Which of the following is true? A) consumption and government purchases went up since you bought a used car and government nods B) consumption and investment went up since you bought a used car and government bonds C) investment and government purchases went up since you built a new house and bought government bonds D) investment went up since you built a new house E) consumption went up since you built a new house NAS: D 3. Which of the following is FALSE? A) U. S.
GAP underestimates actual economic activity because it does not include underground activity B) an increase in the ratio of currency holdings to bank deposits may be seen as evidence for an increase in underground activity C) if the underground economy grows rapidly, then the rate of economic growth will be underestimated D) if the underground economy grows, people’s standard of living will decline E) underground activity includes income from services produced at home but not reported, such as typing someone else’s term paper NAS: D 4.
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Which Of the following statements is true? A) AND is greater than GAP if prices are falling B) N EDP is greater than GAP if prices are rising C) N EDP can be greater than GAP but only if the economy is growing D) AND cannot be greater than GAP E) AND must always be greater than GAP 5. Increases in unwanted business inventories are counted as A) a decrease n the capital stock B) an increase in consumption C) an increase in investment D) an increase in depreciation E) none of the above NAS: C 6.
The difference between gross domestic investment and net domestic investment is equal to A) unwanted inventory changes B) the difference between N EDP and national income C) the addition to the capital stock D) the difference between GAP and AND 7. Assume nominal GAP increased by 4. 2% in the U. S. But by only 3. 4% in Germany. We can definitely conclude that A) the standard of living of the people in the IS. S. Went up more than the standard of living of the people in Germany B) real economic growth in the U. S. Was higher than in Germany C) inflation in the U. S. Was 0. 8% higher than in Germany D) productivity growth in the U.
S. Was higher than in Germany E) none of the above NAS: E 8. Assume you deplete your savings to buy a new sofa and some government bonds and then take a vacation in a foreign country. Which of the following is true? A) consumption will increase B) net exports will increase C) government purchases will increase D) investment will increase E) all of the above NAS: A 9. If gross investment were zero, which of the following would be true? A) the existing capital stock would stay the same B) net investment would be positive C) net investment would be negative D) depreciation would be zero E) depreciation would be negative 10.
Depreciation is A) the difference between gross investment and net investment B) difference between GAP and ND? C) the difference between GNP and NP D) another word for capital consumption allowances the 1 1 . Elf we counted the value of autoworkers’ salaries, wheels, tires, steel, body parts, and final car sales in calculating GAP, then we would be A) understating GAP by overlooking car dealers’ profits B) ignoring the contribution of capital to output C) overstating GAP through double counting D) using the value-added technique for calculating GAP E) calculating GAP correctly only if we excluded any imported cars NAS: C 12.
The difference between gross investment and net investment is A) the same as the difference between GAP and disposable income B) the same as the difference between disposable income and consumption C) the same as the difference between AND and national income D) the same as the difference between net and gross exports E) equal to capital consumption allowances 13. In the United States, annual per-capita GAP in 2009 was around A) $32,300 B) $38,400 C) $46,500 D) $48,200 E) $52,600 14.