Chapter 2--MacroTB - CHAPTER 2 Measuring the Macroeconomy...

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5 Measuring the Macroeconomy CHAPTER 2 MULTIPLE-CHOICE 1. Who created the original National Income and Product Accounts in the 1930s? a. John M. Keynes b. Paul A. Samuelson c. William D. Nordhaus d. Simon Kuznets e. Milton Friedman Answer: d. Section: 2.1 2. The National Income and Product Accounts provides a system for a. aggregating the production of all goods and services into a single measure of economic activity. b. aggregating the production of all goods into a single measure of economic activity. c. aggregating the production of all services into a single measure of economic activity. d. aggregating the production of most goods and services into a single measure of economic activity. e. aggregating the production of all goods and services into two measures of economic activity. Answer: a. Section: 2.1 3. The National Income and Product Accounts allows us to relate __________ to __________ to __________. a. household income; government income; firm income b. total output; total spending; inflation c. total output; inflation; total income d. household income; household expenditure; total output e. total output; total spending; total income Answer: e. Section: 2.1 4. The National Income and Product Accounts identity states a. Expenditure = Production + Income b. Production = Expenditure – Income c. Production = Expenditure + Income d. Expenditure = Production – Income e. Production = Expenditure = Income Answer: e. Section: 2.2 5. The difference between economic profits and normal profits is that a. normal profits are earnings based on the normal competitive return to one’s own labor; economic profits are the above-normal returns associated with prices that exceed competitive prices. b. economic profits are earnings based on the normal competitive return to one’s own labor; normal profits are the above-normal returns associated with prices that exceed competitive prices. c. normal profits are earnings based on the normal competitive return to one’s own labor; economic profits are the above-normal returns associated with prices that exceed monopolistic prices. d. economic profits are earnings based on the noncompetitive return to one’s own labor; normal profits are the above-normal returns associated with prices that exceed competitive prices. e. None of the above is correct. Answer: a. Section: 2.2
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6 | Chapter 2 6. A lesson from microeconomics is that, unless there is some market power where firms charge prices above marginal cost, __________ are zero. a. costs b. revenues c. normal profits d. economic profits e. variable costs Answer: d. Section: 2.2 7. A lesson from microeconomics is that under perfect competition, where firms charge prices equal to marginal cost, __________ are zero. a. revenues
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Chapter 2--MacroTB - CHAPTER 2 Measuring the Macroeconomy...

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