M&B Chapter 7 Quiz

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To study for Monday's test!

A nation's gross domestic product (GDP):

is the dollar value of the total output produced within the borders of the nation.

A nation's gross domestic product (GDP):

can be found by summing C + Ig + G + Xn.

National income accountants can avoid multiple counting by:

only counting final goods.

The term "final goods and services" refers to:

goods and services purchased by ultimate users, as opposed to resale or further processing.

Tom Atoe grows tomatoes for home consumption. This activity is:

productive but is excluded from GDP because no market transaction occurs.

In national income accounting, consumption expenditures include purchases of:

automobiles for personal use, but not houses.

Net exports are:

exports less imports.

Which of the following is not economic investment?

the purchase of 100 shares of AT&T by a retired business executive

Suppose that inventories were $40 billion in 2000 and $50 billion in 2001. In 2001, accountants would:

add $10 billion to other elements of investment in calculating total investment

In calculating GDP, governmental transfer payments, such as social security or unemployment compensation, are:

not counted.

The largest component of total expenditures in the United States is:

consumption.

The ZZZ Corporation issued $25 million in new common stock in 2001. It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans. As a result, investment:

of $18 million has occurred.

In 2001 Trailblazer Bicycle Company produced a mountain bike which was delivered to a retail outlet in November of 2001. The bicycle was sold to E.Z. Ryder in March of 2002. This bicycle is counted as:

investment in 2001 and as disinvestment in 2002.

In 1933 net private domestic investment was a minus $6.0 billion. This means that:

the production of 1933's GDP used up more capital goods than were produced in that year.

Consumption of fixed capital (depreciation) can be determined by:

subtracting NDP from GDP.

"Value added" refers to:

the difference between the value of a firm's output and the value of the inputs it has purchased from others.

Which of the following best defines national income?

all incomes earned by U.S. resource suppliers for their current contributions to production

The largest component of national income is:

compensation of employees.

Which of the following best defines disposable income?

income received by households less personal taxes

The term "real GDP" refers to:

GDP data that have been adjusted for changes in the price level.

The consumer price index (CPI):

measures changes in the prices of a market basket of some 300 goods and services purchased by urban consumers.

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