an economy in a given period of time.

A) used
B) intermediate
C) consumer
D) final

Answer 3

final

Question 4

All of the following are a stock except:

A) a consumer's wealth.
B) the government budget deficit.
C) the number of unemployed people.
D) the amount of capital in the economy.

Question 5

To compute the value of GDP:

A) goods and services are valued at market prices.
B) the sale of used goods is included.
C) production for inventory is not included.
D) goods and services are valued by weight.

Question 6

All of the following transactions that took place in 2009 would be included in GDP for 2009 except the purchase of a:

A) book printed in 2009, entitled The Year 3000.
B) 2001 Jeep Cherokee.
C) year 2010 calendar printed in 2009.
D) ticket to see the movie 2001.

Question 7

The market value of all final goods and services produced within an economy in a given period of time is called:

A) industrial production.
B) gross domestic product.
C) the GDP deflator.
D) general durable purchases.

Question 8

All of the following are a flow except:

A) the number of new automobile purchases.
B) the number of people losing their jobs.
C) business expenditures on plant and equipment.
D) the government debt.

Question 9

The amount of capital in an economy is a ______ and the amount of investment is a ______.

A) flow; stock
B) stock; flow
C) final good; intermediate good
D) intermediate good; final good

Question 10

Two equivalent ways to view GDP are as the:

A) total payments made to all workers in the economy or the total profits of all firms and businesses in the economy.
B) total expenditures on all goods produced in the economy or the total income earned from producing all services in the economy.
C) total profits of all firms and businesses in the economy or the total consumption of goods and services by all households in the economy.
D) total income of everyone in the economy or the total expenditure on the economy's output of goods and services.

Question 11

Which of the following is a flow variable?

A) wealth
B) the number unemployed
C) government debt
D) income

Question 12

In the circular flow model, the flow of dollars from firms to households is paid _____ and the flow of dollars from households to firms is paid _____.

A) as wages and profits; for goods and services
B) for value added; as imputed values
C) in current dollars; in constant dollars
D) as interest and dividends; for depreciation and taxes

Question 13

Which of the following is a stock variable?

A) wealth
B) consumption
C) investment
D) income

Question 14

It is a national income accounting rule that all expenditure on purchases of products in the economy is necessarily equal to:

A) profits of firms.
B) wages of employees.
C) income of the producers of the products in the economy.
D) income of employees.

Question 15

The total income of everyone in the economy is exactly equal to the total:

A) expenditure on the economy's output of goods and services.
B) consumption expenditures of everyone in the economy.
C) expenditures of all businesses in the economy.
D) government expenditures.

Question 16

All of the following are measures of GDP except the total:

A) expenditures of all businesses in the economy.
B) income from all production in the economy.
C) expenditures on all final goods and services produced.
D) value of all final production.

Question 17

An economy's ______ equals its ______.

A) consumption; income
B) consumption; expenditure on goods and services
C) expenditure on goods; expenditures on services
D) total income; total expenditure on goods and services

Question 18

Assume that total output consists of 4 apples and 6 oranges and that apples cost $1 each and oranges cost $0.50 each. In this case, the value of GDP is:

A) 10 pieces of fruit.
B) $7.
C) $8.
D) $10.

Question 19

Since GDP includes only the additions to income, not transfers of assets, ______ are not included in the computation of GDP.

A) final goods
B) used goods
C) consumption goods
D) goods produced for inventory

Question 20

GDP is all of the following except the total:

A) expenditure of everyone in the economy.
B) income of everyone in the economy.
C) expenditure on the economy's output of goods and services.
D) output of the economy.

Question 21

When bread is baked but put away for later sale, this is called:

A) waste.
B) saving.
C) fixed investment.
D) investment in inventory.

Question 22

The underground economy:

A) is included in the latest GDP accounts.
B) includes only illegal activities.
C) includes domestic workers for whom Social Security tax is not collected.
D) excludes the illegal drug trade.

Question 23

Real GDP is measured in _____ prices ____ time.

A) current; at a point in
B) current; per unit of
C) constant; at a point in
D) constant; per unit of

Question 24

When a firm sells a product out of inventory, investment expenditures ______ and consumption expenditures ______.

A) increase; decrease
B) decrease; increase
C) decrease; remain unchanged
D) remain unchanged; increase

Question 25

In principle, the GDP accounts should-but do not-have an imputation for:

A) housing services enjoyed by homeowners.
B) rental services of automobiles driven by owners.
C) meals cooked in restaurants.
D) housing services enjoyed by renters.

Question 26

The best measure of the economic satisfaction of the members of a society is:

A) nominal GDP.
B) real GDP.
C) the rate of inflation.
D) the value of corporate profits.

Question 27

Nominal GDP means the value of goods and services is measured in ______ prices.

A) current
B) real
C) constant
D) average

Question 28

Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 4 in 2009, then real GDP (in 2002 prices) in 2009 was:

A) $5.
B) $6.50.
C) $9.50.
D) $11.

Question 29

The value added of an item produced refers to:

A) a firm's profits on the item sold.
B) the value of the labor inputs in the production of an item.
C) the value of a firm's output less the value of its costs.
D) the value of a firm's output less the value of the intermediate goods that the firm purchases.

Question 30

Assume that a rancher sells McDonald's a quarter-pound of meat for $1 and that McDonald's sells you a hamburger made from that meat for $2. In this case, the value included in GDP should be:

A) $0.50.
B) $1.
C) $2.
D) $3.

Question 31

Real GDP means the value of goods and services is measured in ______ prices.

A) current
B) actual
C) constant
D) average

Question 32

Assume that a tire company sells 4 tires to an automobile company for $400, another company sells a compact disc player for $500, and the automobile company puts all of these items in or on a car that it sells for $20,000. In this case, the amount from these transactions that should be counted in GDP is:

A) $20,000.
B) $20,000 less the automobile company's profit on the car.
C) $20,900.
D) $20,900 less the profits of all three companies on the items that they sold.

Question 33

Nominal GDP is measured in _____ prices _____ time.

A) current; at a point in
B) current; per unit of
C) constant; at a point in
D) constant; per unit of

Question 34

Assume that a bakery hires more workers and pays them wages and that the workers produce more bread. GDP increases in all of the following cases except when the bread:

A) is sold to households.
B) is stored away for later sale.
C) grows stale and is thrown away.
D) is sold to other firms.

Question 35

Imputed values included in GDP are the:

A) market prices of goods and services.
B) estimated value of goods and services that are not sold in the marketplace.
C) price of goods and services measured in constant prices.
D) price of goods and services measured in current prices.

Question 36

To avoid double counting in the computation of GDP, only the value of ______ goods are included.

A) final
B) used
C) intermediate
D) investment

Question 37

When a firm sells a product out of inventory, GDP:

A) increases.
B) decreases.
C) is not changed.
D) increases or decreases, depending on the year the product was produced.

Question 38

Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the value added by the automobile company is:

A) $10,000.
B) $12,000.
C) $20,000.
D) $22,000.

Question 39

An example of an imputed value in the GDP is the:

A) value-added of meals cooked at home.
B) housing services enjoyed by homeowners.
C) services of automobiles to their owners.
D) value of illegal drugs sold.

Question 40

In computing GDP,

A) expenditures on used goods are included.
B) production added to inventories is excluded.
C) the amount of production in the underground economy is imputed.
D) the value of intermediate goods is included in the market price of the final goods.

Question 41

All of the following actions are investments in the sense of the term used by macroeconomists except:

A) IBM's building a new factory.
B) corner candy store's buying a new computer.
C) John Smith's buying a newly constructed home.
D) Sandra Santiago's buying 100 shares of IBM stock.

Question 42

If real GDP grew by 6 percent and population grew by 2 percent, then real GDP per person grew by approximately ______ percent.

A) 2
B) 3
C) 4
D) 8

Question 43

Chain-weighted measures of real GDP make use of prices from:

A) an unchanging base year.
B) a continuously changing base year.
C) a base year that is changed approximately every 5 years.
D) a base year that is changed approximately every 10 years.

Question 44

If total investment (measured in billions of current dollars) equals $741, business fixed investment is $524, and residential fixed investment is $222, then inventory investment is:

A) $5.
B) -$5.
C) $15.
D) -$15.

Question 45

If nominal GDP grew by 5 percent and real GDP grew by 3 percent, then the GDP deflator grew by approximately ______ percent.

A) 2
B) 3
C) 5
D) 8

Question 46

If GDP (measured in billions of current dollars) is $5,465 and the sum of consumption, investment, and government purchases is $5,496, while exports equal $673, imports are:

A) $673.
B) -$673.
C) $704.
D) -$704.

Question 47

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are -$1,910, then government purchases are:

A) $2,977.
B) $1,910.
C) -$843.
D) $1,067.

Question 48

In the national income accounts, consumption expenditures include all of the following except household purchases of:

A) durable goods.
B) nondurable goods.
C) new residential housing.
D) services.

Question 49

If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and government purchases are $1,098, then net exports are:

A) $131.
B) -$131.
C) $31.
D) -$31.

Question 50

In the national income accounts, all of the following are classified as government purchases except:

A) payments made to Social Security recipients.
B) services provided by police officers.
C) purchases of military hardware.
D) services provided by U.S. senators.

Question 51

The national income accounts identity, for an open economy, is:

A) Y = C + I + G - NX.
B) Y = C + I + G + NX.
C) Y = C + I + G.
D) Y = C + I - G.

Question 52

In the national income accounts, net exports equal:

A) exported goods minus imported goods.
B) exported goods and services minus imported goods and services.
C) exported goods minus imported services.
D) exported goods and services plus imported goods and services.

Question 53

In the national income accounts, goods bought for future use are classified as which type of expenditure?

A) services
B) investment
C) government purchases
D) net exports

Question 54

The new chain-weighted measures of real GDP are an improvement over traditional measures because the prices used to compute real GDP are:

A) never far out of date.
B) always from the same base year.
C) imputed.
D) chained to the CPI.

Question 55

Real GDP is a better measure of economic well-being than nominal GDP, because real GDP:

A) excludes the value of goods and services exported aboard.
B) includes the value of government transfer payments.
C) measures changes in the quantity of goods and services produced by holding prices constant.
D) adjusts the value of goods and services produced for changes in the foreign exchange rate.

Question 56

In the national income accounts, the purchase of durables, nondurables, and services by households are classified as:

A) consumption.
B) investment.
C) government purchases.
D) net exports.

Question 57

If total consumption (measured in billions of current dollars) equals $3,657, consumption of durable goods is $480, and consumption of nondurable goods is $1,194, then consumption of services is:

A) $1,674.
B) $2,463.
C) $2,083.
D) $1,983.

Question 58

In the national income accounts, government purchases are goods and services purchased by:

A) the federal government.
B) the federal and state governments.
C) the state and local governments.
D) the federal, state, and local governments.

Question 59

If nominal GDP increased by 5 percent and the GDP deflator increased by 3 percent, then real GDP ______ by ______ percent.

A) increased; 2
B) decreased; 2
C) increased; 8
D) decreased; 8

Question 60

Nominal GDP measures the value of goods and services in ______ prices, while real GDP measures the value of goods and services in ______ prices.

A) foreign; domestic
B) domestic; foreign
C) current; constant
D) constant; current

Question 61

GNP equals GDP ______ income earned domestically by foreigners ______ income that nationals earn abroad.

A) plus; plus
B) minus; minus
C) minus; plus
D) plus; minus

Question 62

The CPI is determined by computing:

A) an average of prices of all goods and services.
B) the price of a basket of goods and services that changes every year, relative to the same basket in a base year.
C) the price of a fixed basket of goods and services, relative to the price of the same basket in a base year.
D) nominal GDP relative to real GDP.

Question 63

In 2013 in the United States, the approximate amount of GDP (in current dollars) that was spent on consumption per person was:

A) $36,400.
B) $53,100.
C) $8, 400.
D) $16,800.

Question 64

In 2013, the GDP of the United States totaled about:

A) $16.8 billion.
B) $168 billion.
C) $16.8 trillion.
D) $168 trillion.

Question 65

An increase in the price of goods bought by firms and the government will show up in:

A) the CPI but not in the GDP deflator.
B) the GDP deflator but not in the CPI.
C) both the CPI and the GDP deflator.
D) neither the CPI nor the GDP deflator.

Question 66

The investment component of GDP includes all of the following except:

A) purchases of corporate stock.
B) spending on new plants and equipment.
C) purchases of new housing by households.
D) changes in business inventories.

Question 67

Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure, called core inflation,

A) provides a real, rather than a nominal, rate of inflation.
B) gives a better measure of ongoing, sustained price changes.
C) is more consistent with measures of inflation used in other countries.
D) fluctuates more than measures of inflation that include food and energy prices.

Question 68

Unlike the GDP deflator, the CPI includes the prices of:

A) goods purchased by firms.
B) goods purchased by governments.
C) exported goods.
D) imported goods.

Question 69

National income differs from net national product by an amount called:

A) depreciation.
B) indirect business taxes.
C) statistical discrepancy.
D) net foreign factor income payments.

Question 70

Net national product equals GNP:

A) plus net investment.
B) minus net investment.
C) plus depreciation.
D) minus depreciation.

Question 71

Disposable personal income:

A) is computed by subtracting personal tax from personal income.
B) is generally greater than personal income.
C) includes corporate profits but not dividends.
D) does not include government transfers to individuals.

Question 72

An increase in the price of imported goods will show up in:

A) the CPI but not in the GDP deflator.
B) the GDP deflator but not in the CPI.
C) both the CPI and the GDP deflator.
D) neither the CPI nor the GDP deflator.

Question 73

The core inflation rate:

A) measures the change in producer prices.
B) is measured using a Paasche index.
C) excludes food and energy prices.
D) includes the price of exports and includes the price of imports.

Question 74

The CPI is a:

A) Laspeyres price index.
B) Paasche price index.
C) Laspeyres quantity index.
D) Paasche quantity index.

Question 75

The largest component of national income is:

A) corporate profits.
B) compensation of employees.
C) proprietors' income.
D) net interest.

Question 76

According to the usual seasonal pattern of the U.S. economy, GDP is highest in the quarter of the year that includes:

A) January, February, and March.
B) April, May, and June.
C) July, August, and September.
D) October, November, and December.

Question 77

Prices of items included in the CPI are:

A) averaged with the price of every item weighted equally.
B) weighted according to amount of the item produced in GDP.
C) weighted according to quantity of the item purchased by the typical household.
D) chained to the base year by the year-to-year growth rate of the item.

Question 78

In 2013, GDP per person in the United States was approximately:

A) $5,000.
B) $35,000.
C) $53,000.
D) $353,000.

Question 79

In 2013 in the United States, total government purchases per person (in current dollars) amounted to approximately:

A) $1,900.
B) $9,900.
C) $13,500.
D) $25,600.

Question 80

In 2013, American net borrowings from abroad, per person, in current dollars, amounted to approximately:

A) $100.
B) $220.
C) $1,600.
D) $10,000.