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Principles of Economics International Edition 9th Edition By Michael - Test Bank

Principles of Economics International Edition 9th Edition By Michael – Test Bank

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Principles of Economics International Edition 9th Edition By Michael – Test Bank

Chapter 05  National Income Accounting

MULTIPLE CHOICE

1.The national income accounting system provides a measure of:

a.

only the total amount of profits made by the business firms.

b.

the total value of all inputs used in production.

c.

government budget surplus and deficit.

d.

the net exports of a nation.

e.

the output of an entire economy.

ANS: E DIF: Easy REF: 1 OBJ: ch. 05, 1

NAT: Analytic | Measuring the Economy TOP: Measures of Output and Income

MSC: Knowledge

2.National income accounting can best be characterized as:

a.

a set of rules used to summarize economic activity over a given period of time.

b.

a method for comparing different political systems.

c.

a microeconomic model of the economy used by the Federal Reserve bank.

d.

a statistical measure of the income received by consumers as opposed to businesses.

e.

a standardized economic report authored by politicians.

ANS: A DIF: Easy REF: Ch 5, 1 OBJ: ch. 05, 1

NAT:Reflective Thinking | Measuring the Economy

TOP:Measures of Output and IncomeMSC:Comprehension

3.Identify the correct statement.

a.

National income accounting measures only the flow of output between the different sectors of the economy.

b.

National income accounting summarizes the level of production in an economy over a decade.

c.

National income accounting explains diagrammatically the flows of goods and services and of money expenditures (income).

d.

National income accounting summarizes and categorizes the productive activity in an economy over a year.

e.

National income accounting measures the total money supply in the economy.

ANS: D DIF: Moderate REF: 1 OBJ: ch. 05, 1

NAT: Analytic | Measuring the Economy TOP: Measures of Output and Income

MSC: Knowledge

4.Which of the following would be included in the calculation of the GDP for the year 2010?

a.

Purchase of a 2004 model Volkswagen sedan in 2010

b.

Swapping of baseball cards among two college students

c.

Car repairs done by a person on his/her own

d.

Fresh lemonade sold at a local diner

e.

A lamp sold at a garage sale

ANS: D DIF: Moderate REF: 1.a OBJ: ch. 05, 1

NAT:Reflective Thinking | Measuring the Economy

TOP: Measures of Output and Income MSC: Application

5.Which of the following must be included in the calculation of GDP?

a.

The sale of a used car to an auto dealer

b.

Bartering lawn care services for car washes

c.

A father staying at home to attend to his child

d.

The sale of an illegal cable box

e.

Payment made for a SAT preparation class

ANS: E DIF: Moderate REF: Ch 5, 1.a OBJ: ch. 05, 1

NAT: Reflective Thinking  | Measuring the Economy

TOP:Measures of Output and IncomeMSC:Comprehension

6.Productive activity in the underground economy:

a.

results in an overstatement of actual income and production in the national accounting system.

b.

consists of unrecorded cash transactions.

c.

is estimated and included in the national income accounting system.

d.

poses no problem for the measurement of gross domestic product.

e.

does not affect GDP but is included in the value-added computations.

ANS: B DIF: Easy REF: 1.a OBJ: ch. 05, 1

NAT:Reflective Thinking | Measuring the Economy

TOP:Measures of Output and IncomeMSC:Comprehension

7.Which of the following would not be included in the calculation of GDP?

a.

Vegetables grown and consumed by a nonfarm family

b.

The purchase of a new Porsche

c.

The sale of meat at the local grocery store

d.

The government purchase of an F-14 fighter plane

e.

The payment made to an accountant for the preparation of tax forms

ANS: A DIF: Moderate REF: Ch 5, 1.a OBJ: ch. 05, 1

NAT: Reflective Thinking | Measuring the Economy

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