Test Bank For Macroeconomics 11th Edition Dornbusch
Chapter 2: National Income Accounting
Difficulty: Easy
1. In calculating this year's GDP, national income accountants
A) include any increase in stock values
B) include an estimate for income from illegal activities
C) exclude Social Security payments to retirees
D) exclude the value of any repairs made on existing property
E) exclude the value of new pollution control equipment that is being installed
Ans: C
Difficulty: Medium
2. Assume you built a new house, bought a used car, and bought some government bonds. Which of the following is true?
A) consumption and government purchases went up since you bought a used car and government bonds
B) consumption and investment went up since you bought a used car and government bonds
C) investment and government purchases went up since you built a new house and bought government bonds
D) investment went up since you built a new house
E) consumption went up since you built a new house
Ans: D
Difficulty: Medium
3. Which of the following is FALSE?
A) U.S. GDP underestimates actual economic activity because it does not include underground activity
B) an increase in the ratio of currency holdings to bank deposits may be seen as evidence for an increase in underground activity
C) if the underground economy grows rapidly, then the rate of economic growth will be underestimated
D) if the underground economy grows, people's standard of living will decline
E) underground activity includes income from services produced at home but not reported, such as typing someone else's term paper
Ans: D
Difficulty: Easy
4. Which of the following statements is true?
A) NDP is greater than GDP if prices are falling
B) NDP is greater than GDP if prices are rising
C) NDP can be greater than GDP but only if the economy is growing
D) NDP cannot be greater than GDP
E) NDP must always be greater than GDP
Ans: D
Difficulty: Easy
5. Increases in unwanted business inventories are counted as
A) a
Difficulty: Easy
1. In calculating this year's GDP, national income accountants
A) include any increase in stock values
B) include an estimate for income from illegal activities
C) exclude Social Security payments to retirees
D) exclude the value of any repairs made on existing property
E) exclude the value of new pollution control equipment that is being installed
Ans: C
Difficulty: Medium
2. Assume you built a new house, bought a used car, and bought some government bonds. Which of the following is true?
A) consumption and government purchases went up since you bought a used car and government bonds
B) consumption and investment went up since you bought a used car and government bonds
C) investment and government purchases went up since you built a new house and bought government bonds
D) investment went up since you built a new house
E) consumption went up since you built a new house
Ans: D
Difficulty: Medium
3. Which of the following is FALSE?
A) U.S. GDP underestimates actual economic activity because it does not include underground activity
B) an increase in the ratio of currency holdings to bank deposits may be seen as evidence for an increase in underground activity
C) if the underground economy grows rapidly, then the rate of economic growth will be underestimated
D) if the underground economy grows, people's standard of living will decline
E) underground activity includes income from services produced at home but not reported, such as typing someone else's term paper
Ans: D
Difficulty: Easy
4. Which of the following statements is true?
A) NDP is greater than GDP if prices are falling
B) NDP is greater than GDP if prices are rising
C) NDP can be greater than GDP but only if the economy is growing
D) NDP cannot be greater than GDP
E) NDP must always be greater than GDP
Ans: D
Difficulty: Easy
5. Increases in unwanted business inventories are counted as
A) a