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Suppose that personal income is $3,500 billion, personal taxes are $1,000 billion, and depreciation is $500 billion. Disposable income is equal to which of the following?(A)$1,500 billion(B)$2,000 billion(C)$2,500 billion(D)$3,000 billion(E)There is not enough information to answer the question.A country’s real gross domestic product is the annual value of all final goods and services that are(A)purchased in that country, adjusted for changes in the price level(B)produced in that country, expressed in current prices(C)produced in that country, less exports(D)produced in that country, less depreciation(E)produced in that country, adjusted for changes in the price levelSuppose that in a particular country, nominal gross domestic product (GDP) grew by 8 percent, and the GDP deflator increased by 10 percent. The country’s growth rate of real GDP would be approximately equal to(A)-2%(B)-0.8%(C)0.8%(D)2%(E)18%An increase in which of the following would most likely cause the gross domestic product of a country to decrease in the short run?(A)Government spending(B)Imports(C)Money supply(D)Consumption spending by households(E)Investment spending by domestic firmsThe value of which of the following would be included in the United States gross domestic product?(A)Time spent volunteering at a local hospital(B)A United States savings bond received as a birthday gift(C)A movie ticket purchased at a local theater(D)A new handbag made in Italy by a United States firm(E)A used car sold at the same price paid for itWhich of the following can be concluded from the following data?(A)The base year for the price index was year 1.(B)The base year for the price index was year 3.(C)The economy was producing higher-quality goods and services in years 2 and 3 than in year 1.(D)The economy was experiencing inflation during years 2 and 3.(E)The economy was experiencing deflation during years 1, 2, and 3.Which of the following best illustrates an improvement in a country’s standard of living?(A)An increase in real per capita gross domestic product(B)An increase in nominal per capita gross domestic product(C)Price stability(D)A balanced budget(E)An increase in the consumer price indexBased on the economic figures in the following table, what value of gross domestic product, in billions of dollars?(A)$4,500(B)$4,700(C)$4,900(D)$5,150(E)$5,950The value of which of the following is counted in the United States gross domestic product?(A)Clean air(B)Child care a father provides for his child(C)An automobile produced in Sweden by a United States firm(D)A car produced in the United States and sold in Europe(E)Medical services not provided due to preventative health careIn the measurement of gross domestic product, investment includes spending by(A)businesses on capital goods and changes in inventories(B)businesses on stocks, bonds, and other financial assets(C)individual households on stocks, bonds, and other financial assets(D)the federal government to purchase bonds issued by the Federal Reserve(E)the Federal Reserve to buy government bondsIf the nominal gross domestic product (GDP) of the nation of Hypothetica increased in 2007 relative to the previous year, it must be true that in Hypothetica in 2007(A)both the price level and the real GDP have increased(B)neither the price level nor the real GDP has increased(C)the price level increased by a larger percentage than did the real GDP(D)the price level increased by a smaller percentage than did the real GDP(E)the price level and/or the real GDP has increased Gross domestic product has been criticized as a measure of well-being because it fails to take into account which of the following?(A)The distribution of income(B)The value of services(C)The value of intermediate goods(D)The value of financial transactions and sales of used items(E)The value of government servicesWhich of the following will lead to an increase in the United States gross domestic product?(A)More individuals prepare their own personal income tax forms.(B)Some citizens begin working abroad as computer programmers.(C)The government prohibits the sale of alcoholic beverages.(D)Foreign companies build new assembly plants in the United States.(E)A million United States households sell their used cars to their children.In one year, spending on consumption, investment, and government purchases was equal to 103 percent of a country’s gross domestic product. This would be possible only if(A)the money supply increased(B)net exports were positive(C)net exports were negative(D)the government ran a budget surplus(E)the government had a balanced budgetWhich of the following household purchases will be counted as part of gross private investment in a country’s gross domestic product?(A)Government bonds(B)Shares of a company stock(C)Corporate bonds(D)A new car for personal use(E)A newly constructed homeThe major difference between real and nominal gross domestic product (GDP) is that real GDP(A)excludes government transfer payments(B)excludes imports(C)is adjusted for price-level changes using a price index(D)measures only the value of final goods and services that are consumed(E)measures the prices of a market basket of goods purchased by a typical urban consumerWhich of the following is included in the computation of gross domestic product?(A)Government transfer payments, such as unemployment benefits(B)Purchases of used goods, such as used cars(C)Child care tasks performed by househusbands(D)Total value of business inventories(E)Additions to business inventoriesWhich of the following best explains why transfer payments are not included in the calculation of gross domestic product?(A)Transfer payments are used to pay for intermediate goods, and intermediate goods are excluded from gross domestic product.(B)Transfer payments are a government expenditure, and government expenditures are excluded from gross domestic product.(C)Recipients of transfer payments have not produced or supplied goods and services in exchange for these payments.(D)Recipients of transfer payments are usually children, and income earned by children is excluded in gross domestic product.(E)Recipients of transfer payments arc sometimes not citizens of the United States.Which of the following transactions would represent an addition to a nation’s current gross domestic product?(A)Ms. Smith purchases a share of stock in an automobile company.(B)A retailer increases her stock of imported shoes.(C)The government increases its domestic purchases of food for use by the military.(D)A corporation sells shoes from last year’s inventory.(E)A mother sells her car to her daughter.If real gross domestic product is increasing at 3 percent per year and nominal gross domestic product is increasing at 7 percent per year, which of the following is necessarily true?(A)Unemployment is increasing.(B)The price level is increasing.(C)Exports exceed imports.(D)The economy is in a recession.(E)The government is running a budget deficit.As a measure of economic welfare, gross domestic product underestimates a country's production of goods and services when there is an increase in(A)the production of military goods(B)the production of antipollution devices(C)crime prevention services(D)household production(E)legal servicesUnexpected increases in inventories usually precede(A)increases in inflation(B)increases in imports(C)stagflation(D)decreases in production(E)decreases in unemploymentIf purchases of education and medical care were counted as investment rather than consumption, gross domestic product would(A)not change, because there is no change in total expenditures(B)increase, because investment is included in gross domestic product but consumption is not(C)increase, because consumption is included in gross domestic product but investment is not(D)decrease, because investment is weighted more heavily than consumption in calculating gross domestic product(E)decrease, because consumption is weighted more heavily than investment in calculating gross domestic productWhen the average price level increases by 10 percent in a given year, which of the following must increase by 10 percent for real output to remain constant?(A)Real national income(B)Nominal national income(C)The international value of the currency(D)Real interest rates(E)Nominal interest ratesA short-run increase in national income could be caused by a decrease in which of the following?(A)Consumption(B)Investment(C)Imports(D)Government spending(E)Exports ................
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