Macroeconomics Machine-graded Assessment Items Module: Macroeconomic Measures of Performance



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Macroeconomics
Machine-graded Assessment Items
Module: Macroeconomic Measures of Performance

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6.0.0.0 Evaluate macroeconomic performance using indicators that include output measures, unemployment, and inflation

Short Title: Macroeconomic Measures of Performance
6.1.0.0 Define the term economic indicator

Short Title: Economic Indicators
6.1.0.1 Economic indicators:

  • are data or statistics used to judge the current or future health of the economy*

  • are largely collected and released by government or non-profit groups*

  • enable analysis of economic performance*

  • permit determination of business cycles*

// Content page - Reading: Macroeconomic Perspective, Policy Implications of the Neoclassical Perspective

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6.1.0.2 The three types of economic indicators are:

  • Leading, coincident, lagging indicators*

  • Future, current, past indicators

  • Forecast, performance, resultant indicators

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When quarterly data is annualized:

it is divided by four.

it is multiplied by four so that it can be reported at an annual rate.*

there are projections made of future trends based upon the past.

// Content Page – Reading: Measuring Total Output

// New 10/29/2015


One of the leading economic indicators, that is known to foretell an expansion is:

Inflation.

falling property values.

falling number new federal unemployment claims.*

rising price for precious metals.

// Content Page – Readings: The Macroeconomic Perspective; Reading: Unemployment

// New 10/29/2015
6.1.0.2 The economic indicators used to determine how the economy is doing are:


  • measures of aggregate production*

  • measures of employment and unemployment*

  • measures of inflation*

// Content Page – Reading: The Macroeconomic Perspective
6.1.0.3 Economic indicators that measure aspects of the aggregate economy include:

  • GDP*

  • Inflation*

  • Dow Jones industrial average

// Removed 10/29/2015
Spending in a macroeconomy includes:

consumer durables.*


import spending by its households.

business investment in capital goods.*

// Content Page – Reading: The Macroeconomic Perspective

// New 10/29/2015


Which of the following are flows, not stocks?

The interest that you get from that loan you made*

Your income*

Your wealth

The value of your home

// Content Page – Reading: The Macroeconomic Perspective; Reading: Measuring Total Output

// New 10/29/2015
Which of the following measures is a macroeconomic flow?

consumer wealth

total export sales*

total import spending*

business inventories

// Content Page – Reading: Measuring Total Output

// New 10/29/2015
The macro economy includes:

all buying and selling

all production

all consumption

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6.1.a.0 Identify the major economic indicators used to assess the state of the macroeconomy

Short Title: Major Macroeconomic Indicators
6.1.a.1 In the US, information about employment or unemployment is collected and published by

  • Bureau of Employment

  • U.S. Department of Labor / Bureau of Labor Statistics*

  • US. Commerce Department

// Removed 10/29/2015

When a pair of jeans is sold to the end user, it:

adds to consumer spending.*

detracts from business inventories.*

represents investment.

// Content Page – Reading: The Macroeconomic Perspective

// New 10/29/2015
6.1.a.1 In the US, the Index of Leading economic Indicators is calculated and published by


  • Bureau of Employment

  • U.S. Department of Commerce*

  • US. Department of Labor / Bureau of labor Statistics

// Content Page – Reading: The Macroeconomic Perspective
6.1.a.2 Which economic indicators are tracked/published by the U.S. Department of Commerce:

  • Personal Income*

  • Gross Domestic Product*

  • Home Sales*

  • Home Construction*

  • Inventories*

  • Business Sales*

  • Rental Vacancy Rates*

  • Home Ownership*

  • Unemployment Rates

  • Employment Rates

  • Tax Rates

  • Tariff Rates

// Content page - Reading: The Macroeconomic Perspective

// Removed 10/29/2015


6.1.a.3 Which economic indicators are tracked/published by the US. Department of Labor

  • Consumer Price Index*

  • Producer Price Index*

  • Consumer Expenditures*

  • Unemployment*

  • Employment*

  • National Compensation*

  • Wages*

  • Productivity*

  • Home Ownership

  • Personal Income

  • Rental Vacancy Rates

// Content page - Reading: The Macroeconomic Perspectives

// Removed 10/29/2015


Gross private domestic investment does NOT include:

inventory added to the warehouse.

spending on capital goods.

spending to maintain the value of existing capital goods, including housing.

spending on consumer durable goods.*

// Content Page – Reading: Calculating GDP

// New 10/29/2015
When the amount that other nations spend on American output is less than the amount that Americans spend on foreign output,:

a trade surplus exists.

a trade deficit exists.*

net exports are positive.

// Content Page – Reading: Alternative Ways to Measure the Economy

// New 10/29/2015


6.2.0.0 Explain GDP, including what it measures and what it excludes

Short Title: Components of GDP
6.2.0.1 Which of the following captures all the components of GDP?

C + I + G

C + I + G + M

C + I + G + (X – M)*

// Content page - Reading: Calculating GDP
6.2.0.2 Which of the following is most likely to contribute to economic growth as measured by GDP per capita?


  • the imposition of tariffs and quotas on imported goods

  • increased capital formation*

  • rapid population growth*

  • an increase in marginal tax rates

// Content page - Reading: Measuring Total Output

// Removed 10/29/2015


Intermediate goods eventually show up in GDP calculations indirectly as:

durable goods spending.

depreciation of fixed capital.

value added to final goods.*

purchases out of inventories.

// Content Page – Reading: Calculating GDP

// New 10/29/2015
6.2.0.3 Final goods or services used to compute GDP refer to:


  • the sum of all wages paid to laborers.

  • the factors of production used to produce output.

  • goods and services purchased by the ultimate users.*

  • the value of outstanding shares of stock of manufacturing firms.

// Content page - Reading: Measuring Total Output
6.2.0.4 Which of the following is part of GDP?

The purchase of your grandfather’s old car by a neighbor.

The purchase of a snow plough by the city of Minneapolis.*

The unsold additions to inventory at an appliances store.*

The purchase of a loaf of bread by a consumer*

// Content page - Reading: Measuring Total Output

// Updated 10/29/2015 answer choices edited
6.2.0.5 Two major components of the GDP in terms of value in the US are consumer goods and ____?


  • agricultural goods

  • durable goods

  • investment expenditures*

// Content page - Reading: Measuring Total Output

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Of the spending listed, the two sources most sensitive to business cycles are _________ and ________. (select two)

durables*

business investment spending*

non-durables

exports

// Content Page - Reading: Measuring Total Output



// New 10/29/2015
6.2.0.6 What is investment used for?

  • buying stocks

  • building bridges*

  • military spending

// Content Page – Reading: “Link It Up” on Measuring Total Output

// Removed 10/29/2015


What is investment used for?

Immediate satisfaction of wants.

Improving productivity.*

The production of capital goods.*

Depleting inventories.

// Content Page – Reading: “Link It Up” on Measuring Total Output

// New 10/29/2015
6.2.0.7 Which of the following is included in GDP?

The payments for a chiropractor’s services.*

Cash paid to a babysitter that is not reported to the tax authorities.

Your friend changes your brake pads for free.

The fees for legal services rendered by your lawyer.*

// Content page - Reading: Measuring Total Output


6.2.0.8 Which of the following is included in GDP calculations?

Cash received from a yard sale.

eBay’s commission for selling your used iPhone.*

The university tuition paid to enroll in a course.*

The milk that is purchased by Ben & Jerry’s in order to make their ice cream.

// Content page - Reading: Measuring Total Output

// Updated 10/29/2015 answer choices edited
6.2.0.9 Which of the following is included in GDP?

Revenue from the sale of a three-year old car.

The fees charged for a stockbroker’s services.*

The tickets to a football game that were bought but never used.*

// Content page - Reading: Measuring Total Output

// Updated 10/29/2015 answer choices edited


6.2.0.10 GDP does NOT directly include:

  • the value of goods produced domestically and sold abroad.

  • the value of intermediate goods sold during a period.*

  • the value of services rendered during a period.

  • the value of final goods and services produced, but not sold, during a period.

// Content page - Reading: Measuring Total Output
6.2.0.11 Gross Private Domestic Investment (I) includes:

the amount spent on new factories and machinery.*

the amount spent on stocks and bonds.

the amount spent on consumer durable goods

the amount spent maintaining the nation’s stock of capital equipment*

// Content page - Reading: Measuring Total Output

// Updated 10/29/2015 question and answer choices edited
6.2.0.12 Fill in the blanks. GDP is a _____ measure of societal well-being, because it ________.


  • good : takes into account employment, production, and income levels

  • good : omits the cost of keeping the environment clean

  • bad : omits the cost of keeping the environment clean*

  • bad : takes into account employment, production, and income levels

// Content page - Reading: Measuring Total Output

// Removed 10/29/2015


GDP is a controversial measure of national output because of what it includes and what it does not include. Test your understanding of GDP’s limitations by identifying what GDP takes into account:

spending on public goods.*

returns to factors of production.*

spending on used goods.

income for those engaged only in the underground economy.

// Content Page – Reading: Calculating GDP

// New 10/29/2015
6.2.0.13 Fill in the blanks. The expenditure approach to measuring GDP is the sum of _______ and the income approach captures ___________.


  • consumption, investment, government, and net exports : personal disposable income, rent, interest, and profit

  • wages, rent, interest, and profit : consumption, investment, government, and net exports

  • consumption, investment, government, and net exports : wages, rent, interest, and profit*

// Content page - Reading: Measuring Total Output

// Removed 10/29/2015


In measuring GDP as sum of all incomes earned in production, we should include:

wages and salaries*

interest payments*

purchases of used goods

American purchases of foreign output

// Content Page – Reading: Calculating GDP

// New 10/29/2015
6.2.0.14 A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle (in sequential order) are:


  • trough, peak, expansion, recession

  • contraction, recession, expansion, boom

  • expansion, peak, recession, trough*

// Content page - Reading: Measuring Total Output

// Removed 10/29/2015


The United States will have a trade deficit as long as:

spending on the American economy is greater than what it can produce.

spending by American households, businesses, and government is greater than GDP.*

spending on the American economy is less that what it can produce.

imports are greater than exports.*

// Content Page - Reading: Measuring Total Output

// New 10/29/2015
6.2.a.0 Explain the expenditure approach to calculating GDP

Short Title: Expenditure Approach to Calculating GDP
6.2.a.1 When calculating the GDP using the expenditure approach, what must happen to exports of a nation?


  • They must be ignored, because they are not bought in the domestic market.

  • They must be added to the other components of GDP.*

  • They must be subtracted, because they are included in the consumption of a foreign country.

  • They must be subtracted if foreign firms buy the exports for investment purposes.

// Removed 10/29/2015
When calculating GDP as the sum total of all spending, the components of spending should include:

purchases of consumer durables.*

savings.

government transfer payments.

government purchases of labor, goods, and services.*

// Content page - Reading: Calculating GDP

// New 10/29/2015
6.2.a.2 Which of the following would be included in the computation of GDP in a particular year?


  • Government expenditure on public schools*

  • Social security payments to retirees

  • An increase in inventories*

// Content page - Reading: Calculating GDP
6.2.a.3 GDP measured from the expenditure side include(s):

Spending on capital goods*

Tax payments

Foreign spending on American output*

Purchases of public goods and services*

// Content page - Reading: Calculating GDP

// Udpated 10/29/2015 answer choices edited
Which of the following components of GDP has the largest immediate impact on GDP. Changes in

1. government spending

1. consumption spending*

1. business investment

1. services provision

// Removed 10/29/2015


6.2.b.0 Explain the national income approach to calculating GDP

Short Title: National Income Approach to Calculating GDP
6.2.b.1 _________ are now the largest single component of the supply side of GDP, representing over half of GDP.

  • Durable goods

  • Services*

  • Nondurable goods

  • Structures

// Content page - Reading: Calculating GDP

// Removed 10/29/2015


Over the past 50 years, one component of spending has steadily gained:

durable goods

services*

nondurable goods

structures

// Content page - Reading: Calculating GDP

// New 10/29/2015
6.2.b.2 The labor component of the national income approach to calculating GDP includes:


  • Salaries*

  • Wages*

  • Health benefits*

  • Retirement benefits*

  • Unemployment Insurance*

  • Hours worked

  • Productivity

  • Per capital labor data

// Content page - Reading: Calculating GDP

// Removed 9/18/2015


Financial investment can be distinguished from private investment by the fact that:

financial investment always involves the creation of new capital.


private investment always adds to the capital stock of the nation.*

financial investment involves risk; private investment does not.

// Content page - Reading: Calculating GDP

// New 10/29/2015


When calculating GDP, investment refers to the:

purchase of stocks and bonds and trading financial assets.

amount of new capital goods sold in a given year.

purchase of new capital goods like real estate, equipment, and inventories.*

// Content page - Reading: Calculating GDP

// New 10/29/2015
6.2.b.3 Proponents of supply side approaches to economic growth will likely make the following statements?


  • Tax reductions for consumers allow them to spend and save more, thereby increasing business investment.

  • Favorable taxes for innovations by business owners decrease worker productivity and elevate citizen reliance on government support.

  • Tax breaks to businesses increase employment and the production of more goods and services. Newly hired workers earn high incomes, and increase spending thereby benefitting other workers.*

  • Government spending translates into higher levels of employment, production, incomes, and spending.

// Content page - Reading: Measuring Total Output; Reading: Calculating GDP

// Removed 10/29/2015


In calculating GDP, which component of spending must be subtracted from total spending to account for the fact that not all private or public spending by U.S. households is directed to U.S. businesses?

domestic


depreciation

export


import*

// Content Page – Reading: Alternative Ways to Measure the Economy

// New 10/29/2015
6.3.0.0 Describe the relationships among GDP, net domestic product, national income, personal income, and disposable income

Short Title: GDP and Income
6.3.0.1 Which of the following best describes economic growth?


  • An increase in real personal income*

  • A reduction in real personal income

  • A decrease in real GDP over time

  • An increase in nominal GDP over time

// Content page - Reading: Alternative Ways to Measure the Economy

// Removed 10/29/2015


6.3.0.2 Disposable Income refers to a households’

  • Consumption and savings*

  • Income minus net taxes*

  • Entertainment, spending, and consumption

  • Credit card debt service and housing

// Content page - Reading: Alternative Ways to Measure the Economy; Reading: Gross National Product

// Removed 10/29/2015


What makes up the difference between net national product and gross domestic product? To arrive at Net National Product, start with GDP, then:

add income receipts from rest of the world.*

add income payments to the rest of world.
subtract income payments to rest of the world.*

subtract depreciation.*

add depreciation.

// Content Page – Reading: Alternative Ways to Measure the Economy

// New 10/29/2015
6.3.0.3 If depreciation equals $36 billion, GDP equals $240 billion, and national income is $225 billion, then what is the Net National Product?


  • $204 billion*

  • $189 billion

  • $276 billion

  • $361 billion

// Content page - Reading: Alternative Ways to Measure the Economy
Royal Caribbean Cruise Lines estimates that they will need to spend $80 million this year just to maintain their capital stock (a fleet of cruise ships) and offset depreciation. If Royal Caribbean behaves as the typical business does, as the macroeconomy encounters a recession, it will spend:

$80 million on maintenance and also purchase a new ship.

$80 million on maintenance, but will not add to its capital stock.

less than $80 million on maintenance, perhaps deactivating some ships.*

// Content Page – Reading: Alternative Ways to Measure the Economy

// New 10/29/2015


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