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Principles of Economics
Quiz 1
Fall 2021
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Name in Korean:
※ Multiple choice questions: Pick only one please.
1. In the GDP accounts production equals
a. income.
b. income + saving.
c. income - government expenditures.
d. income - imports.
2. For an economy as a whole,
a.
b.
c.
d.
wages must equal profit.
consumption must equal income.
income must equal expenditure.
consumption must equal saving.
3. If an economy’s GDP falls, then it must be the case that the economy’s
a. income falls and saving rises.
b. income and saving both fall.
c. income falls and expenditure rises.
d. income and expenditure both fall.
4. In a simple circular-flow diagram, households buy goods and services with the income
they get from
a. wages.
b. rents.
c. profits.
d. All of the above are correct.
5. In the actual economy, goods and services are purchased by
a. households, but not firms or the government.
b. households and firms, but not the government.
c. households and the government, but not firms.
d. households, firms, and the government.
6. GDP is defined as the
a. value of all goods and services produced within a country in a given period of time.
b. value of all goods and services produced by the citizens of a country, regardless of
where they are living, in a given period of time.
c. value of all final goods and services produced within a country in a given period of
time.
d. value of all final goods and services produced by the citizens of a country, regardless of
where they are living, in a given period of time.
7. GDP excludes most items that are produced and sold illegally and most items that are
produced and consumed at home because
a.
b.
c.
d.
the quality of these items is not high enough to contribute value to GDP.
measuring them is so difficult.
the government wants to discourage the production and consumption of these items.
these items are not reported on income tax forms.
8. A professional gambler moves from a state where gambling is illegal to a state where
gambling is legal. Most of his income was, and continues to be, from gambling. His
move
a. raises GDP.
b. decreases GDP.
c. doesn't change GDP because gambling is never included in GDP.
d. doesn't change GDP because in either case his income is included.
9. Over the last few decades, Americans have chosen to cook less at home and eat more at
restaurants. This change in behavior, by itself, has
a. reduced measured GDP.
b. not affected measured GDP.
c. increased measured GDP by the value of the restaurant meals.
d. increased measured GDP by the value added by the restaurant’s preparation and serving
of the meals.
10. Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house
that could be rented for $21,000 a year. How much do these housing services contribute
to GDP?
a. $21,000
b. $28,000
c. $7,000
d. $14,000