Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Gross domestic product does NOT include
a. | personal consumption. | b. | intermediate inputs. | c. | residential
investment. | d. | net exports. |
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2.
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Which of the following is the best example of an investment as defined by
economists?
a. | a household's purchase of 100 shares of Apple computer stock | b. | a firm's
purchase of 100 shares of General Electric stock | c. | a firm's purchase of a bond issued by
General Mills | d. | a firm's purchase of a U.S. savings bond | e. | a firm buying
personal computers for its secretarial staff |
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3.
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If an economy produces final output (GDP) worth $5 trillion, then the amount of
gross income (national income) generated by that production
a. | is $5 trillion | b. | is more than $5 trillion | c. | is $5 trillion minus
taxes | d. | would be $5 trillion if profits were zero | e. | would be $5 trillion
if costs of production were zero |
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4.
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The economy is in equilibrium. But the government is borrowing money. Private
savings by households are equal to firm borrowings from financial markets, which are equal to
business investment spending. According to the circular flow model, capital outflows to ROW are
________ than capital inflows from ROW, and imports are ________ than exports.
a. | less; greater | b. | greater; greater | c. | less;
less | d. | greater; less | e. | same as; same as | f. | impossible to
tell |
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5.
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Economic aggregates are:
a. | valuable minerals. | b. | measures that summarize data across
markets. | c. | economic data from a particular market. | d. | data from a
particular firm. |
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6.
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An example of an economic aggregate is:
a. | the average salary of a graduate from the Columbia graduate school of
business. | b. | the federal personal income tax rate for married individuals. | c. | the amount that
households, firms, and the government save in a given year. | d. | the value of all
cars produced by General Motors during a year. |
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7.
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The topics studied in macroeconomics include:
a. | the price of a motorcycle. | b. | the wages of engineers. | c. | the average price
level in the economy. | d. | how much ice cream consumers
buy. |
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8.
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Macroeconomics focuses on:
a. | the economy as a whole. | b. | individual decisions. | c. | wages. | d. | the allocation of scarce
resources. |
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9.
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In the circular flow model, households:
a. | receive transfer payments from the government. | b. | buy resources in the
factor markets. | c. | sell products in the market for goods and services. | d. | issue stocks and
bonds to raise capital. |
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10.
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In the circular flow model, the ROW fows all of the following except:
a. | sell imports. | b. | buy exports. | c. | borrow from
financial markets. | d. | loan money to financial
markets. | e. | pay taxes |
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