Which of these would most likely negatively impact a country’s overall level of income?

a decrease in demand for new automobiles

Why are intermediate products excluded from macroeconomic calculations of GDP?

because their value is included in that of the final product

Which statement best explains the relationship between points A and B?

Production reaches its highest point, then the economy begins to contract.

Which of these is used by macroeconomists to measure inflation?

the establishment of a base year

Which of these is an example of an intermediate product?

a computer monitor packaged as part of a new computer system

Which of the following would not be considered part of a nation’s GDP?

timber used to build the new house

What best explains why a nation’s GDP is an indication of its citizens’ overall well-being?

It gauges voluntary economic transactions occurring in that nation.

Which of these best describes how a business’s creation of output affects individuals?

It generates jobs and therefore increases income.

Which of the following most likely occurs during C?

Low production and high unemployment

Which of these states a difference between personal income (PI) and disposable personal income (DPI)?

PI - measured before taxes are taken; DPI - measured after taxes are taken

Which of these is an example of a nonmarket transaction?

babysitting as a favor to a friend

Why would the sale of a secondhand car not be included in a calculation of GDP?

The car does not represent new production.

Which of these would economists count as a member of a household, but not part of a family?

a single person with relatives who live elsewhere

Which of these would most likely positively affect a nation’s GDP?

a government contract with a large private firm for road construction

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Evaluating the Economy GDP

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Questions 26

Answers

1
Which of these would most likely negatively impact a country’s overall level of income?
a decrease in demand for used automobiles
increased tourist activity during the summer months
a decrease in demand for new automobiles
increased commercial activity during the year-end holiday season
2
Why are intermediate products excluded from macroeconomic calculations of GDP?
because the GDP is a measure of market output on a local level
because those products are goods, not services
because their value is included in that of the final product
because the GDP is a measure of market output on a national level
3
Which statement best explains the relationship between points A and B?
Unemployment reaches its highest point, then inflation begins to decrease.
Consumption reaches its highest point, and then supply begins to fall.
Inflation reaches its highest point, and then the economy begins to expand.
Production reaches its highest point, then the economy begins to contract.
4
Which term describes the individual use of products that can lead to externalities?
Private consumption
Free resources
Free riders
Common goods
5
Which of the following would not be counted in GDP (gross domestic product)?
Used truck sales
Fast-food worker earnings
Soda purchase
New home construction
6
A product that is included in another final product is called a(n) __ product.
secondhand sale
nonmarket sale
intermediate
underground economy
7
Which of these is used by macroeconomists to measure inflation?
the calculation of the number of households in a country
the creation of an output-expenditure model
the calculation of GDP in current dollars
the establishment of a base year
8
Which of these do economists consider to be the most complete and accurate measure of the aggregate economy?
Rate of deflation
Gross domestic product - GDP
Unemployment
Rate of inflation
9
Which of these is an example of an intermediate product?
a secondhand computer monitor sold alone
) a new computer monitor sold alone
a computer monitor that has been broken and needs replacement
a computer monitor packaged as part of a new computer system
10
The output- __ model calculates GDP in terms of aggregate demand.
GDP
per capita
price
expenditure
11
Which of the following would not be considered part of a nation’s GDP?
nails from the hardware store, used to build the fence for the older house
a new house
timber used to build the new house
fencing supplies from the hardware store, for an older house
12
What best explains why a nation’s GDP is an indication of its citizens’ overall well-being?
Tells how well the gov't is regulating the depreciation of capital equiptme
It gauges the economic effects of free trade agreements.
It tracks certain types of sale transactions.
It gauges voluntary economic transactions occurring in that nation.
13
Which of these best describes how a business’s creation of output affects individuals?
It results in the establishment of a base year.
It reduces the number of secondhand sales and therefore decreases income.
It generates jobs and therefore increases income.
It increases the number of nonmarket transactions.
14
Which of the following most likely occurs during C?
Low production and high unemployment
High inflation and high unemployment
Low inflation and low unemployment
High production and low inflation
15
Which of these states a difference between personal income (PI) and disposable personal income (DPI)?
PI - measured before taxes are taken; DPI - measured after taxes are taken
PI refers to an individual’s income; DPI denotes income from an entire sec.
PI - measured after taxes are taken; DPI - measured before taxes are taken
PI - income from an entire sector; DPI refers to an individual’s income
16
The largest sector of the economy is the consumer, or __, sector.
business
net foreign
government
household
17
Which point of the business cycle represents a peak?
E
C
B
D
18
Which part of the cycle represents a period of contraction?
C
B
D
A
19
Which of these is always true of an “underground economy” transaction?
It is illegal.
It is unreported.
It is legal.
It is taxed.
20
Choices can have unintended consequences. When those outcomes affect someone who had no part in the initial choice, its?
Externality
Free resource
Eminent domain
Free market
21
The sale of a used good is a(n) __ sale.
underground
nonmarket
intermediate
secondhand
22
Which economic sector is not determined by measuring specific sources of income?
the business or investment sector
the household sector
the net foreign sector
the public or government sector
23
Which of these is an example of a nonmarket transaction?
maintaining a newspaper route
babysitting as a favor to a friend
paying a consultant for ideas on how to improve a product
mowing lawns to earn spending money
24
Why would the sale of a secondhand car not be included in a calculation of GDP?
The sale is a free-market transaction.
The car is an intermediate product.
The car does not represent new production.
The transaction occurs in the underground economy.
25
Which of these would economists count as a member of a household, but not part of a family?
an adopted child whose birth parents live elsewhere
a single person with relatives who live elsewhere
a woman sharing an apartment with her brother
an adult male sharing an apartment with relatives
26
Which of these would most likely positively affect a nation’s GDP?
a government contract with a large private firm for road construction
a government-managed restructuring of the airline industry
a steady growth of that nation’s underground economy
an increase in the number of non-market sales

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