macro unit one

In a circular-flow diagram,

• Sales revenue flow from firms to households, and goods and services flow from households to

  firms

• income payments flow from firms to households, and sales revenue flows from households to

  firms.

• inputs and outputs flow in the same direction as the flow of dollars, from firms to households.

• dollars flow from firms to households, and goods and services flow from households to firms.

Refer to the figure above. Which two veins in the circular flow diagram above capture the following transaction: You write a check for $120 to the campus bookstore for the purchase of textbooks.

• A/B and C/D

• A/B and L/N

• L/N and K/M

• C/D and K/M

a circular-flow diagram,

• money flows from households to firms, and goods and services flow from firms to households.

• goods flow from households to firms, and services flow from firms to households.

• payments for the use of labor flow from firms to households, and sales revenue flows from households to firms.

• both A and C.

Real GDP per capita is defined as

• real GDP divided by total population.

• nominal GDP divided by the number of workers.

• real GDP divided by the number of workers.

• nominal GDP divided by total population.

Which of the following are equal to one another?

i) gross domestic production

ii) aggregate expenditure

iii) aggregate income

• I equals II, but not III.

• I equals II equals III.

• II equals III, but not I.

• I equals III, but not II.

To examine how the total domestic production of an economy has changed over time, it would be better to examine

• real GDP.

• nominal GDP.

• the GDP index.

• the GDP deflator.

Let C represent consumption expenditure, S saving, I investment expenditures, G government purchases of goods and services, and NX net exports of goods and services. Then GDP equals

• C+S+G+NX.

• C+I+G-NX.

• C+S+G-NX.

• C+I+G+NX.

Net exports of goods and services equal

• the value of imports of goods and services minus the value of exports of goods and services.

• the value of exports of goods and services divided by the value of imports of goods and services.

• the value of exports of goods and services minus the value of imports of goods and services.

• the value of exports of goods and services plus the value of imports of goods and services.

the calculation of GDP by the expenditure approach, exports from the U.S. must be

• subtracted because they are included in the consumption of a foreign country.

• subtracted if they are bought by foreign firms for investment purposes.

• ignored because they are not bought by U.S. citizens.

• added

If in a given year an economy has consumption of $3000, investment of $2000, government purchases of $1500, exports of $500, imports of $600, taxes of $1200, transfer payments of $400, and depreciation of $300, then GDP will equal

• 9500

• 7600

• 6400

• 7000

• 8900