If an economy produces final output worth $5 trillion, then the amount of gross income generated by that production: is $5 trillion 2. Which of the following would not be Ian expenditure on a final good or service? a medical clinic’s purchase of flu vaccine 3. Which of the following would be included in GDP? payment of the monthly telephone bill by Mr. Laconic 4. Consumption in the expenditures approach to calculating GDP includes: purchases of medical services at the local clinic 5.

Which of the following is not considered a component of investment when alculating GDP? purchases of corporate stock 6. Which of the following is not included in GDP? interest payments on the national debt 7. Which of the following would not increase U. S. GDP? increased shipments of Ghanian cocoa to the United States on Greek vessels 8. A farmer grows wheat and sells it to a bakery for $5. The bakery bakes the wheat into bread, which it sells to a distributor for $20. The distributor sells the bread to a supermarket for $30, which sells the bread to customers for $50.

Which of the following is true? The supermarket contributed more, in value added, than the bakery. 9. The simple circular flow model shows that: households are on the supply side of the resource market and the demand side of the product market 10. Suppose that the economy is in equilibrium with a trade deficit and that saving is greater than investment. According to the circular flow model, the government’s budget: must be in deficit 1 1 . Which of the following statements is true regarding leakages and injections?

Since leakages equal injections, aggregate income equals aggregate expenditure. 2. Which of the following is an injection into the circular flow? transfer payments 13. Which of the following would not be included in the measurement of GDP? transactions in the underground economy 14. GDP is a poor measure of social well-being because: the value of leisure time is not counted in GDP 15. Given the following hypothetical data: C = $3,000; I = $1,200; G = $2,000; X- M $500; depreciation = $200; transfer payments = $800, net domestic product is: $5,500 16.

Limitations of the national income accounting system include: valuing all output t its market price regardless of whether it contributes to a society’s economic welfare 17. The price index in the base year always equals: 100 18. Exhibit 01 Product Bread Gum Quantity in market basket 10 5 50 Price in base year $1. 00 1. 00 0. 20 current year $1. 50 2. 00 0. 50 Use the information in [Exhibit 01] to calculate the consumer price index in the current year. CPI = 200 19. If real GDP in a particular year is $5,000 trillion and nominal GDP in that same year is $4,000 trillion, then the: GDP price index is 80 20.

A major difference between the CPI and the GDP price index is that the CPI includes: a sample of goods consumed, including imported goods, and the price index includes all domestically produced goods 21 . In double-entry book keeping system of GDP: the value of output produced must equal the value of resource payments generated in producing that output 22. Gross Domestic Product measures the: market value of all final goods and services produced by resources located within a nation regardless of who owns those resources 23. The value of the films produced in the United States starring Charlie