Question 1

(Table)  According to the table, when using the expenditure approach, GDP is

Accepted Answer

A)   $1,320 billion.
B)   $1,770 billion.
C)   $1,330 billion.
D)   $2,020 billion.

Question 2

At the peak of the business cycle, the economy is typically operating

Accepted Answer

A)   at its capacity.
B)   above capacity.
C)   below capacity.
D)   at its highest level ever.

Question 3

Describe the parts of a typical business cycle. How does the business cycle differ from the trend line?

Accepted Answer

The business cycle has two main phases, ...

Question 4

John Maynard Keynes devised the framework for developing policies to avoid future severe macroeconomic downturns.

Accepted Answer

A) True 
 B)False

Question 5

When the National Activity Index is at zero, the economy is growing at _____ rates. Negative values imply _____ trends. Positive values imply that growth is _____ the long-term trend.

Accepted Answer

A)   rapid; slowing; equal to
B)   slow; accelerating; equal to
C)   historical; slowing; faster than
D)   historical; accelerating; slower than

Question 6

In the income approach to calculating GDP, net interest is the interest paid by businesses plus the interest they receive.

Accepted Answer

A) True 
 B)False

Question 7

Everything else the same, if investment expenditures rise by $300 billion and imports increase by $300 billion, then GDP

Accepted Answer

A)   increases by $600 billion.
B)   increases by $300 billion.
C)   decreases by $600 billion.
D)   does not change.

Question 8

Cities in Colombia have the option to designate "tolerance zones" where prostitution is legal. How would Colombia's GDP be affected if prostitution were made illegal?

Accepted Answer

All other things being equal, GDP would ...

Question 9

The national income and product accounts do all of these EXCEPT

Accepted Answer

A)   let economists judge our nation's economic performance.
B)   compare U.S. income and output to that of other nations.
C)   track the economy's condition over the course of the business cycle.
D)   track changes in income distribution.

Question 10

The national income and product accounts provide

Accepted Answer

A)   the ability to track business cycles.
B)   the ability to account for nonmarket activities, such as car maintenance.
C)   a comprehensive measure of domestic unemployment.
D)   a comprehensive measure of domestic inflation.

Question 11

If in the past, you always painted your own house but now you hire a painting contractor to do the work, what effect does this have on GDP?

Accepted Answer

A)   GDP is unaffected by this change.
B)   GDP falls as a result of this change.
C)   GDP at first rises but then falls.
D)   GDP rises as a result of this change.

Question 12

The proprietors' income component of the income approach to calculating GDP must be adjusted by an allowance to account for depreciating equipment.

Accepted Answer

A) True 
 B)False

Question 13

If a country's GDP per capita is $86,000, then a typical married couple earns $172,000 per year.

Accepted Answer

A) True 
 B)False

Question 14

Which statement about environmental quality and economic activity is TRUE?

Accepted Answer

A)   Wealthier countries tend to value environmental quality more than developing countries do.
B)   As countries develop, they spend less on resources to improve environmental quality.
C)   No measure of economic progress incorporates environmental quality.
D)   Developing countries generally prefer to keep their environments pristine, even at the cost of such necessities as food and health care.

Question 15

Which phase of the business cycle occurs immediately before a trough?

Accepted Answer

A)   peak
B)   recession
C)   boom
D)   recovery

Question 16

Which statement is TRUE about business cycles?

Accepted Answer

A)   They all have the same approximate length.
B)   Every cycle is unique.
C)   Each recession causes the same amount of unemployment.
D)   The intensity tends to be constant from recession to recession, but the duration differs.

Question 17

China's GDP per capita would have been higher if not for the deterioration in its environment.

Accepted Answer

A) True 
 B)False

Question 18

Which statement is TRUE in the case of the simple circular flow model with no savings?

Accepted Answer

A)   Total spending is greater than total income.
B)   Total spending equals total income only at full employment.
C)   Total spending equals total income.
D)   Total spending is less than total income.

Question 19

Which statement does NOT describe an adjustment to national income to obtain GDP?

Accepted Answer

A)   Net exports are added to national income.
B)   A capital consumption allowance is added to national income.
C)   Income payments from the rest of the world are added to national income.
D)   Payments U.S. corporations and residents send to foreign residents are subtracted from national income.

Question 20

Econoland and Macroland are neighboring countries. Which of these would NOT be included in the GDP of Econoland?

Accepted Answer

A)   the value of the output of a factory in Econoland that is owned by a company whose headquarters are located in Macroland
B)   the value of the output of a factory in Macroland that is owned by a company whose headquarters are located in Econoland
C)   the value of output produced by a factory in Econland that was sold in Macroland
D)   the value of output produced in Econoland that remained unsold the year it was produced

Exam 5: Introduction to Macroeconomics

Econoland and Macroland are neighboring countries. Which of these would NOT be included in the GDP of Econoland?

Correct AnswerverifiedShow Answer

In the income approach to calculating GDP, net interest is the interest paid by businesses plus the interest they receive.

Correct AnswerverifiedShow Answer

John Maynard Keynes devised the framework for developing policies to avoid future severe macroeconomic downturns.

Correct AnswerverifiedShow Answer

Everything else the same, if investment expenditures rise by $300 billion and imports increase by $300 billion, then GDP

Correct AnswerverifiedShow Answer

When the National Activity Index is at zero, the economy is growing at _____ rates. Negative values imply _____ trends. Positive values imply that growth is _____ the long-term trend.

Correct AnswerverifiedShow Answer

Which statement about environmental quality and economic activity is TRUE?

Correct AnswerverifiedShow Answer

At the peak of the business cycle, the economy is typically operating

Correct AnswerverifiedShow Answer

The proprietors' income component of the income approach to calculating GDP must be adjusted by an allowance to account for depreciating equipment.

Correct AnswerverifiedShow Answer

Which statement does NOT describe an adjustment to national income to obtain GDP?

Correct AnswerverifiedShow Answer

Which phase of the business cycle occurs immediately before a trough?

Correct AnswerverifiedShow Answer

If in the past, you always painted your own house but now you hire a painting contractor to do the work, what effect does this have on GDP?

Correct AnswerverifiedShow Answer

Cities in Colombia have the option to designate "tolerance zones" where prostitution is legal. How would Colombia's GDP be affected if prostitution were made illegal?

Correct AnswerverifiedAll other things being equal, GDP would ...View AnswerShow Answer

The national income and product accounts do all of these EXCEPT

Correct AnswerverifiedShow Answer

If a country's GDP per capita is $86,000, then a typical married couple earns $172,000 per year.

Correct AnswerverifiedShow Answer

The national income and product accounts provide

Correct AnswerverifiedShow Answer

Which statement is TRUE about business cycles?

Correct AnswerverifiedShow Answer

Describe the parts of a typical business cycle. How does the business cycle differ from the trend line?

Correct AnswerverifiedThe business cycle has two main phases, ...View AnswerShow Answer

(Table) According to the table, when using the expenditure approach, GDP is

Correct AnswerverifiedShow Answer

Which statement is TRUE in the case of the simple circular flow model with no savings?

Correct AnswerverifiedShow Answer

China's GDP per capita would have been higher if not for the deterioration in its environment.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

When the National Activity Index is at zero, the economy is growing at ___ rates. Negative values imply _ trends. Positive values imply that growth is ___ the long-term trend.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
All other things being equal, GDP would ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The business cycle has two main phases, ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified