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| 1 | |
Last year domestic firms spent $115 billion on plant and equipment, of which $15 billion replaced equipment that had worn out during the year. In addition, they added $10 billion to inventories. In calculating GDP, national income accountants would add gross investment of: |
| | A) | $95 billion |
| | B) | $100 billion |
| | C) | $110 billion |
| | D) | $125 billion |
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| 2 | |
In calculating GDP, the value of net exports is: |
| | A) | included, because exports reflect U.S. production while imports do not |
| | B) | included, because exports reflect U.S. production and imports reflect U.S. consumption |
| | C) | excluded, because exports reflect a flow of products outside the U.S. and imports reflect a flow of money outside the U.S. |
| | D) | excluded, because neither exports nor imports reflect U.S. consumption |
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| 3 | |
Suppose nominal GDP in the base year was $380 billion. Five years later, nominal GDP was $480 and the GDP price index was 120. Over those five years, real GDP: |
| | A) | increased by $20 billion |
| | B) | increased by $96 billion |
| | C) | increased by $80 billion |
| | D) | did not change |
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| 4 | |
In order from largest to smallest, the components of U.S. expenditures comprising GDP are: |
| | A) | consumption, net exports, gross investment, government purchases |
| | B) | government purchases, gross investment, consumption, net exports |
| | C) | consumption, government purchases, gross investment, net exports |
| | D) | consumption, government purchases, net exports, gross investment |
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| 5 | |
If business firms draw down their inventories this year: |
| | A) | net investment will be negative |
| | B) | this will have no impact on measured GDP |
| | C) | the drop in inventory must be subtracted in measuring GDP |
| | D) | the drop in inventory must be added back in measuring GDP |
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| 6 | |
Disposable income consists of: |
| | A) | personal income plus personal taxes |
| | B) | net domestic product minus personal taxes |
| | C) | GDP corrected for inflation |
| | D) | consumption plus saving |
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| 7 | |
In a given year, a country's exports total $25 billion and its imports are $27 billion. Its net exports are: |
| | A) | $52 billion |
| | B) | - $2 billion |
| | C) | $2 billion |
| | D) | $26 billion |
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| 8 | |
GDP can be found either by adding up total expenditures on U.S. production or by adding the incomes received by U.S. citizens. |
| | A) | True |
| | B) | False |
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| 9 | |
If the GDP price index is 150 and nominal GDP is $600, real GDP is $400. |
| | A) | True |
| | B) | False |
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| 10 | |
GDP includes |
| | A) | all government spending at all levels |
| | B) | all government spending at all levels except the local level |
| | C) | government purchases at all levels plus federal spending on transfer payments |
| | D) | government purchases at all levels, which excludes transfer payments |
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