Econ chapter 4

Which of the following does not represent investment in the economic sense?
A. An increase in the quantity of shoes on the shelves at the store.
B. The purchase of newly issued shares in a company.
C. The construction of a house which will be occupied by its owner.
D. The construction of a factory building using money borrowed from a bank.

If depreciation - consumption of fixed capital - exceeds gross private investment, it can be concluded that:
A. The economy is expanding.
B. Net investment is negative.
C. The economy is importing more than its exports.
D. Nominal GDP is rising, but real GDP is declining.

Which of the following are considered an 'investment' by national income accountants?
A. The purchase of a new house.
B. The purchase of gold coins.
C. The purchase of corporate bonds.
D. The purchase of a car for private, non-commercial use.

In an expanding economy:
A. Nominal GDP but not necessarily real GDP, will be rising.
B. National income exceeds disposable income.
C. Gross private domestic investment must exceed depreciation.
D. Net Exports are a positive amount.

A nation's stock of capital goods will decline when:
A. Net investment is positive, but less than gross investment.
B. Depreciation exceeds gross investment.
C. Gross investment exceeds net investment.
D. Gross investment exceeds depreciation.

Net exports are a negative figure when:
A. A nation's imports of goods and services exceed its exports.
B. Depreciation exceeds gross private domestic investment.
C. A nation's exports of goods and services exceed its imports.
D. The economy's stock of capital goods is declining.

The sale in 2012 of a car produced in 2008 should be included:
A. In the calculation of GDP for 2012, as that is when the transaction occurred.
B. Only in the calculation of GDP for 2008, as that is when the car was produced.
C. In GDP for both 2008 and 2012, because it has entered the market place twice.
D. In GDP for 2012, but only after deducting the cost of production so as to avoid double counting.

Suppose Pete pays $100 to Moe. Which of the following is correct?
A. We need more information to determine wheter GDP has changed.
B. We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased.
C. We can say with certainty that the GDP has increased by $100.
D. We can say with certainty that the GDP has increased, but we cannot determine the amount.

Answer the question below on the basis of the following national income data. All figures are in billions of dollars.
Net export expenditures 22 (Expense)
Rent, interest and profits 96 (Income)
Investment expenditures by businesses 57 (Expense)
Non-income allocations 118  (Income)
Government purchases of goods and services 103 (Expense)
Wages 216 (Income)
Consumption expenditures by households 248 (Expense)
A. $430
B. $326
C. $408
D. $452