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FIU ECO 3202 - Chapter 2 The Measurement and Structure of the National Economy

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Macroeconomics 6e Abel et al Chapter 2 The Measurement and Structure of the National Economy 2 1 National Income Accounting 4 The Bigdrill company drills for oil which it sells for 200 million to the Bigoil company to be made into gas The Bigoil company s gas is sold for a total of 600 million What is the total contribution to the country s GDP from companies Bigdrill and Bigoil A 200 million B 400 million C 600 million D 800 million Answer C Diff 2 Topic Section 2 1 Question Status Previous Edition 6 The Compagnie Naturelle sells mounted butterflies using butterfly bait it buys from another firm for 20 000 It pays its workers 35 000 pays 1000 in taxes and has profits of 3000 What is its value added A 3000 B 19 000 C 39 000 D 59 000 Answer C Diff 2 Topic Section 2 1 Question Status Previous Edition 2 2 Gross Domestic Product 5 Because government services are not sold in markets A they are excluded from measurements of GDP B the government tries to estimate their market value and uses this to measure the government s contribution to GDP C they are valued at their cost of production D taxes are used to value their contribution Answer C Diff 1 Topic Section 2 2 Question Status Previous Edition 8 Marvin s Metal Company produces screws that it sells to Ford which uses the screws as a component of its cars In the national income accounts the screws are classified as A inventory B final goods C capital goods D intermediate goods Answer D 1 Diff 2 Topic Section 2 2 Question Status Previous Edition 10 Fred the farmer purchased five new tractors at 20 000 each Fred sold his old tractors to other farmers for 50 000 The net increase in GDP of these transactions was A 50 000 B 100 000 C 125 000 D 150 000 Answer B Diff 2 Topic Section 2 2 Question Status Previous Edition 11 Inventories include each of the following EXCEPT A unsold finished goods B goods in process C raw materials held by firms D office equipment Answer D Diff 1 Topic Section 2 2 Question Status Previous Edition 15 If C 500 I 150 G 100 NX 40 and GNP 800 how much is NFP A 10 B 5 C 5 D 10 Answer D Diff 3 Topic Section 2 2 Question Status Previous Edition 18 Consumer spending is spending by households on final goods and services produced A domestic domestically and abroad B domestic domestically C domestic and foreign domestically and abroad D domestic and foreign domestically Answer A Diff 2 Topic Section 2 2 Question Status Previous Edition 19 In the expenditure approach to GDP which of the following would be excluded from measurements of GDP A Government payments for goods produced by foreign firms B Government payments for goods produced by firms owned by state or local governments C Government payments for welfare D All government payments are included in GDP Answer C Diff 2 2 Topic Section 2 2 Question Status Previous Edition 23 Private disposable income equals A GNP taxes transfers interest B NNP taxes transfers interest C national income taxes transfers interest D national income taxes transfers interest Answer A Diff 2 Topic Section 2 2 Question Status Previous Edition 2 3 Saving and Wealth 2 In a given year a country s GDP 9841 net factor payments from abroad 889 taxes 869 transfers received from the government 296 interest payments on the government s debt 103 consumption 8148 and government purchases 185 The country had private saving equal to A 285 B 3850 C 2397 D 2112 Answer D Diff 2 Topic Section 2 3 Question Status New 6 The government budget surplus equals A government purchases plus transfers B government receipts minus government outlays C government purchases minus net receipts D government purchases minus transfers Answer B Diff 1 Topic Section 2 3 Question Status Revised 7 National saving equals private saving plus government saving which in turn equals A C S T B GDP C G C GDP NFP D GDP NFP C G Answer D Diff 2 Topic Section 2 3 Question Status Previous Edition 8 The uses of saving identity says that an economy s private saving is used for A investment interest expenses and the government budget deficit B investment the government budget deficit and the current account C investment interest expenses the government budget deficit and the current account 3 D investment interest expenses the government budget deficit transfer payments and the current account Answer B Diff 1 Topic Section 2 3 Question Status Previous Edition 10 Suppose that private saving is 1590 billion investment is 1945 billion and the current account balance is 489 billion From the uses of saving identity how much is government saving A 134 billion B 844 billion C 844 billion D 134 billion Answer A Diff 3 Topic Section 2 3 Question Status Revised 11 Suppose that national saving is 1456 billion investment is 1945 billion and private saving is 1590 billion How much is the current account balance A 489 billion B 221 billion C 221 billion D 489 billion Answer D Diff 3 Topic Section 2 3 Question Status Revised 12 In the mid to late 1980s the United States had twin deficits because both and were negative A government saving private saving B saving investment C the current account investment D government saving the current account Answer D Diff 2 Topic Section 2 3 Question Status Previous Edition 2 4 Real GDP Price Indexes and Inflation 2 The value of real GDP in the current year equals A the value of current year output in prices of the base year B the value of current year output in prices of the current year C the value of base year output in prices of the base year D the value of base year output in prices of the current year Answer A Diff 1 Topic Section 2 4 Question Status Previous Edition 4 The country of Old Jersey produces milk and butter and it has published the following macroeconomic data 4 where quantitie s are in gallons and prices are dollars per gallon Good Milk Butter Year 1 Quantity Price Quanitiy 500 2 900 2000 1 3000 Year 2 Price 3 2 Between Year 1 and Year 2 the GDP deflator based on Year 1 as a base year rose A 60 00 B 81 25 C 83 33 D 123 00 Answer B Diff 3 Topic Section 2 4 Question Status Revised 6 If nominal GDP for 2003 is 6400 billion and real GDP for 2004 is 6720 billion in 2003 dollars then the growth rate of real GDP is A 0 B 0 5 C 5 D 50 Answer C Diff 2 Topic Section 2 4 Question Status Previous Edition 14 If the price index last year was 1 0 and today it is 1 4 what is the inflation rate over this period A 4 B 1 4 C 4 D 40 Answer D Diff 2 Topic Section 2 …


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