Question 1

Macroeconomics includes the study of

Accepted Answer

Macroeconomics focuses on the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. This includes studying phenomena like economic growth, unemployment rates, and inflation.

Question 2

Macroeconomics, as opposed to microeconomics, includes the study of what determines the

Accepted Answer

Macroeconomics focuses on the economy as a whole, including topics such as inflation, unemployment, and exchange rates. Choice C, which involves exchange rates between the U.S. dollar and the currencies of Asian nations, is a macroeconomic issue because it deals with the economic interactions between countries, affecting national economies on a large scale. Choices A, B, and D are examples of microeconomic issues, which focus on individual agents and markets.

Question 3

Microeconomics, as opposed to macroeconomics, includes the study of what determines the

Accepted Answer

Microeconomics focuses on the decisions of individuals and industries, like the profitability of the airline industry, rather than the broader economic indicators studied in macroeconomics.

Question 4

Macroeconomics is a study of the economy as a whole, and microeconomics includes the study of decisions made by individuals and businesses.

Accepted Answer

Macroeconomics focuses on the behavior of the economy as a whole, including inflation, unemployment, and economic growth, while microeconomics examines the decisions made by individuals and businesses, such as pricing and the allocation of resources.

Question 5

To calculate gross domestic product, you use the sum of the market values of all final goods and services produced in a given year. This means you

Accepted Answer

Gross Domestic Product (GDP) is calculated by valuing the final goods and services produced within a country during a specific year at their market prices, multiplying these values by the quantities produced in that year, and then summing these products together. This approach ensures that only the output of that particular year is accounted for, avoiding double counting and providing a clear measure of a country's economic activity for that year.

Question 6

Which of the following goods is directly counted in GDP?

Accepted Answer

GDP measures the total value of all final goods and services produced within a country's borders in a specific time period. The large Pizza Hut pizza purchased by a family for dinner is considered a final good, directly contributing to GDP. The other options (pepperoni, cheese, and boxes) are intermediate goods, used in the production of final goods, and are not counted directly in GDP to avoid double counting.

Question 7

Which of the following transactions represents the purchase of a final good or service?

Accepted Answer

B) Aunt Matilda buying a new convection oven for her condo represents the purchase of a final good because the oven is a finished product that will not be resold or used in the production of another good. The other options involve purchases of intermediate goods, which are used to produce other goods or services.

Question 8

Which of the following would be directly counted in GDP for 2015?

Accepted Answer

GDP measures the value of goods and services produced within a country during a specific period. The windows purchased from Pella in 2015, even if they are for a house built in 1945, are a new production in 2015 and thus directly counted in the GDP for that year. Options B and C involve reused or salvaged windows, which do not count as new production in 2015.

Question 9

Which of the following would be directly counted in U.S. GDP for 2015?

Accepted Answer

GDP includes the value of goods and services produced within a country's borders. The Harley-Davidson motorcycle was produced in the U.S. in 2015, making it part of the U.S. GDP for that year, regardless of where it was sold.

Question 10

Table 16.1 : 
-Refer to Table 16.1. Consider the data in the table above (in billions of dollars) for an economy. Gross domestic product (in billions of dollars) for this economy equals

Accepted Answer

Gross Domestic Product (GDP) is calculated by adding up the total consumer spending (Consumption), investment by businesses, government spending, and net exports (exports minus imports). Without the specific data from Table 16.1, the correct answer cannot be directly identified from the provided options. However, the choice of C) $2,350 suggests it is the correct answer based on a typical calculation of GDP from such data.

Question 11

Investment, as defined by economists, would include the purchase of a

Accepted Answer

Economists define investment as spending on capital goods that will be used for future production, such as a cargo van by a delivery company.

Question 12

The purchase of a new house is included in

Accepted Answer

The purchase of a new house is considered an investment expenditure because it is an investment in residential capital.

Question 13

The purchase of an airplane produced in the United States by the government of Thailand is included in

Accepted Answer

The purchase of an airplane produced in the United States by the government of Thailand is considered a U.S. export because it is a sale of goods produced in the U.S. to a foreign buyer.

Question 14

In 2013, which component of U.S. GDP had a negative value?

Accepted Answer

Net exports can have a negative value if a country imports more than it exports, which was the case for the U.S. in 2013.

Question 15

Consumption spending includes spending on durable goods, nondurable goods, and services.

Accepted Answer

Consumption spending encompasses expenditures on all types of goods and services, including durable goods (items expected to last more than three years), nondurable goods (items with a shorter life expectancy), and services (intangible products like healthcare, education, and entertainment).

Question 16

Spending on new housing, which economists refer to as residential fixed investment, is included in the consumption expenditures component of GDP.

Accepted Answer

Spending on new housing, or residential fixed investment, is included in the investment component of GDP, not the consumption expenditures component.

Question 17

When a country's imports are larger than its exports, the country is running a trade deficit.

Accepted Answer

A trade deficit occurs when a country's imports exceed its exports, meaning it is buying more goods and services from other countries than it is selling to them.

Question 18

GDP measures the total income a society generates.

Accepted Answer

GDP, or Gross Domestic Product, measures the total value of all goods and services produced over a specific time period within a country's borders, which reflects the total income generated by the society.

Question 19

Last year in a small economy, consumption spending was $12,000, investment spending was $3,500, government spending was $4, 000, exports were $1,150, and imports were $1,350. What was GDP for this economy last year?

Accepted Answer

The answer of Last year in a small economy, consumption...

Question 20

What are the four subcategories of investment expenditures?

Accepted Answer

The answer of What are the four subcategories of investment...

Quiz 16: Gross Domestic Product and the Wealth of Nations: an Introduction to the Macroeconomy