1) In the circular flow diagram, the different payments made by firms to households include

A) wages and profits.

B) interest and taxes.
C) transfer payments and dividends.
D) taxes and transfer payments.
Answer: A
2) A household that spends less than it receives in income during a given period is
A) saving.
B) dissaving.
C) running a deficit.
D) receiving transfer payments.
Answer: A
3) In the goods-and-services market, households
A) only supply.
B) only demand.
C) both supply and demand.
D) neither supply nor demand.
Answer: B
4) The demanders in the goods-and-services market are
A) households and business firms.
B) households, the government, and the rest of the world.
C) the government and business firms.
D) households, the government, business firms, and the rest of the world.
Answer: D
5) In the circular flow diagram, firms ________ labor and households ________ goods and
services.
A) demand; supply
B) demand; demand
C) supply; demand
D) supply; supply
Answer: B
6) In the circular flow diagram, households' payments ________ the government.
A) only flow into
B) flow into and out of
C) only flow out of
D) do not affect
Answer: B
7) In the circular flow diagram, firms' payments ________ the government.
A) only flow into
B) flow into and out of
C) only flow out of
D) do not affect
Answer: B
8) In the circular flow diagram, the different payments made by ________ to ________ include
wages, rent and profits.
A) households; firms
B) firms; the government
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C) the government; households
D) firms; households
Answer: D
9) In the circular flow diagram, ________ demand labor and ________ demand goods and
services.
A) firms; firms
B) households; firms
C) firms; households
D) households; households
Answer: C
10) In the circular flow diagram, households ________ goods and services and ________ labor.
A) demand; demand
B) supply; demand
C) demand; supply
D) supply; supply
Answer: C
11) The total market value of all final goods and services produced within a given period by
factors of production located within a country is
A) gross domestic product.
B) gross national product.
C) net national product.
D) net national income.
Answer: A
12) Gross domestic product measures
A) the total spending of everyone in the economy.
B) the value of all output in the economy.
C) the total income of everyone in the economy.
D) all of the above
Answer: D
13) Which of the following is an example of a final good or service?
A) wheat a bakery purchases to make bread
B) coffee beans Starbucks purchases to make coffee
C) lumber purchased by a construction company to used in building houses
D) a computer purchased by Federal Express to track shipments
Answer: D
14) Which of the following is a good or service counted in GDP?
A) tires Ford buys to put on a car
B) a used tire you buy for your personal car
C) a new tire you buy for your personal car
D) used tires bought by a used car dealer to put on a car on his lot
Answer: C
15) Which of the following is an example of an intermediate good?
A) the dough you buy to fix yourself a pizza for dinner
B) the chocolate you buy to make yourself some cookies
C) the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you
belong to
D) lumber you buy to build a house for your dog
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Answer: C
16) Which of the following would not be counted in 2016's GDP?
A) the value of a 2008 boat you purchase from a boat dealer in 2016
B) the 2016 salary of a used motorcycle salesperson
C) the commissions earned by a real estate agent in selling condominiums built prior to 2016
D) the value of a refrigerator manufactured in 2016 but not sold in 2016
Answer: A
17) Which of the following would be counted in 2016's GDP?
A) the value of a loan you take in 2016
B) the value of a TV that was produced in 2015 but not sold until 2016
C) the bonus check a stockbroker gets from his/her company in 2016
D) the value of a bond sold by the federal government
Answer: C
18) Which of the following is not included in 2016's GDP?
A) the value of a motorcycle produced in the United States and exported to Japan
B) the profit earned in 2016 from selling a stock that you purchased in 2008
C) the value of a motor that is used in the production of a lawn mower
D) the commission earned by a headhunter when she locates a job for a client
Answer: C
19) Gross national product is the total market value of
A) all final and intermediate goods and service produced by resources owned by a country in a
given year.
B) all final and intermediate goods and services produced in a country, regardless of who owns
the resources.
C) all final goods and services produced in a country in a given year, regardless of who owns the
resources.
D) all final goods and services produced by resources owned by a country, regardless of where
production takes place.
Answer: D