ECO201 Chapter 7 Exam Solution
Question 1
1 out of 1 points
Gross Domestic Product (GDP) is the total market value of all
Selected
... [Show More] Answer: d.
final goods and services produced annually within a country's borders.
Answers: a.
final and intermediate goods and services produced annually within a country's borders.
b.
final goods produced every month within a country's borders.
c.
intermediate goods and services produced annually within a country's borders.
d.
final goods and services produced annually within a country's borders.
• Question 2
0 out of 1 points
Exhibit 7-1
Consumption expenditures $ 4,150
Federal government purchases of goods and services 850
State and local government’s purchases 331
Investment 751
Proprietors income 150
Compensation of employees 4,080
Corporate profits 134
Taxes on corporate profits 23
Rental income 31
Capital consumption allowance 295
Indirect business taxes 130
Net interest 147
Exports 300
Imports 320
Undistributed corporate profits 111
Transfer payments 66
Personal taxes 45
Dividends 0
Income Earned from the Rest of the World 252
Income Earned by the Rest of the World 1,347
Social insurance taxes 222
Statistical discrepancy 5
Refer to Exhibit 7-1. What is the value of disposable income?
Selected Answer: b.
$4,017
Answers: a.
$4,207
b.
$4,017
c.
$3,618
d.
$3,727
e.
$4,795
• Question 3
0 out of 1 points
Exhibit 7-5
Economic Data for Country Z
Year GDP Real GDP
1 $400 billion $378 billion
2 $429 billion $398 billion
3 $440 billion $386 billion
4 $467 billion $395 billion
Refer to Exhibit 7-5. During year 3, Country Z experienced economic _____________ and _________________.
Selected Answer: d.
decline; deflation (falling price level)
Answers: a.
decline; inflation (rising price level)
b.
growth; inflation (rising price level)
c.
growth; deflation (falling price level)
d.
decline; deflation (falling price level)
• Question 4
1 out of 1 points
Which of the following would definitely not be included in the measurement of GDP?
Selected Answer: d.
value of the services of a person who mows his or her own lawn
Answers: a.
value of the services of a maid who cleans your house
b.
value of the services of a painter who paints your garage
c.
value of the services of a plumber who fixes your kitchen sink
d.
value of the services of a person who mows his or her own lawn
• Question 5
1 out of 1 points
Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E. Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals _________ and GDP equals _________.
Selected Answer: c.
$150; $550
Answers: a.
$550; $150
b.
$130; $530
c.
$150; $550
d.
$530; $130
e.
none of the above
• Question 6
1 out of 1 points
In 1950, the country with the highest per-capita GDP was
Selected Answer: d.
the United States.
Answers: a.
the Netherlands.
b.
Venezuela.
c.
Switzerland.
d.
the United States.
e.
New Zealand.
• Question 7
1 out of 1 points
Suppose that inventory investment is $20 billion and (total) investment is $680 billion. What does purchases of newly produced capital goods equal?
Selected Answer: e.
There is not enough information to answer this question.
Answers: a.
$715 billion
b.
$785 billion
c.
$750 billion
d.
$35 billion
e.
There is not enough information to answer this question.
• Question 8
1 out of 1 points
Suppose that consumption spending is $4,200 billion, spending on durable goods is $1,200 billion, and spending on services is $2,000 billion. What does spending on nondurable goods equal?
Selected Answer: b.
$1,000 billion
Answers: a.
$7,200 billion
b.
$1,000 billion
c.
$2,200 billion
d.
$3,200 billion
e.
There is not enough information to answer this question.
• Question 9
1 out of 1 points
The typical U.S. business cycle, measured peak to peak, lasts approximately
Selected Answer: b.
4 to 5 years.
Answers: a.
8 to 10 years.
b.
4 to 5 years.
c.
1 to 3 years.
d.
6 months to 2 years.
• Question 10
1 out of 1 points
If a business firm in Country A produces a good but does not sell it in that same year, that good will not be counted in Country A’s GDP.
Selected Answer: False
Answers: True
False
• Question 11
1 out of 1 points
The research of economists Stevenson and Wolfers tends to support the Easterlin paradox.
Selected Answer: False
Answers: True
False
• Question 12
1 out of 1 points
National income equals
Selected Answer: b.
compensation of employees + proprietors' income + corporate profits + rental income + net interest.
Answers: a.
wages + salaries + corporate profits + net income.
b.
compensation of employees + proprietors' income + corporate profits + rental income + net interest.
c.
compensation of employees + proprietors' income + indirect business taxes + rental income + net interest.
d.
the monetary value of fringe benefits + tips + wages + profits + salaries.
e.
none of the above
• Question 13
1 out of 1 points
Country A has a higher GDP than country B. What does this mean?
Selected Answer: d.
It means that the total market value of the final goods and services produced in country A is greater than the total market value of the final goods and services produced in country B.
Answers: a.
It means that on a per-capita basis the residents of country A are relatively better off (in terms of the goods and services they have available to them) than the residents of country B.
b.
It means that on a per-capita basis the residents of country A are richer than the residents of country B.
c.
It means that more goods and services were produced in country A than country B.
d.
It means that the total market value of the final goods and services produced in country A is greater than the total market value of the final goods and services produced in country B.
e.
a and d
• Question 14
1 out of 1 points
Which of the following is a nonmarket good?
Selected Answer: d.
a and c
Answers: a.
the corn you grow in your home garden and consume
b.
the clothes you sew and sell to a neighbor who pays you by writing you a check
c.
the self-portrait hanging in your den
d.
a and c
e.
a, b, and c
• Question 15
1 out of 1 points
Consumption expenditures in the U.S. usually account for approximately __________ percent of GDP.
Selected Answer: b.
70
Answers: a.
60
b.
70
c.
50
d.
80
e.
40
• Question 16
1 out of 1 points
Which of the following is counted in GDP?
Selected Answer: b.
the services of a real estate broker
Answers: a.
the trading of 100 shares of Microsoft stock
b.
the services of a real estate broker
c.
government transfer payments
d.
the sale of a used car
e.
none of the above
• Question 17
1 out of 1 points
Corporate profits is the largest category of national income.
Selected Answer: False
Answers: True
False
• Question 18
0 out of 1 points
Exhibit 7-5
Economic Data for Country Z
Year GDP Real GDP
1 $400 billion $378 billion
2 $429 billion $398 billion
3 $440 billion $386 billion
4 $467 billion $395 billion
Refer to Exhibit 7-5. What was Country Z’s economic growth rate between year 1 and year 2?
Selected Answer: a.
7.3%
Answers: a.
7.3%
b.
8.3%
c.
5.3%
d.
6.8%
• Question 19
1 out of 1 points
Net domestic product is the total value of
Selected Answer: b.
all final goods and services produced within a country's borders in a year minus capital consumption allowance.
Answers: a.
all final goods and services produced within a country's borders in a year minus gross private domestic investment.
b.
all final goods and services produced within a country's borders in a year minus capital consumption allowance.
c.
all final goods and services produced within a country's borders in a year.
d.
only intermediate goods produced within a country's borders in a year.
e.
only intermediate goods produced within a country's borders in a year plus gross private domestic investment.
• Question 20
1 out of 1 points
Sophia just bought shares of IBM stock for $20,000 and paid a $300 commission to her broker. How did this impact GDP?
Selected Answer: d.
GDP increased by $300
Answers: a.
GDP increased by $19,700
b.
GDP increased by $20,300
c.
GDP increased by $20,000
d.
GDP increased by $300
e.
it had no impact on GDP
• Question 21
1 out of 1 points
In 1900, the country with the highest per capita GDP was
Selected Answer: c.
New Zealand.
Answers: a.
Belgium.
b.
the United States.
c.
New Zealand.
d.
the Netherlands.
e.
Australia.
• Question 22
1 out of 1 points
What is the proper sequence of the phases of a business cycle?
Selected Answer: c.
peak, contraction, trough, recovery, expansion
Answers: a.
peak, contraction, recovery, trough, expansion
b.
contraction, peak, trough, recovery, expansion
c.
peak, contraction, trough, recovery, expansion
d.
recovery, trough, peak, expansion, contraction
e.
peak, contraction, trough, expansion, recovery
• Question 23
1 out of 1 points
An example of income earned but not received is
Selected Answer: c.
undistributed profits.
Answers: a.
welfare payments.
b.
Social Security payments.
c.
undistributed profits.
d.
a and b
e.
a, b, and c
• Question 24
1 out of 1 points
Exhibit 7-4
Economic Data for Country A
Year/Quarter Real GDP
2012/Quarter 1 $450 billion
2012/Quarter 2 $430 billion
2012/Quarter 3 $425 billion
2012/Quarter 4 $439 billion
Refer to Exhibit 7-4. Did Country A experience a recession (based on the standard definition) in 2012?
Selected Answer: c.
Yes, because Real GDP declined during two consecutive quarters in 2012
Answers: a.
Yes, because Real GDP was lower at the end of the year than it was at the beginning of the year.
b.
No, because Real GDP did not decline during three consecutive quarters in 2012.
c.
Yes, because Real GDP declined during two consecutive quarters in 2012
d.
This information cannot be determined because the determination of a recession is based upon GDP not Real GDP.
• Question 25
0 out of 1 points
GDP includes some nonmarket goods.
Selected Answer: False
Answers: True
False [Show Less]