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Macroeconomics,6e(Abeletal.)

Chapter2 TheMeasurementandStructureoftheNationalEconomy

2.1

National

Income

Accounting

4)TheBigdrillcompanydrillsforoil,whichitsellsfor$200milliontotheBigoilcompanytobemadeintogas.

TheBigoilcompanysgasissoldforatotalof$600million.Whatisthetotalcontributiontothecountrys

GDPfromcompaniesBigdrillandBigoil?

A)$200million

B)$400million

C)$600million

D)$800million

Answer:CDiff:2

Topic:Section2.1

QuestionStatus:

Previous

Edition

6)TheCompagnieNaturellesellsmountedbutterflies,usingbutterflybaititbuysfromanotherfirmfor

$20,000.Itpaysitsworkers$35,000,pays$1000intaxes,andhasprofitsof$3000.Whatisitsvalueadded?

A)$3000

B)$19,000

C)$39,000

D)$59,000

Answer:CDiff:2

Topic:Section2.1

QuestionStatus:PreviousEdition

2.2GrossDomesticProduct

5)Becausegovernmentservicesarenotsoldinmarkets,

A)theyareexcludedfrommeasurementsofGDP.

B)thegovernmenttriestoestimatetheirmarketvalueandusesthistomeasurethegovernments

contributiontoGDP.

C)theyarevaluedattheircostofproduction.

D)taxesareusedtovaluetheircontribution.

Answer:C

Diff:1

Topic:Section2.2

QuestionStatus:PreviousEdition

8)MarvinsMetalCompanyproducesscrewsthatitsellstoFord,whichusesthescrewsasacomponentofits

cars.Inthenationalincomeaccounts,thescrewsareclassifiedas

A)inventory.

B)finalgoods.

C)capitalgoods.

D)intermediategoods.

Answer:D

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Diff:2

Topic:Section2.2

QuestionStatus:PreviousEdition

10)Fredthefarmerpurchasedfivenewtractorsat$20,000each.Fredsoldhisoldtractorstootherfarmersfor

$50,000.ThenetincreaseinGDPofthesetransactionswas

A)$50,000.

B)$100,000.

C)$125,000.

D)$150,000.

Answer:BDiff:2

Topic:Section2.2

QuestionStatus:PreviousEdition

11)InventoriesincludeeachofthefollowingEXCEPT

A)unsold

finished

goods.

B)goodsinprocess.

C)rawmaterialsheldbyfirms.

D)officeequipment.

Answer:DDiff:1

Topic:Section2.2

QuestionStatus:PreviousEdition

15)IfC=$500,I=$150,G=$100,NX=$40,andGNP=$800,howmuchisNFP?

A)-$10

B)-$5

C)$5

D)$10

Answer:DDiff:3

Topic:Section2.2

QuestionStatus:PreviousEdition

18)Consumerspendingisspendingby________householdsonfinalgoodsandservicesproduced________.

A)domestic;domesticallyandabroad

B)domestic;domestically

C)domesticandforeign;domesticallyandabroad

D)domesticandforeign;domestically

Answer:ADiff:2

Topic:Section2.2

QuestionStatus:PreviousEdition

19)IntheexpenditureapproachtoGDP,whichofthefollowingwouldbeexcludedfrommeasurementsof

GDP?

A)Governmentpaymentsforgoodsproducedbyforeignfirms

B)Governmentpaymentsforgoodsproducedbyfirmsownedbystateorlocalgovernments

C)Governmentpaymentsforwelfare

D)AllgovernmentpaymentsareincludedinGDP

Answer:C

Diff:2

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Topic:Section2.2

QuestionStatus:PreviousEdition

23)Privatedisposableincomeequals

A)GNP-taxes+transfers+interest.

B)NNP-taxes+transfers+interest.

C)nationalincome-taxes+transfers+interest.

D)nationalincome-taxes-transfers+interest.

Answer:ADiff:2

Topic:Section2.2

QuestionStatus:PreviousEdition

2.3SavingandWealth

2)Inagivenyear,acountrysGDP=$9841,netfactorpaymentsfromabroad=$889,taxes=$869,transfers

receivedfromthegovernment=$296,interestpaymentsonthegovernmentsdebt=$103,consumption=

$8148,andgovernmentpurchases=$185.Thecountryhadprivatesavingequalto

A)$285.

B)$3850.

C)$2397.

D)$2112.

Answer:DDiff:2

Topic:Section2.3

QuestionStatus:New

6)Thegovernmentbudgetsurplusequals

A)governmentpurchasesplustransfers.

B)governmentreceiptsminusgovernmentoutlays.

C)governmentpurchasesminusnetreceipts.

D)governmentpurchasesminustransfers.

Answer:BDiff:1

Topic:Section2.3

QuestionStatus:Revised

7)Nationalsavingequalsprivatesavingplusgovernmentsaving,whichinturnequals

A)C

+

S

+

T.

B)GDP+C+G.

C)GDP+NFP.

D)GDP+NFP-C-G.

Answer:DDiff:2

Topic:Section2.3

QuestionStatus:PreviousEdition

8)Theuses-of-savingidentitysaysthataneconomysprivatesavingisusedfor

A)investment,interestexpenses,andthegovernmentbudgetdeficit.

B)investment,thegovernmentbudgetdeficit,andthecurrentaccount.

C)investment,interestexpenses,thegovernmentbudgetdeficit,andthecurrentaccount.

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D)investment,interestexpenses,thegovernmentbudgetdeficit,transferpayments,andthecurrent

account.

Answer:BDiff:1

Topic:Section2.3

QuestionStatus:PreviousEdition

10)Supposethatprivatesavingis$1590billion,investmentis$1945billion,andthecurrentaccountbalanceis-

$489billion.Fromtheuses-of-savingidentity,howmuchisgovernmentsaving?

A)-$134billion

B)-$844billion

C)$844billion

D)$134billion

Answer:ADiff:3

Topic:Section2.3

QuestionStatus:

Revised

11)Supposethatnationalsavingis$1456billion,investmentis$1945billion,andprivatesavingis$1590billion.

Howmuchisthecurrentaccountbalance?

A)$489billion

B)$221billion

C)-$221billion

D)-$489billion

Answer:DDiff:3

Topic:Section2.3

QuestionStatus:Revised

12)Inthemid-to-late1980s,theUnitedStateshad twindeficitsbecauseboth________and________were

negative.

A)governmentsaving;privatesaving

B)saving;investment

C)thecurrentaccount;investment

D)governmentsaving;thecurrentaccount

Answer:DDiff:2

Topic:Section2.3

QuestionStatus:PreviousEdition

2.4

Real

GDP,

Price

Indexes,

and

Inflation

2)ThevalueofrealGDPinthecurrentyearequals

A)thevalueofcurrent-yearoutputinpricesofthebaseyear.

B)thevalueofcurrent-yearoutputinpricesofthecurrentyear.

C)thevalueofbase-yearoutputinpricesofthebaseyear.

D)thevalueofbase-yearoutputinpricesofthecurrentyear.

Answer:ADiff:1

Topic:Section2.4

QuestionStatus:PreviousEdition

4)ThecountryofOldJerseyproducesmilkandbutter,andithaspublishedthefollowingmacroeconomicdata,

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where

quantitie

sarein

gallons

and

prices

are

dollars

pergallon.

Year1 Year2

Good Quantity Price Quanitiy Price

Milk 500 $2 900 $3

Butter

2000

$1

3000

$2

BetweenYear1andYear2,theGDPdeflator(basedonYear1asabaseyear)rose

A)60.00%.

B)81.25%.

C)83.33%.

D)123.00%.

Answer:BDiff:3

Topic:Section2.4

QuestionStatus:Revised

6)IfnominalGDPfor2003is$6400billionandrealGDPfor2004is$6720billion(in2003dollars),thenthe

growthrateofrealGDPis

A)0%.

B)0.5%.

C)5%.

D)50%.

Answer:CDiff:2

Topic:Section2.4

QuestionStatus:PreviousEdition

14)Ifthepriceindexlastyearwas1.0andtodayitis1.4,whatistheinflationrateoverthisperiod?

A)-4%

B)1.4%

C)4%

D)40%

Answer:DDiff:2

Topic:Section2.4

QuestionStatus:PreviousEdition

19)The

CPI

may

overstate

inflation

for

all

the

following

reasons

EXCEPT

A)problemsmeasuringchangesinthequalityofgoods.

B)substitutionbyconsumerstowardscheapergoods.

C)problemsmeasuringthequalityofservices.

D)changesinSocialSecuritybenefits.

Answer:DDiff:1

Topic:Section2.4

QuestionStatus:PreviousEdition

2.5InterestRates

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Theexpectedrealinterestrate(r)isequalto

A)nominalinterestrateminusinflationrate.

B)nominalinterestrateminusexpectedinflationrate.

C)expectednominalinterestrateminusinflationrate.

D)nominalinterestrateplusexpectedinflationrate.

Answer:

B

Diff:1

Topic:Section2.5

QuestionStatus:PreviousEdition

4)In2004,inflationexceededexpectedinflation.In2005,expectedinflationexceededinflation.Thereforethe

realinterestratewas________thantheexpectedrealinterestratein2004andtherealinterestratewas

________thantheexpectedrealinterestratein2005.

A)less;less

B)less;greater

C)greater;less

D)greater;greater

Answer:BDiff:2

Topic:Section2.5

QuestionStatus:New

5)Iftheexpectedinflationratewas2.5%,theexpectedrealinterestratewas4.0%,andtheactualinflationrate

turnedouttobe3.2%,thentherealinterestrateequals

A)1.7%.

B)3.2%.

C)3.3%.

D)4.7%.

Answer:CDiff:2

Topic:Section2.5

QuestionStatus:New

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