Multiple Choice Questions:
1. Investment includes?
a. Fixed investment.
b. Fixed investment plus government investment.
c. Fixed investment plus additions to business inventories.
d. Fixed investment plus subtractions from business inventories.
e. Fixed investment plus government investment plus additions to business inventories.
2. Included in the investment category under the expenditure approach to GDP accounting is (are)?
a. Additions to inventory.
b. Machines and tools.
c. Newly constructed residential housing.
d. All of the above.
3. Which of the following is not included in government purchases?
a. Government purchases of investment goods
b. Transfer payments
c. Government spending on services
d. None of the above is included in government purchases.
e. Neither b nor c is included in government purchases.
4. A negative amount of net exports in the GDP expenditures accounting means?
a. Exports are less than imports.
b. Imports are less than exports.
c. The sum of this period’s exports and imports has declined from the previous period.
d. Net exports have declined from the previous period.
e. None of the above.
5. We can be certain that net exports fall if?
a. Both exports and imports rise.
b. Both exports and imports fall.
c. Exports rise and imports fall.
d. Exports fall and imports rise.
e. Either b or d occurs.
6. French perfume that is purchased in the United States is accounted for in which expenditure category of U.S. GDP?
a. Consumption.
b. Investment.
c. Government purchases.
d. Net exports.
e. None of the above.
7. If the United States imported $1.5 billion worth of goods and services and sold $2.9 billion worth of goods and services outside its borders, net exports would equal?
a. –$4.4 billion.
b. $4.4 billion.
c. $1.4 billion.
d. – $1.4 billion.
e. none of the above.
8. The largest category of GDP is _____________, and the most unstable category of GDP is _____________.
a. Consumption, consumption.
b. Government, investment.
c. Consumption, investment.
d. Consumption, government purchases.
e. Investment, consumption.