Macroeconomics Multiple Choice
a - ANSHow are intermediate goods treated in the calculation of GDP?
a) Their value is not counted separately, but included as part of the value of the final good for
which they are an input.
b) Their value is counted separately, and their value is also included as part of the value of the
final good for which they are an input.
c) Their value is counted separately, but is not included as part of the value of the final good for
which they are an input.
d) They are included only if they are imported.
c - ANSGross national product is defined as...
a) the value of final goods and services produced within the United States.
b) the value of final goods and services produced outside of the United States.
c) the value of final goods and services produced by residents of the United States even if the
production takes place outside of the United States.
d) the value of final goods and services produced within the United States, by United States
residents.
c - ANSProfits that are reinvested in a firm rather than paid to the firm's owners are called...
a) dividends.
b) stock options.
c) retained earnings.
d) corporate bonds.
b - ANSWhen the coupon rate on newly issued bonds ______ relative to older, outstanding
bonds, the market price of the older bond ______.
a) increases; falls in the secondary market
b) increases; rises in the secondary market
c) decreases; falls in the secondary market
d) decreases; rises in the secondary market
a - ANSOn a balance sheet, stockholder's equity is equal to...
a) assets minus liabilities.
b) the total value of outstanding shares of stock.
c) long-term liabilities minus current liabilities.
d) total assets minus goodwill.
, d - ANSThe nominal GDP of the U.S. in 2015 was approximately $17.3 trillion. This means
that...
a) the value of output in 2015 was around $17.3 trillion.
b) total income in 2015 was around $17.3 trillion.
c) total spending in 2015 was around $17.3 trillion.
d) all of the above are true.
b - ANSTo calculate GDP by the expenditure method, one must add...
a) wages, rents, interest, and profits.
b) consumption spending, investment spending, government spending, and net exports.
c) consumption spending, investment spending, government spending, and exports.
d) labor, natural resources, entrepreneurship, and capital.
d - ANSAssuming that the United States is the domestic economy, ______ are goods and
services produced by ______ and purchased by ______.
a) exports; foreign countries; the United States
b) exports; the United States; the United States
c) imports; foreign countries; foreign countries
d) imports; foreign countries; the United States
b - ANSIn the circular flow diagram, ______ supply the factors of production, and ______ goods
and services.
a) households; sell
b) households; buy
c) firms; sell
d) firms; buy
b - ANSIf nominal GDP exceeds real GDP for a specific year, then the GDP deflator most be...
a) equal to 100.
b) greater than 100.
c) less than 100.
d) less than 0.
b - ANSWhen an investor buys a corporate bond, the face value of the bond is...
a) a measure of ownership in the corporation.
b) a loan to the corporation.
c) the coupon rate of the bond.
a - ANSHow are intermediate goods treated in the calculation of GDP?
a) Their value is not counted separately, but included as part of the value of the final good for
which they are an input.
b) Their value is counted separately, and their value is also included as part of the value of the
final good for which they are an input.
c) Their value is counted separately, but is not included as part of the value of the final good for
which they are an input.
d) They are included only if they are imported.
c - ANSGross national product is defined as...
a) the value of final goods and services produced within the United States.
b) the value of final goods and services produced outside of the United States.
c) the value of final goods and services produced by residents of the United States even if the
production takes place outside of the United States.
d) the value of final goods and services produced within the United States, by United States
residents.
c - ANSProfits that are reinvested in a firm rather than paid to the firm's owners are called...
a) dividends.
b) stock options.
c) retained earnings.
d) corporate bonds.
b - ANSWhen the coupon rate on newly issued bonds ______ relative to older, outstanding
bonds, the market price of the older bond ______.
a) increases; falls in the secondary market
b) increases; rises in the secondary market
c) decreases; falls in the secondary market
d) decreases; rises in the secondary market
a - ANSOn a balance sheet, stockholder's equity is equal to...
a) assets minus liabilities.
b) the total value of outstanding shares of stock.
c) long-term liabilities minus current liabilities.
d) total assets minus goodwill.
, d - ANSThe nominal GDP of the U.S. in 2015 was approximately $17.3 trillion. This means
that...
a) the value of output in 2015 was around $17.3 trillion.
b) total income in 2015 was around $17.3 trillion.
c) total spending in 2015 was around $17.3 trillion.
d) all of the above are true.
b - ANSTo calculate GDP by the expenditure method, one must add...
a) wages, rents, interest, and profits.
b) consumption spending, investment spending, government spending, and net exports.
c) consumption spending, investment spending, government spending, and exports.
d) labor, natural resources, entrepreneurship, and capital.
d - ANSAssuming that the United States is the domestic economy, ______ are goods and
services produced by ______ and purchased by ______.
a) exports; foreign countries; the United States
b) exports; the United States; the United States
c) imports; foreign countries; foreign countries
d) imports; foreign countries; the United States
b - ANSIn the circular flow diagram, ______ supply the factors of production, and ______ goods
and services.
a) households; sell
b) households; buy
c) firms; sell
d) firms; buy
b - ANSIf nominal GDP exceeds real GDP for a specific year, then the GDP deflator most be...
a) equal to 100.
b) greater than 100.
c) less than 100.
d) less than 0.
b - ANSWhen an investor buys a corporate bond, the face value of the bond is...
a) a measure of ownership in the corporation.
b) a loan to the corporation.
c) the coupon rate of the bond.
