32 Questions
What is the focus of microeconomics?
Households and firms decision-making
What is the main subject of macroeconomics?
Economy-wide phenomena
What does GDP stand for?
Gross Domestic Product
What is one of the components of GDP?
Government spending
How is GDP corrected for inflation?
By using the Consumer Price Index (CPI)
Does GDP measure society's well-being?
No, it only measures economic output
What does the Gross Domestic Product (GDP) measure?
Total income of everyone in the economy
Why does income equal expenditure for the economy as a whole?
Because every dollar a buyer spends is a dollar of income for the seller
What happens with total expenditure when Nalah pays James $50 to mow her lawn?
Total expenditure rises by $50
Who owns the factors of production according to the circular-flow diagram?
Households
What do firms do with the factors of production according to the circular-flow diagram?
Use them to produce goods and services
What do factor payments refer to in the context of the circular-flow diagram?
Payments made by firms for purchasing factors of production
How is GDP depicted in the circular-flow diagram?
As spending and income
What are considered as factors of production in the circular-flow context?
Inputs like labor, land, capital, and natural resources
What is illustrated in the circular-flow diagram?
Spending, revenue, factor payments, and income in the macroeconomy
What does the Circular-Flow Diagram illustrate?
The interaction between businesses and individuals in financial transactions
Which of the following is a characteristic of microeconomics?
Interactions in markets
What does the Circular-Flow Diagram primarily illustrate?
Interactions in markets
How does GDP relate to a nation's total income and spending?
It equals the total value of goods and services produced in the economy
What are considered as factors of production in the circular-flow context?
Land, labor, and capital
Why does income equal expenditure for the economy as a whole?
Because every dollar spent by buyers becomes income to sellers
What is the main subject of macroeconomics?
Inflation, unemployment, and economic growth
What does the Circular-Flow Diagram primarily illustrate?
Spending and revenue in the economy
Why does income equal expenditure for the economy as a whole?
Because every dollar a buyer spends is a dollar of income for the seller
What is the focus of microeconomics?
The behavior of individual consumers and firms
What are considered as factors of production in the circular-flow context?
Inputs like labor, land, capital, and natural resources
How is GDP corrected for inflation?
By using the Consumer Price Index (CPI)
What do factor payments refer to in the context of the circular-flow diagram?
'Payments to the factors of production (e.g., wages, rent)'
What does GDP stand for?
'Gross Domestic Product'
How does GDP relate to a nation's total income and spending?
'GDP reflects both income and spending'
What is the main subject of macroeconomics?
'National income analysis'
What happens with total expenditure when Nalah pays James $50 to mow her lawn?
'Total expenditure rises by $50'
Test your knowledge on Measuring a Nation’s Income with interactive PowerPoint slides from N. Gregory Mankiw's Ninth Edition of Principles of Economics. This quiz is prepared by V. Andreea Chiritescu from Eastern Illinois University.
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