In a simple circular-flow diagram, total income and total expenditure are

always equal because every transaction has a buyer and a seller.

never equal because total income always exceeds total expenditure.

seldom equal because of the ongoing changes in an economy’s unemployment rate.

equal only when the government purchases no goods or services.

According to the circular-flow diagram GDP

can be computed as the total income paid by firms or as expenditures on final goods and services.

can be computed as the total income paid by firms, but not as expenditures on final goods and services.

can be computed as expenditures on final goods and services, but not as the total income paid by firms.

cannot be computed as either total income paid by firms or expenditures on final goods and services.

Which of the following pairs correctly identify W and Y?

markets for factors of production and markets for goods and services

Which of the following pairs correctly identify X and Z?

markets for factors of production and markets for goods and services

flow of dollars and flow of inputs and outputs

In computing GDP, market prices are used to value final goods and services because

market prices reflect the values of goods and services.

market prices do not change much over time, so it is easy to make comparisons between years.

market prices reflect the quantity sold.

None of the above is correct; market prices are not used in computing GDP.

If the price of a dress is three times the price of a pair of shoes, then a pair of shoes contributes

exactly one-third as much to GDP as does a dress.

more than one-third as much to GDP as does a dress.

less than one-third as much to GDP as does a dress.

exactly one-fourth as much to GDP as does a dress.

Suppose that an economy produces 20,000 units of good A which sells at $3 a unit and 40,000 units of good B which sells at $1 per unit. Production of good A contributes

3/2 times as much to GDP as the production of good B.

1/3 times as much to GDP as the production of good B.

3 times as much to GDP as the production of good B.

2/3 times as much to GDP as production of good B.

Suppose that an economy produces 30,000 units of good A which sells at $3 a unit and 60,000 units of good B which sells at $2 per unit. Production of good A contributes

3/4 times as much to GDP as the production of good B.

1/2 times as much to GDP as the production of good B.

3/2 times as much to GDP as the production of good B.

4/3 times as much to GDP as production of good B.

Which of the following is included in the calculation of GDP?

The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.

The purchase of a new edition of a foreign textbook that was produced in a different nation.

The purchase of ink and paper supplies by a textbook company for the production of new textbooks.

The purchase of a used textbook from a friend who took the same class last year.

Suppose an apartment complex converts to a condominium, so that the former renters are now owners of their housing units. Suppose further that a current estimate of the value of the condominium owners' housing services is the same as the rent they previously paid. What happens to GDP as a result of this conversion?

GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services.

GDP is unaffected because neither the rent nor the estimate of the value owner-occupied housing services is included in GDP.

Most goods and services produced at home

and most goods and services produced illegally are excluded from GDP.

and most goods and services produced illegally are included in GDP.

are included in GDP while most goods and services produced illegally are excluded from GDP.

are excluded from GDP while most goods and services produced illegally are included in GDP

GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because

measuring them is so difficult.

the quality of these items is not high enough to contribute value to GDP.

the government wants to discourage the production and consumption of these items.

these items are not reported on income tax forms.

Estimates of the values of which of the following non-market goods or services are included in GDP?

the estimated rental value of owner-occupied homes

the value of services provided by major household appliances purchased in a previous period

All of the above are included in GDP.

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has .

increased measured GDP by the value added by the restaurant’s preparation and serving of the meals

increased measured GDP by the value of the restaurant meals.

Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his back yard. Regarding these two practices, which of the following statements is correct?

Only Joe’s and Jim’s grocery store purchases are included in GDP.

Only Joe’s grocery store purchases are included in GDP.

Joe’s and Jim’s grocery store purchases are included in GDP. The vegetables from Jim’s backyard garden are included at their market value.

Joe’s and Jim’s grocery store purchases are included in GDP. The vegetables from Jim’s backyard garden are included at their market value, if Jim provides this information.

A professional gambler moves from a state where gambling is illegal to a state where gambling is legal. Most of his income was, and continues to be, from gambling. His move

doesn't change GDP because gambling is never included in GDP.

doesn't change GDP because in either case his income is included.

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

doesn't change because both legal and illegal production are included in GDP.

doesn't change because these activities are never included in GDP.

The purchase of rice produced this period is included in GDP if the rice is

used in a meal a restaurant sells during the same period they buy the rice.

purchased by a family who uses it to make tuna casserole for its supper.

purchased by a frozen food company to increase its inventory.

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely

may have increased, decreased, or stayed the same.

CHAPTER 23

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180 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Macroeconomists study
A. the decisions of individual households and firms.
B. the interaction between households and firms.
C. economy-wide phenomena.
D. regulations imposed on firms and unions.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following headlines is more closely related to what microeconomists study than to what macroeconomists study?

Unemployment rate falls from 7.5 percent to 7.3 percent.

Real GDP falls by 0.4 percent in the third quarter.

Inflation was 2.4 percent last year.

The price of gasoline rises due to rising oil prices.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

Why do prices in general rise by more in some countries than in others?

Why do wages differ across industries?

Why do national production and income increase in some periods and not in others?

How rapidly is GDP currently increasing?

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

the effect of taxes on the prices of airline tickets, and the profitability of automobile-manufacturing firms

the price of beef, and wage differences between genders

how consumers maximize utility, and how prices are established in markets for agricultural products

the percentage of the labor force that is out of work, and differences in average income from country to country

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

The basic tools of supply and demand are
A. useful only in the analysis of economic behavior in individual markets.
B. useful in analyzing the overall economy, but not in analyzing individual markets.
C. central to microeconomic analysis, but seldom used in macroeconomic analysis.
D. central to macroeconomic analysis as well as to microeconomic analysis.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following statistics is usually regarded as the best single measure of a society’s economic wellbeing?
A. the unemployment rate
B. the inflation rate
C. gross domestic product
D. the trade deficit

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

GDP

is used to monitor the performance of the overall economy but is not the single best measure of a society’s

economic well-being.

is used to monitor the performance of the overall economy and is the single best measure of a society’s

economic well-being.

is not used to monitor the performance of the overall economy but is the single best measure of a society’s

economic well-being.

is not used to monitor the performance of the overall economy and is not the single best measure of a

society’s economic wellbeing.

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CHAPTER 23

Macroeconomists study
A. the decisions of individual households and firms.
B. the interaction between households and firms.
C. economy-wide phenomena.
D. regulations imposed on firms and unions.

Which of the following headlines is more closely related to what microeconomists study than to what macroeconomists study?

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Which of the following statistics is usually regarded as the best single measure of a society’s economic wellbeing?
A. the unemployment rate
B. the inflation rate
C. gross domestic product
D. the trade deficit

GDP

Gross domestic product measures
A. income and expenditures.
B. income but not expenditures.
C. expenditures but not income.
D. neither income nor expenditures.

Expenditures on a nation’s domestic production
A. are less than its domestic production.
B. are equal to its domestic production.
C. are greater than its domestic production.
D. could be less than, equal to, or greater than its domestic production.

For an economy as a whole,
A. wages must equal profit.
B. consumption must equal income.
C. income must equal expenditure.
D. consumption must equal saving.

Access all questions and much more by creating a free account

Popular Resources on Wayground

Discover more resources for Specialty

CHAPTER 23

Macroeconomists studyA. the decisions of individual households and firms.B. the interaction between households and firms.C. economy-wide phenomena.D. regulations imposed on firms and unions.

Which of the following headlines is more closely related to what microeconomists study than to what macroeconomists study?

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Which of the following statistics is usually regarded as the best single measure of a society’s economic well­being?A. the unemployment rateB. the inflation rateC. gross domestic productD. the trade deficit

GDP

Gross domestic product measuresA. income and expenditures.B. income but not expenditures.C. expenditures but not income.D. neither income nor expenditures.

Expenditures on a nation’s domestic productionA. are less than its domestic production.B. are equal to its domestic production.C. are greater than its domestic production.D. could be less than, equal to, or greater than its domestic production.

For an economy as a whole,A. wages must equal profit.B. consumption must equal income.C. income must equal expenditure.D. consumption must equal saving.

Access all questions and much more by creating a free account

Popular Resources on Wayground

Discover more resources for Specialty

Macroeconomists study
A. the decisions of individual households and firms.
B. the interaction between households and firms.
C. economy-wide phenomena.
D. regulations imposed on firms and unions.

Which of the following statistics is usually regarded as the best single measure of a society’s economic wellbeing?
A. the unemployment rate
B. the inflation rate
C. gross domestic product
D. the trade deficit

Gross domestic product measures
A. income and expenditures.
B. income but not expenditures.
C. expenditures but not income.
D. neither income nor expenditures.

Expenditures on a nation’s domestic production
A. are less than its domestic production.
B. are equal to its domestic production.
C. are greater than its domestic production.
D. could be less than, equal to, or greater than its domestic production.

For an economy as a whole,
A. wages must equal profit.
B. consumption must equal income.
C. income must equal expenditure.
D. consumption must equal saving.