CHAPTER 23

Net exports are negative when

a nation's exports exceed its imports
depreciation exceeds domestic investment.
the economy's stock of capital goods is declining.
a nation's imports exceed its exports.

Which of the following transactions would be included in GDP? 

Olivia receives a tax refund of $500.
Nick buys $5000 worth of stock in Microsoft
Peter buys a newly constructed house.
Mary buys a used book for $5 at a garage sale.

The largest component of total expenditures in the United States is: 

government purchases.
consumption.
net exports.
gross investment

Consumption consists of spending by households on goods and services, with the exception
of
purchases of durable goods.
purchases of new houses.
spending on education.
purchases of intangible services.

When economists refer to "investment," they are describing a situation where: 

financial assets are purchased in the hope of a monetary gain
people are buying shares of corporate stock
money is saved in a bank account
resources are devoted to increasing future output.

GDP is defined as the

value of all final goods and services produced within a country in a given period of time.
value of all final goods and services produced by the citizens of a country, regardless of where
they are living, in a given period of time.
value of all goods and services produced by the citizens of a country, regardless of where they
are living, in a given period of time.
value of all goods and services produced within a country in a given period of time.

Government purchases include spending on goods and services by

the federal government, but not by state or local governments.
federal and state governments, but not by local governments
federal, state, and local governments, as well as household spending by employees of those
governments.
federal, state, and local governments.

The three statistics that are the main focus for those measuring macroeconomic health are: 
real GDP, inflation, and unemployment
nominal GDP, unemployment, and inflation.
real GDP, nominal GDP, and unemployment
real GDP, nominal GDP, and inflation

Gross domestic product (GDP) measures and reports output: 

in quantities of physical units (for example, pounds, gallons, and bushels).
in percentage terms.
in dollar amounts
as an index number

Which of the following statements about GDP is correct?

All of the above are correct
GDP measures two things at once: the total income of everyone in the economy and the total
expenditure on the economy’s output of goods and services.
GDP is generally regarded as the best single measure of a society’s economic well-being.
Money continuously flows from households to firms and then back to households, and GDP
measures this flow of money.

Final goods and services refer to: 

 
goods and services whose value has been adjusted for changes in the price level.
the excess of U.S. exports over U.S. imports
goods and services purchased by ultimate users, rather than for resale or further processing. 
goods and services that are unsold and therefore added to inventories.
Which of the following is used to measure directly the average standard of living across
countries? 
  
purchasing power parity  
real GDP  
GDP per person  
nominal GDP
 
Because every transaction has a buyer and a seller,
 
- GDP is more closely associated with an economy’s income than it is with an economy’s
expenditure.
- the number of firms must be equal to the number of households in a simple circular-flow
diagram.
- every transaction contributes equally to an economy’s income and to its expenditure.
- firms’ profits are necessarily zero in a simple circular-flow diagram.

GDP includes the value of all

 
- final goods and services produced within a country using primarily market prices to
measure the value of goods and services.
 
- final goods and services produced within a country using primarily a survey of
consumers to measure the value of goods and services
 
- goods and services produced within a country using primarily market prices to measure
the value of goods and services.
 
- goods and services produced within a country using primarily a survey of consumers to
measure the value of goods and services.

When economists refer to "investment," they are describing a situation where: 

  
money is saved in a bank account
financial assets are purchased in the hope of a monetary gain
people are buying shares of corporate stock  
resources are devoted to increasing future output.