AP Macro 2.1 and 2.2 (Circular Flow and GDP)

The part of the economy that is controlled by the government is referred to as the:

• public sector

• private sector

Which part of the circular flow is the yellow arrow pointing to? (It's the money that businesses bring in when they sell goods and services)

• capital costs

• income

• factor payments

• revenue

Which part of the circular flow is circled in yellow? (note: green arrows represent money moving from one group to another)

• factor payments

• subsidies

• welfare

• taxes

Which of the following is true according to the circular flow model?

• The market for goods and services connects household spending to government spending.

• • The market for factors of production connects household spending to goods produced by firms.

• The market for factors of production connects spending by firms to household income.

• The market for goods and services connects labor income to firms as employers.

• The market for goods and services connects labor income to household spending.

Which of the following would count towards U.S. GDP?

(select all that apply)

• a software company purchases new servers for its data center

• consumers in Japan buy smartphones produced by an American company

• a foreigner purchases shares in a mutual fund

• a family pays a contractor to add on a bedroom to a house that was bought three years ago

• a family sells their old furniture at a garage sale

Which of the following would count towards U.S. GDP?

(select all that apply)

• an American buys $10,000 is US Treasury

  bonds

• the US military purchases a new tank

• the government issues a Social Security

  check to a retired real estate agent

• the Ford Motor Company buys windshields to

  put on new cars in production

• Tesla builds 100 cars in the U.S. that are sold to people in Canada.

Which of the following methods for calculating GDP involves counting money at each step of the production process?

• expenditures approach

• value added approach

• income approach

When using the expenditures approach to GDP, which of the following would be considered investment?

• paying of wages

• the purchase of capital goods

• intermediate goods

• rent payments

Based on the data, the GDP for this country would be $ ___ million. (income approach)

Using the expenditures approach, calculate GDP for this country from the data provided. (billions of dollars)

• $130 billion

• $135 billion

• $140 billion

• $145 billion