macro95ex2 - Chapter 2 The Measurement and Structure of the...

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Chapter 2 The Measurement and Structure of the National Economy T Multiple Choice Questions 1. The three approaches to measuring economic activity are the (a) cost, income, and expenditure approaches. (b) product, income, and expenditure approaches. (c) consumer, business, and government approaches. (d) private, public, and international approaches. Answer: B Level of difficulty: 1 Section: 2.1 2. The value of a producer’s output minus the value of the inputs it purchases from other producers is called the producer’s (a) surplus. (b) profit. (c) value added. (d) gross product. Answer: C Level of difficulty: 2 Section: 2.1 3. 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 Level of difficulty: 2 Section: 2.1
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Chapter 2 The Measurement and Structure of the National Economy 15 4. Sam’s Semiconductors produces computer chips, which it sells for $10 million to Carl’s Computer Company (CCC). CCC’s computers are sold for a total of $16 million. What is the value added to CCC? (a) $6 million (b) $10 million (c) $16 million (d) $26 million Answer: A Level of difficulty: 1 Section: 2.1 5. 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 $3,000. What is its value added? (a) $3000 (b) $19,000 (c) $39,000 (d) $59,000 Answer: C Level of difficulty: 2 Section: 2.1 6. To ensure that the fundamental identity of national income accounting holds, changes in inventories are (a) treated as part of expenditure. (b) treated as part of saving. (c) ignored. (d) counted as consumption. Answer: A Level of difficulty: 2 Section: 2.1 7. To what extent are homemaking and child-rearing accounted for in the government’s GDP accounts? (a) Not at all (b) Only to the extent that they are provided for pay (c) Only to the extent that taxes are paid on them (d) All homemaking and childrearing are accounted for Answer: B Level of difficulty: 2 Section: 2.2
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16 Abel/Bernanke • Macroeconomics, Fifth Edition 8. The measurement of GDP includes (a) nonmarket goods such as homemaking and child-rearing. (b) the benefits of clean air and water. (c) estimated values of activity in the underground economy. (d) purchases and sales of goods produced in previous periods. Answer: C Level of difficulty: 2 Section: 2.2 9. Which of the following is included in U.S. GDP? (a) The sale of a new car from a manufacturer’s inventory (b) The purchase of a watch from a Swiss company (c) The sale of a used car (d) A newly constructed house Answer: D Level of difficulty: 2 Section: 2.2 10. Because government services are not sold in markets, (a) they are excluded from measurements of GDP.
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This note was uploaded on 03/15/2012 for the course ECON 101 taught by Professor Carlitos during the Spring '11 term at Alaska Bible.

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macro95ex2 - Chapter 2 The Measurement and Structure of the...

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