1. Which of the following is an accurate statement concerning double counting?

It is an appropriate method to account for the increased value of goods and services.

It should be avoided when calculating the GDP because it inflates totals.

It is an appropriate method to calculate GDP for goods with more than one component.

It should be used to calculate the GDP for goods, but not for services.

2. GDP would omit which of the following?

a can of corn sold at a convenience store

five ears of corn sold at a supermarket

a corn muffin mix sold at a farmer's market

a used tractor sold to a corn farmer

3. Which of the following examples would be shown in the bottom half of the circular flow model?

Nathan purchases an ice cream cone at a restaurant.

Vintage Antique Shop pays wages to an employee named Nathan.

Nathan hires an accountant to review his taxes.

North Side Bowling receives a payment from Nathan for bowling five games.

4. What is the only part of investment tied to household expenditure decision?

cleaning services

residential construction

gardening

appliance purchases

5. Which of the following takes into account the shipper of a product?

value-added approach

expenditure approach

per capita approach

depreciation approach

6. Which of the following examples shows the strongest economic growth?

Real GDP per capita decreases from $50,000 to $45,000.

Real GDP per capita decreases from $45,000 to $25,000.

Real GDP per capita increases from $55,000 to $57,000.

Real GDP per capita increases from $25,000 to $35,000.

7. The service of housewives and househusbands is considered to be a(n) ______.

underground activity

market transaction

leisure activity

nonmarket transaction

8. A country that has less development than the United States will most likely have ______.

more nonmarket transactions

more government taxes

lower government taxes

fewer nonmarket transactions

9. Real gross domestic product is most relevant to which major macroeconomic goal?

maintaining high levels of employment

maintaining prices at a relatively stable level

achieving a high rate of economic growth

balancing supply and demand

10. Which of the following best explains why the effect of minimum wage on unemployment is likely small?

Very few workers get laid off from minimum-wage jobs.

Most workers are not minimum-wage earners.

Most businesses prefer to employ minimum-wage earners.

Minimum-wage earners are unlikely to leave their jobs.

11. Which of the following best characterizes a main difference between the consumer price index (CPI) and GDP deflator?

The GDP deflator is restricted to domestic goods, whereas the CPI is not.

The CPI includes consumer goods, whereas the GDP deflator excludes them.

The GDP deflator fully captures price increases, whereas the CPI does not.

The CPI is restricted to international goods, whereas the GDP deflator is not.

12. Sadiq owns a shoe store. As a result of inflation, he has had to raise prices and must retag all of the shoeboxes in his store. Which of the following is this an example of?

hyperinflation

menu costs

shoe-leather costs

unanticipated inflation