Macroeconomics,6e(Abeletal.

)
Chapter2 TheMeasurementandStructureoftheNationalEconomy

2.1NationalIncomeAccounting

4)TheBigdrillcompanydrillsforoil,whichitsellsfor$200milliontotheBigoilcompanytobemadeintogas.
TheBigoilcompanysgasissoldforatotalof$600million.Whatisthetotalcontributiontothecountrys
GDPfromcompaniesBigdrillandBigoil?
A)$200million
B)$400million
C)$600million
D)$800million
Answer:C
Diff:2
Topic:Section2.1
QuestionStatus:PreviousEdition

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:C
Diff: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:B
Diff:2
Topic:Section2.2
QuestionStatus:PreviousEdition

11)InventoriesincludeeachofthefollowingEXCEPT
A)unsoldfinishedgoods.
B)goodsinprocess.
C)rawmaterialsheldbyfirms.
D)officeequipment.
Answer:D
Diff: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:D
Diff:3
Topic:Section2.2
QuestionStatus:PreviousEdition

18)Consumerspendingisspendingby________householdsonfinalgoodsandservicesproduced________.
A)domestic;domesticallyandabroad
B)domestic;domestically
C)domesticandforeign;domesticallyandabroad
D)domesticandforeign;domestically
Answer:A
Diff:2
Topic:Section2.2
QuestionStatus:PreviousEdition

19)IntheexpenditureapproachtoGDP,whichofthefollowingwouldbeexcludedfrommeasurementsof
GDP?
A)Governmentpaymentsforgoodsproducedbyforeignfirms
B)Governmentpaymentsforgoodsproducedbyfirmsownedbystateorlocalgovernments
C)Governmentpaymentsforwelfare
D)AllgovernmentpaymentsareincludedinGDP
Answer:C
Diff:2

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:A
Diff: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:D
Diff:2
Topic:Section2.3
QuestionStatus:New

6)Thegovernmentbudgetsurplusequals
A)governmentpurchasesplustransfers.
B)governmentreceiptsminusgovernmentoutlays.
C)governmentpurchasesminusnetreceipts.
D)governmentpurchasesminustransfers.
Answer:B
Diff: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:D
Diff: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:B
Diff: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:A
Diff:3
Topic:Section2.3
QuestionStatus:Revised

11)Supposethatnationalsavingis$1456billion,investmentis$1945billion,andprivatesavingis$1590billion.
Howmuchisthecurrentaccountbalance?
A)$489billion
B)$221billion
C)-$221billion
D)-$489billion
Answer:D
Diff:3
Topic:Section2.3
QuestionStatus:Revised

12)Inthemid-to-late1980s,theUnitedStateshadtwindeficitsbecauseboth________and________were
negative.
A)governmentsaving;privatesaving
B)saving;investment
C)thecurrentaccount;investment
D)governmentsaving;thecurrentaccount
Answer:D
Diff:2
Topic:Section2.3
QuestionStatus:PreviousEdition

2.4RealGDP,PriceIndexes,andInflation

2)ThevalueofrealGDPinthecurrentyearequals
A)thevalueofcurrent-yearoutputinpricesofthebaseyear.
B)thevalueofcurrent-yearoutputinpricesofthecurrentyear.
C)thevalueofbase-yearoutputinpricesofthebaseyear.
D)thevalueofbase-yearoutputinpricesofthecurrentyear.
Answer:A
Diff:1
Topic:Section2.4
QuestionStatus:PreviousEdition

4)ThecountryofOldJerseyproducesmilkandbutter,andithaspublishedthefollowingmacroeconomicdata,
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where
quantitie
sarein
gallons
and
prices
are
dollars

pergallon.

Year1
Year2

GoodQuantityPriceQuanitiyPrice
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:B
Diff:3
Topic:Section2.4
QuestionStatus:Revised

6)IfnominalGDPfor2003is$6400billionandrealGDPfor2004is$6720billion(in2003dollars),thenthe
growthrateofrealGDPis
A)0%.
B)0.5%.
C)5%.
D)50%.
Answer:C
Diff:2
Topic:Section2.4
QuestionStatus:PreviousEdition

14)Ifthepriceindexlastyearwas1.0andtodayitis1.4,whatistheinflationrateoverthisperiod?
A)-4%
B)1.4%
C)4%
D)40%
Answer:D
Diff:2
Topic:Section2.4
QuestionStatus:PreviousEdition

19)TheCPImayoverstateinflationforallthefollowingreasonsEXCEPT
A)problemsmeasuringchangesinthequalityofgoods.
B)substitutionbyconsumerstowardscheapergoods.
C)problemsmeasuringthequalityofservices.
D)changesinSocialSecuritybenefits.
Answer:D
Diff:1
Topic:Section2.4
QuestionStatus:PreviousEdition

2.5InterestRates

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:B
Diff: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:C
Diff:2
Topic:Section2.5
QuestionStatus:New