Question : 51) The circular flow shows that GDP measures i. total income. ii. : 1228236

 

 

51) The circular flow shows that GDP measures

i. total income.

ii. total expenditures.

iii.price changes.

A) i only

B) ii only

C) iii only

D) i and ii

E) i, ii, and iii

 

52) Because of the circular flows of expenditure and income in the economy, total ________ equals total ________ equals total ________.

A) expenditure; investment; income

B) expenditure; income; value of production

C) consumption; expenditure; value of production

D) investment; income; consumption

E) consumption; investment; expenditure

53) In the circular flow, how are the “value of production,” “income,” and “expenditures” related?

A) They have no relationship to each other.

B) Once tax payments are subtracted at each stage, they are equal.

C) Expenditures on GDP equals the value of production which equals income.

D) Once net exports of goods and services are subtracted from GDP, all three are equal.

E) Value of production always equals income but expenditures is smaller because households save some of their income and do not spend it.

 

54) In a circular flow diagram,

i)the value of production = income

ii)the value of production = expenditure

iii)expenditure = income

A) i, ii and iii are true statements.

B) only iii is a true statement.

C) i and ii are true statements.

D) i and iii are true statements.

E) only i is a true statement.

 

55) The abbreviation “GDP” stands for

A) Gross Domestic Product.

B) Gross Domestic Prices.

C) General Domestic Prices.

D) Great Domestic Prices.

E) Government’s Domestic Politics.

56) GDP is equal to the ________ value of all the final goods and services produced within a country in a given period of time.

A) production

B) market

C) wholesale

D) retail

E) typical

 

57) The following are all final goods EXCEPT

A) flour used by the baker to make cupcakes.

B) bread eaten by a family for lunch.

C) pencils used by a 6th grader in class.

D) Nike shoes used by a basketball player.

E) a computer used by Intel to design new computer chips.

 

58) Which of the following is directly included in the U.S. GDP for 2013?

i.a 2013 Cadillac Escalade produced and sold as a new car in the United States in 2031

ii.tires produced in the United States, purchased by General Motors, and installed on a new Cadillac Escalade sold in 2013

iii.General Motors cars produced in Canada because General Motors is an American corporation

A) i only

B) ii only

C) i and iii

D) ii and iii

E) i, ii, and iii

59) Production by Honda, a Japanese firm, in the United States is included in ________ GDP and production by Nike Corporation, a U.S. firm, in Vietnam is included in ________ GDP.

A) Japanese; U.S.

B) U.S.; Vietnamese

C) U.S.; U.S.

D) Japanese; Vietnamese

E) U.S. and Japanese; U.S. and Vietnamese

 

60) Investment is defined as

A) the purchase of a stock or bond.

B) financial capital.

C) what consumers do with their savings.

D) the purchase of new capital goods by firms.

E) spending on capital goods by governments.

 

61) In one year, a firm increases its production by $9 million and increases sales by $8 million. All other things in the economy remaining the same, which of the following is true?

A) GDP increases by $8 million and inventory investment decreases by $1 million.

B) GDP increases by $9 million and inventory investment increases by $1 million.

C) Inventory investment decreases by $1 million.

D) GDP increases by $8 million and investment increases by $1 million.

E) GDP increases by $17 million.

 

62) Net exports of goods and services increase when

A) exports of goods and services decrease and imports of goods and services do not change.

B) consumption expenditure increases.

C) exports of goods and services increase and imports of goods and services do not change.

D) consumption expenditure decreases.

E) imports of goods and services increase and exports of goods and services do not change.

63) Total expenditure equals

A) C + I + G + NX.

B) C + I + G – NX.

C) C + I – G + NX.

D) C – I + G + NX.

E) C – I – G – NX.

 

64) Total income in a country in 2012 is $780 billion. Total expenditure in the country

A) cannot be determined.

B) is greater than $780 billion.

C) is $780 billion.

D) is less than $780 billion.

E) is either less than or equal to $780 billion.

 

65) Total expenditure in the United States is equal to consumption expenditure plus investment

A) plus government expenditure on goods and services plus imports of goods and services.

B) minus government expenditure on goods and services minus imports of goods and services.

C) plus government expenditure on goods and services plus exports of goods and services.

D) plus government expenditure on goods and services plus exports of goods and services minus imports of goods and services.

E) plus government expenditure on goods and services plus exports of goods and services plus imports of goods and services.