ECO 111 - Macroeconomics Quiz well
answered graded A+ 2025/2026
GDP measures - correct answer ✔✔1. the total income of everyone in the economy
2. the total expenditure on the economy's output of goods and services
Income equals - correct answer ✔✔Expenditure
Circular Flow Diagram - correct answer ✔✔- describes all the transactions between households
and firms in a simple economy
- assumes all goods and services are bought by households and households spend all of their
income
How does money flow in the Circular Flow Diagram? - correct answer ✔✔from households to
firms then back to households
What does a transaction always have? - correct answer ✔✔A buyer and seller
Gross Domestic Product (GDP) - correct answer ✔✔the market value of all final goods and
services produced within a country in a given period of time
What do market prices measure? - correct answer ✔✔the amount people are willing to pay for
different goods
What items does GDP exclude? - correct answer ✔✔items produced and sold illicitly (ex: illegal
drugs - sold on black market) and items that are produced and consumed at home (ex:
vegetables you grow in your garden)
, Intermediate vs. Final Goods - correct answer ✔✔Intermediate - materials used to make the
product
Final - the final product used from by material
What type of goods does GDP include? (Intermediate/Final) - correct answer ✔✔Final Goods
When can an intermediate good be taken to be a final good? - correct answer ✔✔When an
intermediate good is produced and is added to a firm's inventory of goods for use or sale at a
later date (ex: additions to inventory add to GDP)
What types of goods does GDP include? (Tangible/Intangible) - correct answer ✔✔Tangible and
Intangible Goods (goods vs. services)
How is GDP measured regarding time? - correct answer ✔✔GDP measures the value of
production that takes place within a specific interval of time (usually a year or quarter) and the
economy's flow of income and expenditure in that given interval
Seasonal Adjustment - correct answer ✔✔The economy produces more goods and services
during some times of the year than others
4 Components of GDP - correct answer ✔✔- Consumption
- Investment
- Government Purchases
- Net Exports
Consumption - correct answer ✔✔spending by households on goods and services, with the
exception of purchases of new housing
- ex: automobiles, appliances, food, clothing, haircuts, medical care, education
answered graded A+ 2025/2026
GDP measures - correct answer ✔✔1. the total income of everyone in the economy
2. the total expenditure on the economy's output of goods and services
Income equals - correct answer ✔✔Expenditure
Circular Flow Diagram - correct answer ✔✔- describes all the transactions between households
and firms in a simple economy
- assumes all goods and services are bought by households and households spend all of their
income
How does money flow in the Circular Flow Diagram? - correct answer ✔✔from households to
firms then back to households
What does a transaction always have? - correct answer ✔✔A buyer and seller
Gross Domestic Product (GDP) - correct answer ✔✔the market value of all final goods and
services produced within a country in a given period of time
What do market prices measure? - correct answer ✔✔the amount people are willing to pay for
different goods
What items does GDP exclude? - correct answer ✔✔items produced and sold illicitly (ex: illegal
drugs - sold on black market) and items that are produced and consumed at home (ex:
vegetables you grow in your garden)
, Intermediate vs. Final Goods - correct answer ✔✔Intermediate - materials used to make the
product
Final - the final product used from by material
What type of goods does GDP include? (Intermediate/Final) - correct answer ✔✔Final Goods
When can an intermediate good be taken to be a final good? - correct answer ✔✔When an
intermediate good is produced and is added to a firm's inventory of goods for use or sale at a
later date (ex: additions to inventory add to GDP)
What types of goods does GDP include? (Tangible/Intangible) - correct answer ✔✔Tangible and
Intangible Goods (goods vs. services)
How is GDP measured regarding time? - correct answer ✔✔GDP measures the value of
production that takes place within a specific interval of time (usually a year or quarter) and the
economy's flow of income and expenditure in that given interval
Seasonal Adjustment - correct answer ✔✔The economy produces more goods and services
during some times of the year than others
4 Components of GDP - correct answer ✔✔- Consumption
- Investment
- Government Purchases
- Net Exports
Consumption - correct answer ✔✔spending by households on goods and services, with the
exception of purchases of new housing
- ex: automobiles, appliances, food, clothing, haircuts, medical care, education
