Macroeconomics 21st Edition Mcconnell Test Bank Full Chapter PDF

Macroeconomics 21st Edition
McConnell Test Bank

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Chapter 07 Measuring Domestic Output and National Income Answer Key
Multiple Choice Questions
1. The National Income and Product Accounts (NIPA) help economists and policymakers to
A. determine which firms are likely to succeed or fail.

B. follow the long-run course of the economy to determine whether it has grown or stagnated.
C. measure what is occurring in each specific labor market.
D. accomplish all of these.
AACSB: Knowledge Application

Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 02 Medium
Learning Objective: 07-01 Explain how gross domestic product (GDP) is defined and measured.
Test Bank: I
Topic: Assessing the Economys Performance
2. The agency responsible for compiling the National Income Product Accounts for the U.S. economy is the
A. Council of Economic Advisers.

B. Bureau of Economic Analysis.
C. National Bureau of Economic Research.
D. Bureau of Labor Statistics.

Blooms: Understand
Test Bank: I
3. The system that measures the economy's overall performance is formally known as
A. national income accounting.

B. business cycle measurement.
C. GDP assessment.
D. final output and income statistics.

Blooms: Understand
Test Bank: I
4. A nation's gross domestic product (GDP)
A. is the dollar value of all final output produced within the borders of the nation during a specific period of time.
B. is the dollar value of all final output produced by its citizens, regardless of where they are living.
C. can be found by summing C + In + S + Xn.
D. is always some amount less than C + Ig + G + Xn.

Blooms: Understand
Test Bank: I
5. A nation's gross domestic product (GDP)
A. can be found by summing C + Ig + G + Xn.

B. is the dollar value of the total output produced by its citizens, regardless of where they are living.
C. can be found by summing C + S + G + Xn.
D. is always some amount less than its NDP.

Blooms: Understand
Test Bank: I
6. GDP is the
A. national income minus all nonincome charges against output.

B. monetary value of all final goods and services produced within the borders of a nation in a particular year.
C. monetary value of all economic resources used in producing a year's output.
D. monetary value of all goods and services, final and intermediate, produced in a specific year.

Blooms: Understand
Test Bank: I
7. Suppose Smith pays $100 to Jones.
A. We can say with certainty that the GDP has increased by $100.
B. We can say with certainty that the GDP has increased, but we cannot determine the amount.
C. We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased.
D. We need more information to determine whether GDP has changed.

Blooms: Understand
27-1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Test Bank: I
8. Suppose the total monetary value of all final goods and services produced in a particular country in 2015 is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that
A. GDP in 2015 is $450 billion.

B. NDP in 2015 is $450 billion.
C. GDP in 2015 is $500 billion.
D. inventories in 2015 fell by $50 billion.

Blooms: Understand
Test Bank: I
9. National income accountants can avoid multiple counting by
A. including transfer payments in their calculations.

B. only counting final goods.
C. counting both intermediate and final goods.
D. only counting intermediate goods.

Blooms: Understand
Test Bank: I
10. Gross domestic product (GDP) measures and reports output
A. as an index number.
B. in percentage terms.
C. in dollar amounts and percentage growth.
D. in quantities of physical units (for example, pounds, gallons, and bushels).

Blooms: Understand
Test Bank: I
11. By summing the dollar value of all market transactions in the economy, we would
A. determine the market value of all resources used in the production process.
B. obtain a sum substantially larger than the GDP.
C. determine value added for the economy.
D. measure GDP.

Blooms: Understand
Test Bank: I
12. Final goods and services refers to
A. goods and services that are unsold and therefore added to inventories.
B. goods and services whose value has been adjusted for changes in the price level.
C. goods and services purchased by ultimate users, rather than for resale or further processing.
D. the excess of U.S. exports over U.S. imports.

Blooms: Understand
Test Bank: I
13. If intermediate goods and services were included in GDP,
A. the GDP would be overstated.

B. the GDP would then have to be deflated for changes in the price level.
C. nominal GDP would exceed real GDP.
D. the GDP would be understated.

Blooms: Understand
Test Bank: I
14. Which of the following is a final good or service?
A. a haircut purchased by a father for his 12-year-old son

B. fertilizer purchased by a farm supplier
C. diesel fuel bought for a delivery truck
D. Chevrolet windows purchased by a General Motors assembly plant

Blooms: Understand
27-2
Test Bank: I
15. Which of the following is an intermediate good?
A. the purchase of gasoline for a ski trip to Colorado

B. the purchase of baseball uniforms by a professional baseball team
C. the purchase of a pizza by a college student
D. the purchase of jogging shoes by a professor

Blooms: Understand
Test Bank: I
16. Tom Atoe grows fruits and vegetables for home consumption. This activity is
A. excluded from GDP in order to avoid double counting.

B. excluded from GDP because an intermediate good is involved.
C. productive but is excluded from GDP because no market transaction occurs.
D. included in GDP because it reflects production.

Blooms: Understand
Test Bank: I
17. The value added of a firm is the market value of
A. a firm's output plus the value of the inputs bought from others.
B. a firm's output less the value of the inputs bought from others.
C. the firm's output.
D. the firm's inputs bought from others.

Blooms: Understand
Test Bank: I
18. Alejandro Scoobertini owns a store specializing in soccer jerseys. In 2016, he purchased $150,000 worth of jerseys from manufacturers, employed one worker for $40,000, purchased $20,000 worth of supplies from an office
supply store, and sold jerseys for $280,000. Based on this information, what was the value added at Alejandro's store in 2016?
A. $70,000 B.
$110,000 C.
$280,000 D.
$490,000

Blooms: Understand
Test Bank: I
19. Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for $700. Donita sells the dresses for $1,200 to
kids attending the prom. The total contribution to GDP of this series of transactions is
A. $1,200. B.
$500. C.
$2,300.
D. $1,100.

Blooms: Understand
Test Bank: I
20. Which of the following transactions would be included in GDP?
A. Mary buys a used book for $5 at a garage sale.

B. Nick buys $5,000 worth of stock in Microsoft.
C. Olivia receives a tax refund of $500.
D. Peter buys a newly constructed house.

Blooms: Understand
Test Bank: I
21. Value added refers to
A. any increase in GDP that has been adjusted for adverse environmental effects.
B. the excess of gross investment over net investment.
C. the difference between the value of a firm's output and the value of the inputs it has purchased from others.
D. the portion of any increase in GDP that is caused by inflation as opposed to an increase in real output.

Blooms: Understand
27-3
Test Bank: I
22. Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is
A. $110.
B. $30.
C. $40.
D. $70.

Blooms: Understand
Test Bank: I
23. Setup Corporation buys $100,000 of sand, rock, and cement to produce ready-mix concrete. It sells 10,000 cubic yards of concrete at $30 a cubic yard. The value added by Setup Corporation is A.
$300,000.
B. $100,000.
C. $200,000.
D. zero dollars.

Blooms: Understand
Test Bank: I
24. Value added can be determined by
A. summing the profits of all enterprises in the economy.

B. subtracting the purchase of intermediate products from the value of the sales of final products.
C. calculating the year-to-year changes in real GDP.
D. deflating nominal GDP.

Blooms: Understand
Learning Objective: 07-03 Explain how GDP can be determined by summing up all of the incomes that were derived from producing the economys output of goods and services.
Test Bank: I
Topic: The Income Approach
25. If depreciation exceeds gross investment,
A. the economy's stock of capital may be either growing or shrinking.

B. the economy's stock of capital is shrinking.
C. the economy's stock of capital is growing.
D. net investment is zero.

Blooms: Understand
Learning Objective: 07-02 Describe how expenditures on goods and services can be summed to determine GDP.
Test Bank: I
Topic: The Expenditures Approach
26. The concept of net domestic investment refers to
A. the amount of machinery and equipment used up in producing the GDP in a specific year.
B. the difference between the market value and book value of outstanding capital stock.
C. gross domestic investment less net exports.
D. total investment less the amount of investment goods used up in producing the year's output.

Blooms: Understand
Test Bank: I
27. If depreciation (consumption of fixed capital) exceeds gross domestic investment, we can conclude that
A. nominal GDP is rising but real GDP is declining.

B. net investment is negative.
C. the economy is importing more than it exports.
D. the economy's production capacity is expanding.

Blooms: Understand
Test Bank: I
28. When an economy's production capacity is expanding,
A. nominal GDP, but not necessarily real GDP, is rising.

B. net exports is always a positive amount.
C. DI exceeds PI.
D. gross domestic investment exceeds depreciation.

Blooms: Understand
27-4
Test Bank: I
29.
Economy A: gross investment equals depreciation Economy B:
depreciation exceeds gross investment Economy C: gross
investment exceeds depreciation
Based on this information, positive net investment is occurring in
A. economy A only.
B. economy B only.
C. economy C only.
D. economies A and B only.

Blooms: Understand
Test Bank: I
30.
Economy A: gross investment equals depreciation Economy B:
depreciation exceeds gross investment Economy C: gross
investment exceeds depreciation
Other things equal, the information suggests that the production capacity in economy
A. B is growing more rapidly than that in either economy A or C.

B. A is growing more rapidly than that in either economy B or C.
C. A is growing less rapidly than that in economy B.
D. C is growing more rapidly than that in economy B.

Blooms: Understand
Test Bank: I
31. In 1933, net private domestic investment was a minus $6.0 billion. This means that
A. gross private domestic investment exceeded depreciation by $6.0 billion.

B. the economy was expanding in that year.
C. the production of 1933's GDP used up more capital goods than were produced in that year.
D. the economy produced no capital goods at all in 1933.

Blooms: Understand
Test Bank: I
32. An economy is enlarging its stock of capital goods
A. when net investment exceeds gross investment.

B. when gross investment exceeds replacement investment.
C. whenever gross investment is positive.
D. when replacement investment exceeds gross investment.

Blooms: Understand
Test Bank: I
33. If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock
A. may have either increased or decreased.

B. increased by $65 billion.
C. increased by $55 billion.
D. decreased by $55 billion.

Blooms: Understand
Test Bank: I
34. GDP can be calculated by summing
A. consumption, investment, government purchases, exports, and imports.

B. consumption, investment, government purchases, and net exports.
C. consumption, investment, wages, and rents.
D. consumption, investment, government purchases, and imports.
27-5
Blooms: Understand
Test Bank: I
35. In national income accounting, the consumption category of expenditures includes purchases of
A. both new and used consumer goods.

B. automobiles for personal use but not houses.
C. consumer durable and nondurable goods but not services.
D. consumer nondurable goods and services but not consumer durable goods.

Blooms: Understand
Test Bank: I
36. In national income accounting, the consumption category of expenditures includes purchases of
A. both new and used consumer goods.

B. consumer durable goods and consumer nondurable goods but not services.
C. consumer durable goods, consumer nondurable goods, and services.
D. changes in business inventories.

Blooms: Understand
Test Bank: I
37. Net exports are
A. that portion of consumption and investment goods sent to other countries.

B. exports plus imports.
C. exports less imports.
D. imports less exports.

Blooms: Understand
Test Bank: I
38. Net exports are negative when
A. a nation's imports exceed its exports.

B. the economy's stock of capital goods is declining.
C. depreciation exceeds domestic investment.
D. a nation's exports exceed its imports.

Blooms: Understand
Test Bank: I
39. Which of the following is not economic investment?
A. the purchase of a new drill press by the Ajax Manufacturing Company

B. the purchase of 100 shares of AT&T by a retired business executive
C. construction of a suburban housing project
D. the piling up of inventories on a grocer's shelf

Blooms: Understand
Test Bank: I
40. Which of the following do national income accountants consider to be investment?
A. the purchase of an automobile for private, nonbusiness use

B. the purchase of a new house
C. the purchase of corporate bonds
D. the purchase of gold coins

Blooms: Understand
Test Bank: I
41. National income accountants define investment to include
A. any increase in business inventories.

B. the addition of cash to a savings account.
C. the purchase of common or preferred stock.
D. the purchase of any durable good, for example, an automobile or a refrigerator.
27-6
Blooms: Understand
Test Bank: I
42. Suppose that inventories were $40 billion in 2015 and $50 billion in 2016. In 2016, national income accountants would
A. add $10 billion to other elements of investment in calculating total investment.

B. subtract $10 billion from other elements of investment in calculating total investment.
C. add $45 billion (= $90/2) to other elements of investment in calculating total investment.
D. subtract $45 billion (= $90/2) from other elements of investment in calculating total investment.

Blooms: Understand
Test Bank: I
43. Suppose that inventories were $80 billion in 2015 and $70 billion in 2016. In 2016, national income accountants would
A. add $10 billion to other elements of investment in calculating total investment.

B. subtract $10 billion from other elements of investment in calculating total investment.
C. add $75 billion (= $150/2) to other elements of investment in calculating total investment.
D. subtract $75 billion (= $150/2) from other elements of investment in calculating total investment.

Blooms: Understand
Test Bank: I
44. Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion. GDP in year 2 is
A. $180 billion.
B. $190 billion.
C. $200 billion.
D. $210 billion.

Blooms: Understand
Test Bank: I
45. Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion. GDP in year 2 is
A. $180 billion.
B. $190 billion.
C. $200 billion.
D. $210 billion.

Blooms: Understand
Test Bank: I
46. If the economy adds to its inventory of goods during some year,
A. gross investment will exceed net investment by the amount of the inventory increase.
B. this amount should be ignored in calculating that year's GDP.
C. this amount should be subtracted in calculating that year's GDP.
D. this amount should be included in calculating that year's GDP.

Blooms: Understand
Test Bank: I
47. The smallest component of aggregate spending in the United States is
A. net exports.
B. government purchases.
C. investment.
D. consumption.

Blooms: Understand
Test Bank: I
48. In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are
A. not counted.
B. counted as investment spending.
C. counted as government spending.
D. counted as consumption spending.
27-7
Blooms: Understand
Test Bank: I
49. The largest component of total expenditures in the United States is
A. net exports.
B. government purchases.
C. consumption.
D. gross investment.

Blooms: Understand
Test Bank: I
50. Government purchases include government spending on
A. government consumption goods and public capital goods.

B. government consumption goods only.
C. public capital goods only.
D. government consumption goods, public capital goods, and transfer payments.

Blooms: Understand
Test Bank: I
51. In national income accounting, government purchases include
A. purchases by federal, state, and local governments.

B. purchases by the federal government only.
C. government transfer payments.
D. purchases of goods for consumption but not public capital goods.

Blooms: Understand
Test Bank: I
52. Transfer payments are
A. excluded when calculating GDP because they only reflect inflation.

B. excluded when calculating GDP because they do not reflect current production.
C. included when calculating GDP because they are a category of investment spending.
D. included when calculating GDP because they increase the spending of recipients.

Blooms: Understand
Test Bank: I
53. The value of U.S. imports is
A. added to exports when calculating GDP because imports reflect spending by Americans.
B. subtracted from exports when calculating GDP because imports do not constitute spending by Americans.
C. subtracted from exports when calculating GDP because imports do not constitute production in the United States.
D. added when calculating GDP because imports do not constitute production in the United States.

Blooms: Understand
Test Bank: I
54. In the treatment of U.S. exports and imports, national income accountants
A. subtract exports, but add imports, in calculating GDP.

B. subtract both exports and imports in calculating GDP.
C. add both exports and imports in calculating GDP.
D. add exports, but subtract imports, in calculating GDP.

Blooms: Understand
Test Bank: I
55. In calculating the GDP, national income accountants
A. treat inventory changes as an adjustment to personal consumption expenditures.

B. ignore inventories because they do not represent final goods.
C. subtract increases in inventories or add decreases in inventories.
D. add increases in inventories or subtract decreases in inventories.

27-8
Blooms: Understand
Test Bank: I
56. The ZZZ Corporation issued $25 million in new common stock in 2016. It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans. As a result, investment
A. of $7 million occurred.
B. of $25 million occurred.
C. of $18 million occurred.
D. has not occurred.

Blooms: Understand
Test Bank: I
57. In 2012, Trailblazer Bicycle Company produced a mountain bike that was delivered to a retail outlet in November 2012. The bicycle was sold to E.Z. Ryder in March 2013. This bicycle is counted as
A. consumption in 2012 and as negative investment in 2013.

B. negative investment in 2012 and as consumption in 2013.
C. negative investment in 2012 and as investment in 2013.
D. investment in 2012 and as negative investment in 2013.

Blooms: Understand
Test Bank: I
58. Government Purchases $15

Consumption 90
Gross Investment 20
Consumption of Fixed Capital 5
Exports 8
Imports 12
Refer to the accompanying data (all figures in billions of dollars). GDP is
A. $116. B.
$121. C.
$125. D.
$150.

Blooms: Understand
Test Bank: I
Type: Table
59. Government Purchases $15

Consumption 90
Gross Investment 20
Exports 8
Imports 12
Refer to the accompanying data (all figures in billions of dollars). NDP (net domestic product) is
A. $116. B.
$121. C.
$125. D.
$150.

Blooms: Understand
Learning Objective: 07-04 Describe the relationships among GDP, net domestic product, national income, personal income, and disposable income.
Test Bank: I
Topic: Other National Accounts
Type: Table
60. Personal Taxes $40

Social Security Contributions 15
Taxes on Production and Imports 20
Corporate Income Taxes 40
Transfer Payments 22
U.S. Exports 24
Undistributed Corporate Profits 35
Government Purchases 90
Gross Private Domestic Investment 75
U.S. Imports 22
Personal Consumption Expenditures 250
Net Foreign Factor Income 10
Statistical Discrepancy 0
27-9
Refer to the accompanying data (all figures in billions of dollars). GDP is
A. $390. B.
$417. C.
$422. D.
$492.

Blooms: Understand
Test Bank: I
Type: Table

U.S. Exports 24
U.S. Imports 22
Refer to the accompanying data (all figures in billions of dollars). NDP is
A. $370. B.
$402. C.
$392. D.
$467.

Blooms: Understand
Test Bank: I
Type: Table

U.S. Exports 24
U.S. Imports 22
Refer to the accompanying data (all figures in billions of dollars). NI is
A. $362. B.
$382. C.
$447. D.
$402.

Blooms: Understand
Test Bank: I
Type: Table

U.S. Exports 24
U.S. Imports 22
Statistical Discrepancy 0 27-10
Refer to the accompanying data (all figures in billions of dollars). PI is
A. $314. B.
$346. C.
$408. D.
$437.

Blooms: Understand
Test Bank: I
Type: Table

U.S. Exports 24
U.S. Imports 22
Refer to the accompanying data (all figures in billions of dollars). DI is
A. $284. B.
$329. C.
$274. D.
$402.

Blooms: Understand
Test Bank: I
Type: Table
65. Gross Investment $18

National Income 100
Net Exports 2
Personal Income 85
Saving 5
Net Domestic Product 105
Refer to the accompanying data (all figures in billions of dollars). The gross domestic product for this economy is
A. $100. B.
$95. C.
$110. D.
$107.

Blooms: Understand
Test Bank: I
Type: Table

National Income 100
Net Exports 2
Personal Income 85
Saving 5
Refer to the accompanying data (all figures in billions of dollars). Consumption of fixed capital is
A. $5.
B. $10.
27-11
C. $20.
D. $30.

Blooms: Understand
Test Bank: I
Type: Table

National Income 100
Net Exports 2
Personal Income 85
Saving 5
Refer to the accompanying data (all figures in billions of dollars). Disposable income is
A. $83.
B. $73.
C. $75.
D. $77.

Blooms: Understand
Test Bank: I
Type: Table

National Income 100
Net Exports 2
Personal Income 85
Saving 5
Refer to the accompanying data (all figures in billions of dollars). From this information we can conclude that the net foreign factor income is
A. negative $5 billion.
B. zero.
C. positive $5 billion.
D. positive $15 billion.

Blooms: Understand
Test Bank: I
Type: Table
69. Personal Consumption Expenditures $400

Net Exports 7
Compensation of Employees 369
Rents 12
Interest 15
Proprietors' Income 52
Dividends 24
Refer to the accompanying national income data for the economy. All figures are in billions of dollars. The gross domestic product for this economy is
A. $584. B.
$592. C.
$609. D.
$623.

Blooms: Understand
Test Bank: I
27-12
Type: Table

Net Exports 7
Rents 12
Interest 15
Dividends 24
Refer to the accompanying national income data for the economy. All figures are in billions of dollars. Net domestic product is
A. $520. B.
$580. C.
$623. D.
$573.

Blooms: Understand
Test Bank: I
Type: Table

Net Exports 7
Rents 12
Interest 15
Dividends 24
Refer to the accompanying national income data for the economy. All figures are in billions of dollars. The national income is
A. $561. B.
$573. C.
$580. D.
$530.

Blooms: Understand
Test Bank: I
Type: Table

Net Exports 7
Rents 12
Interest 15
Dividends 24
Refer to the accompanying national income data for the economy. All figures are in billions of dollars. Disposable income
A. cannot be determined from the data given. B.

is $484.
C. is $416. D.
is $502.
27-13
Blooms: Understand
Test Bank: I
Type: Table
73. Gross Private Domestic Investment $46

Exports of the U.S. 9
Disposable Income 190
Personal Saving 10
Dividends 13
Imports of the U.S. 12
Personal Taxes 38
Refer to the accompanying data. All figures are in billions of dollars. The gross domestic product is
A. $326. B.
$282. C.
$307. D.
$300.

Blooms: Understand
Test Bank: I
Type: Table

Personal Saving 10
Dividends 13
Personal Taxes 38
Refer to the accompanying data. All figures are in billions of dollars. The net domestic product is
A. $233. B.
$255. C.
$230. D.
$348.

Blooms: Understand
Test Bank: I
Type: Table

Personal Saving 10
Dividends 13
Personal Taxes 38
Refer to the accompanying data. All figures are in billions of dollars. The national income is
A. $265. B.
$223. C.
$208. D.
$346.

Blooms: Understand
Test Bank: I
27-14
Type: Table

Personal Saving 10
Dividends 13
Personal Taxes 38
Refer to the accompanying data. All figures are in billions of dollars. Personal income is
A. $184. B.
$221. C.
$149. D.
$228.

Blooms: Understand
Test Bank: I
Type: Table

Personal Saving 10
Dividends 13
Personal Taxes 38
Refer to the accompanying data. All figures are in billions of dollars. The economy characterized by the data is
A. experiencing inflation because disposable income exceeds personal income.

B. experiencing declining production capacity because net investment is negative.
C. in a depression because personal income exceeds disposable income.
D. experiencing expanding production capacity because net private domestic investment is positive.

Blooms: Understand
Test Bank: I
Type: Table
78. Proprietors' Income $20

Gross Investment 80
Rents 10
Interest 20
Exports 30
Imports 50
Corporate Profits 25
Refer to the accompanying data. All figures are in billions of dollars. National income is
A. $395. B.
$380. C.
$375. D.
$360.

Blooms: Understand
Test Bank: I
Type: Table

Consumption of Fixed Capital 15 27-15
Gross Investment
Copyright © 2018 McGraw-Hill Education. All80rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Rents 10
Interest 20
Exports 30
Imports 50
Refer to the accompanying data. All figures are in billions of dollars. Gross domestic product is
A. $395. B.
$380. C.
$375. D.
$360.

Blooms: Understand
Test Bank: I
Type: Table

Gross Investment 80
Rents 10
Interest 20
Exports 30
Imports 50
Refer to the accompanying data. All figures are in billions of dollars. Net domestic product is
A. $395. B.
$380. C.
$375. D.
$360.

Blooms: Understand
Test Bank: I
Type: Table
81. Corporate profits are found by
A. summing corporate income taxes, dividends, and undistributed corporate profits.

B. adding corporate income taxes and dividends and subtracting undistributed corporate profits.
C. subtracting corporate income taxes from the sum of dividends and undistributed corporate profits.
D. summing dividends, undistributed corporate profits, and proprietors' income.

Blooms: Understand
Test Bank: I

Net Private Domestic Investment 33
Net Exports 6
National Income 278
U.S. Exports 20
Refer to the accompanying national income data. All figures are in billions of dollars. Consumption of fixed capital (private sector) is
A. $23.
B. $14.
C. $32.
D. $26.
27-16
Blooms: Understand
Test Bank: I
Type: Table

Net Exports 6
National Income 278
U.S. Exports 20
Refer to the accompanying national income data. All figures are in billions of dollars. U.S. imports are
A. $26.
B. $16.
C. $24.
D. $14.

Blooms: Understand
Test Bank: I
Type: Table

Net Exports 6
National Income 278
U.S. Exports 20
Refer to the accompanying national income data. All figures are in billions of dollars. Personal consumption expenditures
A. cannot be calculated.
B. are $231.
C. are $225.
D. are $205.

Blooms: Understand
Test Bank: I
Type: Table

Net Exports 6
National Income 278
U.S. Exports 20
Refer to the accompanying national income data. All figures are in billions of dollars. The gross domestic product is
A. $328. B.
$301. C.
$382. D.
$333.

Blooms: Understand
Test Bank: I
Type: Table
27-17
Net Exports 6
National Income 278
U.S. Exports 20
Refer to the accompanying national income data. All figures are in billions of dollars. Personal income is
A. $229. B.
$253. C.
$274. D.
$243.

Blooms: Understand
Test Bank: I
Type: Table
87. Consumption of fixed capital (depreciation) can be determined by
A. adding taxes on production and imports to NDP.

B. subtracting NDP from GDP.
C. subtracting net investment from GDP.
D. adding net investment to gross investment.

Blooms: Understand
Test Bank: I
88. If net foreign factor income is zero and there are no statistical discrepancies, the sum of national income and the consumption of fixed capital equals
A. disposable income.
B. personal income.
C. net domestic product.
D. gross domestic product.

Blooms: Understand
Test Bank: I
89. If there are no statistical discrepancies, NDP (net domestic product) is
A. NI minus net foreign factor income.

B. NI plus corporate income taxes.
C. GDP deflated for increases in the price level.
D. GDP minus taxes on production and imports.

Blooms: Understand
Test Bank: I
90. Which of the following best defines national income?
A. income received by households less personal taxes

B. the before-tax income received by households
C. incomes earned by U.S. resource suppliers plus taxes on production and imports
D. the market value of the annual output net of consumption of fixed capital

Blooms: Understand
Test Bank: I
91. The total amount of income earned by U.S. resource suppliers in a year, plus taxes on production and imports, is measured by
A. gross domestic product.

B. national income.
C. personal income.
D. disposable income.

Blooms: Understand
27-18
Test Bank: I
92. The largest component of national income is
A. compensation of employees.
B. rents.
C. interest.
D. corporate profits.

Blooms: Understand
Test Bank: I
93. National income measures
A. nominal GDP after it has been inflated or deflated for changes in the value of the dollar.
B. the after-tax income of resource suppliers.
C. the total of all sources of private income plus government revenue from taxes on production and imports.
D. the amount of wage, rent, interest, and profits income actually received by households.

Blooms: Understand
Test Bank: I
94. If personal income exceeds national income in a particular year, we can conclude that
A. transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and taxes on production and imports.
B. the sum of Social Security contributions, corporate income taxes, and undistributed corporate profits exceeded transfer payments.
C. consumption of fixed capital and taxes on production and imports exceeded personal taxes.
D. transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and undistributed corporate profits.

Blooms: Understand
Test Bank: I
95. Which of the following best defines disposable income?
A. income received by households less personal taxes

B. the before-tax income received by households
C. all income earned by resource suppliers for their current contributions to production
D. the market value of the annual output net of consumption of fixed capital

Blooms: Understand
Test Bank: I
96. Which of the following is the smallest dollar amount in the United States?
A. disposable income
B. personal income
C. gross domestic product
D. national income

Blooms: Understand
Test Bank: I
97. Transfer payments are included in
A. NI.
B. PI.
C. GDP.
D. NDP.

Blooms: Understand
Test Bank: I
98. The amount of after-tax income received by households is measured by
A. discretionary income.
B. national income.
C. disposable income.
D. personal income.

Blooms: Understand
27-19
Test Bank: I
99. In a typical year, which of the following measures of aggregate output and income is likely to be the smallest?
A. gross domestic product

B. national income
C. disposable income
D. personal income

Blooms: Understand
Test Bank: I
100. What is the difference between national income and personal income?
A. personal taxes
B. National income includes income earned both in the United States and abroad, while personal income only includes that income earned within the borders of the United States.
C. National income represents before-tax income, while personal income measures how much is available for spending after all taxes have been subtracted.
D. National income represents income earned by American-owned resources, while personal income measures received income, whether earned or unearned.

Blooms: Understand
Test Bank: I
101. Nominal GDP is
A. the sum of all monetary transactions that occur in the economy in a year.
B. the sum of all monetary transactions involving final goods and services that occur in the economy in a year.
C. the amount of production that occurs when the economy is operating at full employment.
D. money GDP adjusted for inflation.

Blooms: Understand
Learning Objective: 07-05 Discuss the nature and function of a GDP price index and describe the difference between nominal GDP and real GDP.
Test Bank: I
Topic: Nominal GDP versus Real GDP
102. Real GDP refers to
A. the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income.
B. GDP data that embody changes in the price level but not changes in physical output.
C. GDP data that do not reflect changes in both physical output and the price level.
D. GDP data that have been adjusted for changes in the price level.

Blooms: Understand
Test Bank: I
103. Real GDP measures
A. current output at current prices.

B. current output at base year prices.
C. base year output at current prices.
D. base year output at current exchange rates.

Blooms: Understand
Test Bank: I
104. Nominal GDP is adjusted for price changes through the use of
A. the Consumer Price Index (CPI).

B. the Producer Price Index (PPI).
C. the GDP price index.
D. exchange rates.

Blooms: Understand
Test Bank: I
105. In the second quarter (three-month period) of 2001, U.S. nominal GDP increased but U.S. real GDP declined. We can conclude that
A. nominal income declined by more than personal income.

B. the price level rose by more than nominal GDP.
C. real wages declined by more than real GDP.
D. the price level fell by more than real GDP.

Blooms: Understand
Test Bank: I
27-20
106. A price index is
A. a comparison of the current price of a market basket to a fixed point of reference.

B. a comparison of real GDP in one period relative to another.
C. the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period.
D. a ratio of real GDP to nominal GDP.

Blooms: Understand
Test Bank: I
107. If real GDP falls from one period to another, we can conclude that
A. deflation occurred.
B. inflation occurred.
C. nominal GDP fell.
D. none of these necessarily occurred.

Blooms: Understand
Test Bank: I
108. Price of Bagel Price Index

Year Units of Output Per Unit (Year 1 = 100)
1 10 $10 100
2 12 20 200
3 15 30 300
4 20 40 400
The table contains data for a hypothetical single-product economy. Nominal GDP in year 3 is
A. $100. B.
$450. C.
$225. D.
$150.

Blooms: Understand
Test Bank: I
Type: Table

1 10 $10 100
2 12 20 200
3 15 30 300
4 20 40 400
The table contains data for a hypothetical single-product economy. Real GDP in year 3 is
A. $100. B.
$450. C.
$225. D.
$150.

Blooms: Understand
Test Bank: I
Type: Table

1 10 $10 100
2 12 20 200
3 15 30 300
4 20 40 400
The table contains data for a hypothetical single-product economy. Nominal GDP in year 4 is
A. $320. B.
$450. C.
$225. D.
$800.

Blooms: Understand
27-21
Test Bank: I
Type: Table

1 10 $10 100
2 12 20 200
3 15 30 300
4 20 40 400
The table contains data for a hypothetical single-product economy. Real GDP in year 4 is
A. $320. B.
$450. C.
$200. D.
$800.

Blooms: Understand
Test Bank: I
Type: Table
112. If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP price index for that year is
A. 100.
B. 200.
C. 240.
D. 300.

Blooms: Understand
Test Bank: I
113. Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90. To make the 2010 GDP comparable with the base year GDP, the 2010 GDP must be
A. deflated to $678 billion.

B. deflated to $896 billion.
C. inflated to $1,080 billion.
D. deflated to $1,080 billion.

Blooms: Understand
Test Bank: I
114. Suppose nominal GDP in 2009 was $100 billion and in 2010 it was $260 billion. The general price index in 2009 was 100 and in 2010 it was 180. Between 2009 and 2010, the real GDP rose by approximately
A. 160 percent.
B. 44 percent.
C. 37 percent.
D. 80 percent.

Blooms: Understand
Test Bank: I
115. Historically, real GDP has increased less rapidly than nominal GDP because
A. price indices have not reflected improvements in product quality.

B. the general price level has increased.
C. technological progress has resulted in more efficient production.
D. the general price level has decreased.

Blooms: Understand
Test Bank: I
116. Suppose nominal GDP was $360 billion in 1990 and $450 billion in 2000. The appropriate price index (1985 = 100) was 120 in 1990 and 125 in 2000. Between 1990 and 2000, real GDP
A. increased by $60 billion.

B. decreased by $32 billion.
C. increased by $100 billion.
D. increased by $117 billion.

Blooms: Understand
Test Bank: I
27-22
117. Year Units of Output Price Per Unit
1 3 $3
2 4 4
3 6 5
4 7 7
5 8 8
Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a five-year period are shown in the table. The price index for year 1 is
A. 140.
B. 40.
C. 167.
D. 60.

Blooms: Understand
Test Bank: I
Type: Table

1 3 $3
2 4 4
3 6 5
4 7 7
5 8 8
Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a five-year period are shown in the table. The nominal GDP for year 4 is
A. $49.
B. $55.
C. $40.
D. $35.

Blooms: Understand
Test Bank: I
Type: Table

1 3 $3
2 4 4
3 6 5
4 7 7
5 8 8
Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a five-year period are shown in the table. Real GDP for year 5 is
A. $160. B.
$49.
C. $40.
D. $64.

Blooms: Understand
Test Bank: I
Type: Table

1 3 $3
2 4 4
3 6 5
4 7 7
5 8 8
Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a five-year period are shown in the table. In determining real GDP, the nominal GDP for
A. each year must be multiplied by the relevant price index.

B. years 1 and 2 must be inflated.
C. years 4 and 5 must be inflated.
D. years 1 and 2 must be deflated.

Blooms: Understand
Test Bank: I
Type: Table
27-23
1 3 $3
2 4 4
3 6 5
4 7 7
5 8 8
Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a five-year period are shown in the table. For the years shown, the growth of
A. real GDP has exceeded the growth of nominal GDP.

B. nominal GDP accurately reflects changes in real output.
C. nominal GDP overstates increases in real output.
D. nominal GDP understates increases in real output.

Blooms: Understand
Test Bank: I
Type: Table
122. If nominal GDP rises,
A. real GDP may either rise or fall.

B. we can be certain that the price level has risen.
C. real GDP must fall.
D. real GDP must also rise.

Blooms: Understand
Test Bank: I
123. Real GDP is
A. the nominal value of all goods and services produced in the economy.
B. the nominal value of all goods and services produced in the domestic economy, corrected for inflation or deflation.
C. that aggregate output that is produced when the economy is operating at full employment.
D. always greater than nominal GDP.

Blooms: Understand
Test Bank: I
124. In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because
A. of changes in trade deficits and surpluses.

B. the length of the workweek has declined historically.
C. the price level may change over time.
D. depreciation may be greater or smaller than gross investment.

Blooms: Understand
Test Bank: I
125. Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per-unit prices of these three goods are A = $2, B = $3, and C = $1. Nominal GDP in the current year is A.
$110.
B. $115.
C. $45.
D. $90.

Blooms: Understand
Test Bank: I
126. (Advanced analysis) Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per-unit prices of these three goods are A = $2, B = $3, and C = $1. If the per-unit prices of the
three goods were each $1 in a base year used to construct a GDP price index, then the GDP price index in the current year is
A. 205.5.
B. 255.5.
C. 39.3.
D. 100.

Blooms: Understand
Test Bank: I
127. (Advanced analysis) Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per-unit prices of these three goods are A = $2, B = $3, and C = $1. If the per-unit prices of the
three goods were each $1 in a base year used to construct a GDP price index, then real GDP in the current year is
27-24
A. $110. B.
$115. C.
$45. D.
$160.

Blooms: Understand
Test Bank: I

1 20 $4
2 25 4
3 30 6
Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. If year 2 is chosen as the base year, the price index for year 1 is
A. 80.
B. 100.
C. 120.
D. 20.

Blooms: Understand
Test Bank: I
Type: Table

1 20 $4
2 25 4
3 30 6
Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. The nominal GDP for year 3 is
A. 125 percent higher than the nominal GDP for year 1.

B. 50 percent higher than the nominal GDP for year 1. C.
$120.
D. $30.

Blooms: Understand
Test Bank: I
Type: Table

1 20 $4
2 25 4
3 30 6
Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. If year 2 is chosen as the base year, real GDP for year 1 is
A. $25. B.
$100. C.
$20.
D. $80.

Blooms: Understand
Test Bank: I
Type: Table

1 20 $4
2 25 4
3 30 6
Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. If year 2 is chosen for the base year, in year 3 nominal GDP and real GDP, respectively, are
A. $180 and $30. B.

$30 and $5.
C. $180 and $120. D.
$120 and $100.

Blooms: Understand
27-25
Test Bank: I
Type: Table

1 20 $4
2 25 4
3 30 6
Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. If year 2 is chosen as the base year, in years 1 and 3 the price index values are
A. 4 and 6, respectively.
B. 6 and 4, respectively.
C. 120 and 100, respectively.
D. 100 and 150, respectively.

Blooms: Understand
Test Bank: I
Type: Table
133. Year Nominal GDP Price Index

1 $550 $140
2 560 135
3 576 120
4 586 117
5 604 108
The economy described in the table has experienced a
A. declining nominal GDP.

B. rising price level.
C. declining real GDP.
D. rising real GDP.

Blooms: Understand
Test Bank: I
Type: Table

1 $550 $140
2 560 135
3 576 120
4 586 117
5 604 108
In the economy described in the table,
A. the price level is rising faster than nominal GDP.

B. nominal and real GDP are growing at the same rate.
C. the growth of nominal GDP understates the growth of real GDP.
D. the growth of nominal GDP overstates the growth of real GDP.

Blooms: Understand
Test Bank: I
Type: Table

1 $550 $140
2 560 135
3 576 120
4 586 117
5 604 108
In the economy described in the table, real GDP for year 3 is
A. $512. B.
$428. C.
$480. D.
$691.

Blooms: Understand
27-26
Test Bank: I
Type: Table
136. Assume that in 2002 the nominal GDP was $350 billion and in 2003 it was $375 billion. On the basis of this information, we
A. cannot make a meaningful comparison of the economy's performance in 2002 relative to 2003.
B. can conclude that the economy was achieving real economic growth.
C. can conclude that real GDP was higher in 2002 than in 2003.
D. can conclude that real GDP was lower in 2002 than in 2003.

Blooms: Understand
Test Bank: I
137. If nominal GDP in some year is $280 and real GDP is $160, then the GDP price index for that year is
A. 175.
B. 57.
C. 160.
D. 280.

Blooms: Understand
Test Bank: I
138. If real disposable income fell during a particular year, we can conclude that
A. personal taxes increased.

B. inflation occurred.
C. transfer payments declined.
D. none of these necessarily occurred.

Blooms: Understand
Test Bank: I
139.
Refer to the diagram. The base year used in determining the price indices for this economy
A. cannot be determined from the information given.

B. is some year before 2000.
C. is more recent than 2000.
D. is 2000.

Blooms: Understand
Test Bank: I
Type: Graph
140.
27-27
Refer to the diagram. Which of the following statements is correct?
A. The price index is greater than 100 for every year shown on the graph.
B. Nominal GDP must be deflated in each year prior to 2000 to determine real GDP.
C. Real GDP has grown in this economy, but nominal GDP has not.
D. Nominal GDP must be deflated in each year since 2000 to determine real GDP.

Blooms: Understand
Test Bank: I
Type: Graph
141. In an economy experiencing a persistently falling price level,
A. potential GDP will necessarily exceed actual GDP.

B. changes in nominal GDP may either overstate or understate changes in real GDP.
C. changes in nominal GDP understate changes in real GDP.
D. changes in nominal GDP overstate changes in real GDP.

Blooms: Understand
Test Bank: I
142. If real GDP rises and the GDP price index has increased,
A. the percentage increase in nominal GDP must have been less than the percentage increase in the price level.
B. nominal GDP may have either increased or decreased.
C. nominal GDP must have increased.
D. nominal GDP must have fallen.

Blooms: Understand
Test Bank: I
143. In determining real GDP, economists adjust the nominal GDP by using the
A. national productivity index.

B. wholesale (producers') price index.
C. GDP price index.
D. consumer price index.

Blooms: Understand
Test Bank: I
144. The fact that nominal GDP has risen faster than real GDP
A. suggests that the base year of the GDP price index has been shifted.
B. tells us nothing about what has happened to the price level.
C. suggests that the general price level has fallen.
D. suggests that the general price level has risen.

Blooms: Understand
Test Bank: I
145. Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?
A. the services of used-car dealers

B. the child-care services provided by stay-at-home parents
27-28
C. the construction of new houses
D. government expenditures on military equipment

Blooms: Remember
Difficulty: 01 Easy
Learning Objective: 07-06 List and explain some limitations of the GDP measure.
Test Bank: I
Topic: Shortcomings of GDP
146. Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?
A. the services of health care workers

B. the services of military personnel
C. the construction of new buildings
D. goods and services produced in the underground economy

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
147. A large underground economy results in an
A. understated GDP.
B. overstated GDP.
C. understated GDP price index.
D. overstated GDP price index.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
148. The GDP tends to
A. overstate economic welfare because it does not include certain nonmarket activities such as the productive work of housewives.
B. understate economic welfare because it includes expenditures undertaken to offset or correct pollution.
C. understate economic welfare because it does not take into account increases in leisure.
D. overstate economic welfare because it does not reflect improvements in product quality.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
149. GDP excludes
A. the market value of unpaid work in the home.

B. the production of services.
C. the production of nondurable goods.
D. positive changes in inventories.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
150. The growth of GDP may understate changes in the economy's economic well-being over time if the
A. distribution of income becomes increasingly unequal.

B. quality of products and services improves.
C. environment deteriorates because of pollution.
D. amount of leisure decreases.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
151. Environmental pollution is accounted for in
A. GDP.
B. PI.
C. DI.
D. none of these.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
152. Assume that the size of the underground economy increases both absolutely and relatively over time. As a result,
A. real GDP will rise more rapidly than nominal GDP.

B. GDP will tend to increasingly understate the level of output through time.
C. GDP will tend to increasingly overstate the level of output through time.
27-29
D. the accuracy of GDP will be unaffected through time.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
153. Gross output (GO)
A. and GDP are equivalent measures of the final output of an economy.

B. sums together the dollar value of economic activity at the four stages of production.
C. measures all economic activity leading up to but excluding final output.
D. always equals an amount smaller than GDP.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
154. Gross output (GO) and GDP both measure
A. resource extraction.
B. production.
C. distribution.
D. final output.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
155. Gross output (GO) for an economy in a given year
A. will always be less than GDP for that economy in the same year.
B. will always equal GDP for that economy in the same year.
C. may be greater than or less than GDP for that economy in the same year.
D. will always exceed GDP for that economy in the same year.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
156. During the 2007–2009 recession,
A. real GO and real GDP fell by roughly the same amount.

B. real GDP fell by roughly twice the amount that real GO fell.
C. real GDP fell, while real GO remained unchanged.
D. real GO fell by roughly twice the amount that real GDP fell.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
157.
Answer this question on the basis of the given information for an economy in 2016.
Dollar value of resource extraction activity = $20 billion Dollar value of
production activity = $50 billion
Dollar value of distribution activity = $80 billion Dollar value of
final output = $110 billion
Gross output for this economy in 2016 equals
A. $110 billion.
B. $260 billion.
C. $150 billion.
D. an amount that cannot be calculated with the information given.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
158.
Answer this question on the basis of the given information for an economy in 2016.
Dollar value of resource extraction activity = $20 billion Dollar value of
27-30
production activity = $50 billion
Dollar value of distribution activity = $80 billion Dollar value of
final output = $110 billion
Suppose that in 2017, the dollar value of distribution activity fell to $70 billion, but the other values remained the same. Based on this, we could conclude that from 2016 to 2017,
A. GO and GDP both fell by $10 billion.

B. GO fell by $10 billion, while GDP was unchanged.
C. GDP fell by $10 billion, while GO was unchanged.
D. neither GO nor GDP were affected by the change in distribution activity.

Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
159. (Consider This) When making a capital stock and reservoir analogy, the
A. outflow below the dam is gross investment.

B. inflow from the river is the stock of capital.
C. level of water in the reservoir is the stock of capital.
D. level of water in the reservoir is net investment.

Blooms: Understand
Test Bank: I
160. (Consider This) When making a capital stock and reservoir analogy, the
A. outflow below the dam is the stock of capital.

B. inflow from the river is gross investment.
C. level of water in the reservoir is depreciation.
D. level of water in the reservoir is net investment.

Blooms: Understand
Test Bank: I
161. (Consider This) Capital is a
A. flow, whereas gross investment and depreciation are stocks.

B. flow, as are gross investment and depreciation.
C. stock, as are gross investment and depreciation.
D. stock, whereas gross investment and depreciation are flows.

Blooms: Understand
Test Bank: I
162. (Last Word) The U.S. government agency responsible for compiling the national income accounts is the
A. Census Bureau.
B. Bureau of Labor Statistics (BLS).
C. Commerce Department's Bureau of Economic Analysis (BEA).
D. Government Accountability Office (GAO).

Blooms: Understand
Test Bank: I
163. (Last Word) Which of the following is a source of data for the consumption component of the U.S. GDP?
A. the Census Bureau's Retail Trade Survey

B. the Census Bureau's Survey of Government Finance
C. the Conference Board's Index of Leading Indicators
D. the Bureau of Labor Statistics' Consumer Price Index

Blooms: Understand
Test Bank: I
164. (Last Word) Which of the following is a source of data for the investment component of U.S. GDP?
A. the Census Bureau's Retail Trade Survey

B. the Census Bureau's Housing Starts Survey and Housing Sales Survey
C. the Conference Board's Survey of Consumer Sentiment
D. the Bureau of Labor Statistics' Consumer Price Index
27-31
Blooms: Understand
Test Bank: I
True / False Questions

165. Within the circular flow model, the level of total resource income and total spending on output will be approximately equal.
TRUE
Blooms: Understand
Test Bank: I
166. In determining GDP by the expenditures method, it is appropriate to use net investment rather than gross investment as a measure of investment spending.
FALSE
Blooms: Understand
Test Bank: I
167. Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity.
TRUE
Blooms: Understand
Test Bank: I
168. Interest on the public debt is included as a part of government purchases in determining GDP by the expenditures method.
FALSE
Blooms: Understand
Test Bank: I
169. All expenditures on new construction are included as investment in calculating GDP.
TRUE
Blooms: Understand
Test Bank: I
170. Exports are subtracted from imports in calculating U.S. GDP because exports are not available for domestic consumption.
FALSE
Blooms: Understand
Test Bank: I
171. The purchase of Wal-Mart stock is a part of gross investment but not of net investment.
FALSE
Blooms: Understand
Test Bank: I
172. The simplest way to calculate GDP is to sum the total sales of all business firms.
FALSE
Blooms: Understand
Test Bank: I
Type: Table
27-32
173. Personal income usually exceeds disposable income.
TRUE
Blooms: Understand
Test Bank: I
174. Welfare payments to low-income families are included in national income.
FALSE
Blooms: Understand
Test Bank: I
175. Disposable income measures the before-tax income received by resource suppliers.
FALSE
Blooms: Understand
Test Bank: I
176. NDP can be determined by adding taxes on production and imports to GDP.
FALSE
Blooms: Understand
Test Bank: I
177. If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.
TRUE
Blooms: Understand
Test Bank: I
178. If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.
TRUE
Blooms: Understand
Test Bank: I
179. Real GDP accounts for changes in product quality; nominal GDP does not.
FALSE
Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
180. Gross output (GO) reflects the overall status of the productive side of the economy better than GDP does.
TRUE
Blooms: Remember
Difficulty: 01 Easy
Test Bank: I
Multiple Choice Questions

181. Which of the following is a primary use for national income accounts?
A. to analyze the environmental cost of economic growth

B. to assess the economic efficiency of specific industries in the economy
C. to measure changes in the value of production and income in the economy
D. to determine whether there is a fair and equitable distribution of income in the economy
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Blooms: Understand
Test Bank: II
182. The National Income and Product Accounts (NIPA) for the U.S. are compiled by the
A. National Bureau of Economic Research.

B. Bureau of Economic Analysis.
C. National Census Bureau.
D. Council of Economic Advisers.

Blooms: Understand
Test Bank: II
183. GDP is the market value of
A. resources (land, labor, capital, and entrepreneurship) in an economy in a given year.

B. all final goods and services produced in an economy in a given year.
C. consumption and investment spending in an economy in a given year.
D. all output produced and accumulated over the years.

Blooms: Understand
Test Bank: II
184. The gross domestic product (GDP) concept accounts for society's valuation of the relative worth of goods and services by using
A. a measure of physical weight.

B. a measure of volume.
C. a utility measure.
D. a monetary measure.

Blooms: Understand
Test Bank: II
185. To avoid multiple counting in national income accounts,
A. only final goods and services should be counted.

B. intermediate goods and services should be counted.
C. both final and intermediate goods and services should be counted.
D. primary, intermediate, and final goods and services should be counted.

Blooms: Understand
Test Bank: II
186. Adding the market value of all final and intermediate goods and services in an economy in a given year would result in
A. the calculation of GDP for that year.

B. the calculation of NDP for that year.
C. an amount less than GDP for that year.
D. an amount greater than GDP for that year.

Blooms: Understand
Test Bank: II
187. An example of final goods in national income accounts would be
A. new lawn mowers purchased by Cut-Rite Lawn Equipment & Supplies.

B. flowers and pots purchased by homeowner Joe Smith.
C. chemicals purchased by Green Grass Lawn Care Services.
D. seedlings and saplings purchased for resale by Wendy's Garden Center.

Blooms: Understand
Test Bank: II
188. The following are examples of final goods in national income accounting, except
A. lumber and steel beams purchased by a construction company.

B. a tractor purchased by a construction company.
C. a laptop computer purchased by an executive for personal use.
D. a desktop computer purchased by an executive for business use.
27-34
Blooms: Understand
Test Bank: II
189. An example of intermediate goods would be
A. bricks bought by a homeowner for constructing a patio.

B. sacks of groceries bought by a dentist for his family.
C. cars bought by a car-rental company.
D. paper and ink bought by a publishing company.

Blooms: Understand
Test Bank: II
190. All of the following are examples of intermediate goods, except
A. flour bought by a bakery.

B. an oven bought by a bakery.
C. office supplies bought by an accounting firm.
D. gasoline bought by a trucking company.

Blooms: Understand
Test Bank: II
191. The total volume of business sales in our economy is several times larger than GDP because
A. the GDP does not take taxes into account.

B. the GDP excludes intermediate transactions.
C. the GDP grossly understates the value of our annual output.
D. total sales are in money terms and GDP is always stated in real terms.

Blooms: Understand
Test Bank: II
192. Value added by a firm is the market value of the firm's output minus the
A. total wages paid to its employees.

B. value of inputs bought from other firms.
C. profits that the firm's owners earn.
D. total costs of all inputs used.

Blooms: Understand
Test Bank: II
193. A business buys $5,000 worth of inputs from other firms in order to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the business to these products is A.
$5,000.
B. $6,500.
C. $1,500.
D. $1,000.

Blooms: Understand
Test Bank: II
194. Sales Value of Materials or

Stage of Production Products
Firm A $800
Firm B 1,250
Firm C 1,850
Firm D 2,600
Firm E 3,800
Firm A produces something that Firm B uses as an input. The product of Firm B, in turn, is purchased and used as an input by Firm C, and so on down the line through Firm E, which produces the end product. (See the
accompanying table.) The total value added by Firms A–E from the production of the end product described here is
A. $3,000.
B. $3,800.
C. $6,500. D.
$10,300.

Blooms: Understand
27-35
Test Bank: II
195. Subtracting the purchase of intermediate products and supplies from the value of the sales of final products determines the amount of
A. net investment for a business.

B. profit and cost.
C. value added from the economic activity.
D. surplus or deficit from the economic activity.

Blooms: Understand
Test Bank: II
196. Total Revenue $50,000

Total Cost 45,000
Supplies $10,000
Wages and Salaries 35,000
Profit 5,000
Consider the accompanying data for a firm over a period of time. The contribution of the firm to domestic output by the value-added method is
A. $5,000. B.
$40,000. C.
$45,000. D.
$50,000.

Blooms: Understand
Test Bank: II
197. Which of the following is a private transfer payment?
A. unemployment benefits received by newly laid-off workers

B. the sale of used clothing at a thrift store
C. the Social Security benefits paid to a retired worker
D. a check for $250 sent by a parent to a daughter at college

Blooms: Understand
Test Bank: II
198. Which of the following is included in GDP?
A. welfare payments received by some households

B. fees received by stockbrokers
C. cash gifts from relatives during the holidays
D. payments received from selling stocks in one's portfolio

Blooms: Understand
Test Bank: II
199. The sale of a used automobile would not be included in GDP of the current year because it is a
A. nonmarket transaction.
B. nonproduction transaction.
C. purely financial transaction.
D. private transfer payment.

Blooms: Understand
Test Bank: II
200. U.S. GDP in 2015 was about
A. $8 trillion.
B. $18 trillion.
C. $890 billion.
D. $30 trillion.

Blooms: Understand
Test Bank: II
201. The two ways of looking at GDP are the
A. output approach and expenditures approach.
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B. income approach and saving approach.
C. expenditures approach and income approach.
D. output approach and consumption approach.

Blooms: Understand
Test Bank: II
202. Which of the following is included in the expenditures approach to GDP?
A. spending on meals by consumers at restaurants

B. expenditures on used clothing at garage sales
C. the value of stocks and bonds bought by businesspersons
D. government spending on welfare payments

Blooms: Understand
Test Bank: II
203. The largest expenditure component of GDP is
A. government purchases.
B. personal consumption expenditures.
C. gross private domestic investment.
D. net exports.

Blooms: Understand
Test Bank: II
204. Which of the following is not a component of GDP in the expenditures approach?
A. government purchases
B. workers' wages and other compensation
C. gross private domestic investment
D. the difference between exports and imports

Blooms: Understand
Test Bank: II
205. Which of the following is not included in personal consumption expenditures?
A. new furniture and appliances bought by homeowners

B. payments for cable and Internet services to homes
C. purchases of mutual funds by consumers
D. food purchased at supermarkets

Blooms: Understand
Test Bank: II
206. Money spent on the purchase of a new house is included in the GDP as a part of
A. household expenditures on durable goods.

B. personal consumption expenditures.
C. personal saving.
D. gross domestic private investment.

Blooms: Understand
Test Bank: II
207. The value of corporate stocks and bonds traded in a given year is
A. included in the calculation of GDP because they make a contribution to the current production of goods and services.
B. excluded from the calculation of GDP because they make no contribution to current production of goods and services.
C. included in the calculation of net private domestic investment.
D. included in the calculation of gross private domestic investment.

Blooms: Understand
Test Bank: II
208. Which would be considered an investment according to economists?
A. A fishing-company owner buys Google shares.

B. A fishing company buys a few boats from another fishing company that was closing out.
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C. A fishing-company owner buys new fishing gear.
D. A fishing-company owner buys fuel to run the boats.

Blooms: Understand
Test Bank: II
209. Gross domestic private investment, as defined in national income accounts, would include the following, except
A. changes to business inventories.

B. all domestic construction done by the private sector.
C. government construction of new highways and dams.
D. the value of all capital goods bought by business firms.

Blooms: Understand
Test Bank: II
210. Business inventories increase when firms produce
A. more than they sell, and the inventory increase is added to GDP.
B. less than they sell, and the inventory increase is added to GDP.
C. more than they sell, and the inventory increase is subtracted from GDP.
D. less than they sell, and the inventory increase is subtracted from GDP.

Blooms: Understand
Test Bank: II
211. In November 2016, Econland Motors produced an automobile that was delivered to a local dealership in December 2016. The auto was then sold to Sharon Smith for personal use in February 2017. Following national income
accounting practices, this auto would be counted as part of
A. consumption in 2016 and consumption in 2017.

B. consumption in 2016 and investment in 2017.
C. negative investment in 2016 and consumption in 2017.
D. investment in 2016 and negative investment in 2017.

Blooms: Understand
Test Bank: II
212. In an economy, the value of inventories was $75 billion in 2016 and $63 billion in 2017. In calculating total investment for 2017, national income accountants would
A. decrease it by $75 billion.

B. increase it by $63 billion.
C. decrease it by $12 billion.
D. increase it by $138 billion.

Blooms: Understand
Test Bank: II
213. When gross investment is positive, net investment
A. is always zero
B. must be negative.
C. must be positive.
D. may be either positive or negative.

Blooms: Understand
Test Bank: II
214. When gross private domestic investment exceeds depreciation, it can be concluded that
A. net investment is positive.

C. the economy is exporting more than it imports.
D. the economy is importing more than it exports.

Blooms: Understand
Test Bank: II
215. A nation's capital stock was valued at $500 billion at the start of the year and $575 billion at the end. Consumption of private fixed capital in the year was $35 billion. Assuming stable prices, net investment was
A. $35 billion.
B. $40 billion.
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C. $45 billion.
D. $75 billion.

Blooms: Understand
Test Bank: II
216. A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end. Consumption of private fixed capital in the year was $25 billion. Assuming stable prices, gross investment was
A. $25 billion.
B. $50 billion.
C. $75 billion.
D. $90 billion.

Blooms: Understand
Test Bank: II
217. The consumption of fixed capital in each year's production is called
A. indirect business taxes.

B. inventory reduction.
C. depreciation.
D. net investment.

Blooms: Understand
Test Bank: II
218. In an economy that is experiencing a shrinking production capacity,
A. gross domestic investment is negative.

B. net private domestic investment is zero.
C. depreciation is negative.
D. depreciation exceeds gross investment.

Blooms: Understand
Test Bank: II
219. In an economy that has stationary production capacity,
A. GDP is zero.
B. capital consumption (or depreciation) is zero.
C. net investment is zero.
D. gross investment is zero.

Blooms: Understand
Test Bank: II
220. Disinvestment occurs when
A. businesses sell machinery and equipment to one another.

B. the prices of investment goods rise faster than the prices of consumer goods.
C. businesses have larger inventories at the end of the year than they had at the start.
D. the consumption of private fixed capital exceeds gross private domestic investment.

Blooms: Understand
Test Bank: II
221. Government purchases in national income accounts would include payments for
A. Social Security checks to retirees.

B. salaries for current U.S. military officers.
C. public assistance for welfare recipients.
D. unemployment benefits.

Blooms: Understand
Test Bank: II
222. When local police and fire departments buy new cars for their operations, these are counted as part of
A. C.
B. Ig.
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C. G.
D. Xn.

Blooms: Understand
Test Bank: II
223. A distinguishing characteristic of public transfer payments is that
A. they include wages to government workers.

B. they are counted as part of government purchases in the calculation of the gross domestic product.
C. they include the cost of maintaining public parks.
D. they involve no contribution to current production in return.

Blooms: Understand
Test Bank: II
224. Net exports is a positive number when
A. a nation's exports of goods and services are increasing.

B. a nation exports goods and services to other nations.
C. a nation's exports of goods and services exceed its imports.
D. a nation's exports of goods and services fall short of its imports.

Blooms: Understand
Test Bank: II
225. In the expenditures approach of national income accounting, C, Ig, and G include expenditures for
A. domestically produced goods and services only.

B. domestically produced as well as imported goods and services.
C. exported goods and services.
D. the private sector of the economy only.

Blooms: Understand
Test Bank: II
226. Computation of GDP by the expenditures method would include the purchase of
A. fertilizer by a farmer.
B. cement by a construction company.
C. land by the U.S. Department of Interior.
D. government bonds by a commercial bank.

Blooms: Understand
Test Bank: II
227. In the reservoir analogy for stock versus flow, the stock of capital is similar to the
A. quality of water.
B. outflow of water.
C. inflow of water.
D. level of water.

Blooms: Understand
Test Bank: II
228. In the reservoir analogy of stock and flow for the economy,
A. gross investment is an outflow and depreciation is an inflow.

B. the stock of capital is an outflow and depreciation is an inflow.
C. net investment is an inflow and the stock of capital is an outflow.
D. gross investment is an inflow and depreciation is an outflow.

Blooms: Understand
Test Bank: II
229. If inflows to the capital stock are greater than outflows, then
A. net investment is positive.

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C. depreciation equals gross investment.
D. depreciation is greater than gross investment.

Blooms: Understand
Test Bank: II
230. GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports must be
A. +$53 billion.
B. −$47 billion.
C. −$84 billion.
D. −$161 billion.

Blooms: Understand
Test Bank: II
231. The following are national income account data for a hypothetical economy in billions of dollars: gross private domestic investment ($320), imports ($35), exports ($22), personal consumption expenditures ($2,460), and
government purchases ($470). What is GDP in this economy?
A. $3,250 billion
B. $3,263 billion
C. $3,237 billion
D. $3,290 billion

Blooms: Understand
Test Bank: II
232. The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,050), personal consumption expenditures ($4,800), imports ($370), exports ($240), and gross
private domestic investment ($1,130). Personal consumption expenditures are approximately what percentage of this economy?
A. 60 percent
B. 65 percent
C. 70 percent
D. 75 percent

Blooms: Understand
Test Bank: II
233. The expenditures or output approach to GDP measures it by summing up
A. compensation of employees, rents, interest, dividends, undistributed corporate profits, proprietors' income, indirect business taxes paid, consumption of fixed capital, and net foreign factor income earned in the United States.
B. compensation of employees, rents, interest, dividends, corporate profits, proprietors' income, and indirect business taxes, and subtracting the consumption of fixed capital.
C. the total spending for consumption, investment, net exports, and government purchases.
D. the total spending for consumption and government purchases, but subtracting public and private transfer payments.

Blooms: Understand
Test Bank: II
234. Personal Consumption Expenditures $4,500

Exports 65
Imports 85
Refer to the accompanying data about a hypothetical economy (in billions of dollars). GDP in this economy is
A. $6,080 billion.
B. $6,230 billion.
C. $6,380 billion.
D. $6,400 billion.

Blooms: Understand
Test Bank: II
235. Personal Consumption Expenditures $4,500

Exports 65
Imports 85
27-41
Refer to the accompanying data about a hypothetical economy (in billions of dollars). How much are net exports of this economy?
A. +$150 billion
B. −$20 billion
C. +$20 billion
D. −$65 billion

Blooms: Understand
Test Bank: II
236. Disposable Income $200

US Imports 15
National Income 300
Personal Taxes 31
Net Exports 9
Refer to the accompanying national income data (in billions of dollars). In these data, U.S. exports are
A. $9 billion.
B. $16 billion.
C. $24 billion.
D. $28 billion.

Blooms: Understand
Test Bank: II
237. Disposable Income $200

US Imports 15
National Income 300
Personal Taxes 31
Net Exports 9
Refer to the accompanying national income data (in billions of dollars). In these data, U.S. GDP is
A. $315 billion.
B. $324 billion.
C. $305 billion.
D. $367 billion.

Blooms: Understand
Test Bank: II
238. In 2014, the three largest economies in the world were (listed in order, from largest)
A. the U.S., China, Germany.

B. China, the U.S., Japan.
C. the U.S., China, Japan.
D. China, the U.S., Germany.

Blooms: Understand
Test Bank: II
239. 1 Consumption of Fixed Capital $438

2 Taxes on Production and Imports 326
3 Compensation of Employees 2,347
4 Rents 14
5 Interest 287
6 Proprietors' Income 242
7 Corporate Profits 297
8 Personal Consumption Expenditures 2,582
9 Gross Private Domestic Investment 669
10 Government Purchases 815
11 Net Exports -78
12 Net Foreign Factor Income 46
13 Statistical Discrepancy 50
27-42
Refer to the accompanying national income data (in billions of dollars). The expenditures approach to GDP calculation can be done by adding
A. 1 through 7.
B. 2 through 7.
C. 8 through 11.
D. 8 through 13.

Blooms: Understand
Test Bank: II

4 Rents 14
5 Interest 287
11 Net Exports -78
Refer to the accompanying national income data (in billions of dollars). The national income in this economy can be estimated by adding items
A. 1 through 7.
B. 8 through 11.
C. 2 through 7.
D. 1 through 13.

Blooms: Understand
Test Bank: II

4 Rents 14
5 Interest 287
11 Net Exports -78
Refer to the accompanying national income data (in billions of dollars). Which items need to be accounted for in going from national Income to GDP?
A. 1, 12, and 13
B. 2, 11, and 12
C. 13 only
D. 1 and 2

Blooms: Understand
Test Bank: II
242. National income is the sum of employee compensation, profits, and the following items, except
A. rent.
B. interest.
C. depreciation or consumption of fixed capital.
D. taxes on production and imports.

Blooms: Understand
Test Bank: II
243. "Corporate profits" in the national income accounts consists of the following, except
A. retained earnings.
B. interest.
C. dividends.
D. corporate income taxes.
27-43
Blooms: Understand
Test Bank: II
244. "Net foreign factor income" in the national income accounts refers to the difference between
A. the income Americans gain from supplying resources abroad and the income that foreigners earn by supplying resources in the U.S.
B. the value of products sold by Americans to other nations and the value of products bought by Americans from other nations.
C. the value of investments that Americans made abroad and the value of investments made by foreigners in the U.S.
D. the income earned by Americans in the U.S. minus the income earned by foreigners in the U.S.

Blooms: Understand
Test Bank: II
245. Depreciation is all of the following, except
A. the difference between GDP and NDP.

B. the difference between gross investment and net investment.
C. the accumulation of capital stock.
D. the consumption of fixed capital.

Blooms: Understand
Test Bank: II
246. The "statistical discrepancy" that the NIPA includes in the data is to account for the following, except
A. equalizing GDP totals produced by the expenditures approach and the income approach.
B. errors due to people misrepresenting their incomes on their tax returns.
C. difficulty in accurately estimating depreciation.
D. household production, or "do-it-yourself" activities of households.

Blooms: Understand
Test Bank: II
247. Consumption of Fixed Capital $25

US imports 260
Personal Taxes 45
US Exports 249
Refer to the accompanying national income data (in billions of dollars). Gross domestic product is
A. $1,049 billion.
B. $1,079 billion.
C. $1,090 billion.
D. $1,101 billion.

Blooms: Understand
Test Bank: II

US imports 260
Personal Taxes 45
US Exports 249
Refer to the accompanying national income data (in billions of dollars). Net domestic product equals
27-44
A. $1,039 billion.
B. $1,044 billion.
C. $1,054 billion.
D. $1,076 billion.

Blooms: Understand
Test Bank: II

US imports 260
Personal Taxes 45
US Exports 249
Refer to the accompanying national income data (in billions of dollars). National income is
A. $804 billion.
B. $940 billion.
C. $975 billion.
D. $1,019 billion.

Blooms: Understand
Test Bank: II

US imports 260
Personal Taxes 45
US Exports 249
Refer to the accompanying national income data (in billions of dollars). Personal income is
A. $621 billion.
B. $656 billion.
C. $705 billion.
D. $716 billion.

Blooms: Understand
Test Bank: II

US imports 260
Personal Taxes 45
US Exports 249
Refer to the accompanying national income data (in billions of dollars). Disposable income is
27-45
Another random document with
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Laura spent a happy afternoon choosing presents at the village shop. For
Henry she bought a bottle of ginger wine, a pair of leather gaiters, and some
highly recommended tincture of sassafras for his winter cough. For
Caroline she bought an extensive parcel—all the shop had, in fact—of
variously coloured rug-wools, and a pound’s worth of assorted stamps. For
Sibyl she bought some tinned fruits, some sugar-biscuits, and a pink knitted
bed-jacket. For Fancy and Marion respectively she bought a Swanee flute
and a box with Ely Cathedral on the lid, containing string, which Mrs.
Trumpet was very glad to see the last of, as it had been forced upon her by a
traveller, and had not hit the taste of the village. To her great-nephew and
great-nieces she sent postal orders for one guinea, and pink gauze stockings
filled with tin toys. These she knew would please, for she had always
wanted one herself. For Dunlop she bought a useful button-hook.
Acquaintances and minor relations were greeted with picture postcards,
either photographs of the local War Memorial Hall and Institute, or a
coloured view of some sweet-peas with the motto: ‘Kind Thoughts from
Great Mop.’ A postcard of the latter kind was also enclosed with each of the
presents.
Titus was rather more difficult to suit. But by good luck she noticed two
heavy glass jars such as old-fashioned druggists use. These were not
amongst Mrs. Trumpet’s wares—she kept linen buttons in the one and horn
buttons in the other; but she was anxious to oblige such a magnificent
customer and quite ready to sell her anything that she wanted. She was
about to empty out the buttons when Laura stopped her. ‘You must keep
some for your customers, Mrs. Trumpet. They may want to put them in
their Christmas puddings.’ Laura was losing her head a little with the
excitement. ‘But I should like to send about three dozen of each sort, if you
can spare them. Buttons are always useful.’
‘Yes, miss. Shall I put in some linen thread too?’
Mrs. Trumpet was a stout, obliging woman. She promised to do up all
the parcels in thick brown paper and send them off three days before
Christmas. As Laura stepped out of the shop in triumph, she exclaimed:
‘Well, that’s done it!’
For the life of her she could not have said in what sense the words were
intended. She was divided between admiration for her useful and well-
chosen gifts and delight in affronting a kind of good taste which she
believed to be merely self-esteem.
Although she had chosen presents with such care for her relations, Laura
was surprised when counter presents arrived from them. She had not
thought of them as remembering her. Their presents were all of a warm
nature; they insisted upon that bleakness and draughtiness which their
senders had foretold. When Caroline wrote to thank Laura, she said:
‘I have started to make you a nice warm coverlet out of those pretty
wools you sent. I think it will look very cheerful and variegated. I often feel
quite worried to think of you upon those wind-swept hills. And from all I
hear you have a great many woods round you, and I’m afraid all the
decaying leaves must make the place damp.’
Heaping coals of fire was a religious occupation. Laura rather admired
Caroline for the neat turn of the wrist with which she heaped these.
In spite of the general determination of her family that she should feel
the cold Laura lived at Great Mop very comfortably. Mrs. Leak was an
excellent cook; she attended to her lodger civilly and kindly enough, made
no comments, and showed no curiosity. At times Laura felt as though she
had exchanged one Caroline for another. Mrs. Leak was not, apparently, a
religious woman. There were no texts on her walls, and when Laura asked
for the loan of a Bible Mrs. Leak took a little time to produce it, and blew
on the cover before she handed it over. But like Caroline, she gave the
impression that her kingdom was not of this world. Laura liked her, and
would have been glad to be upon less distant terms with her, but she did not
find it easy to break through Mrs. Leak’s reserve. She tried this subject and
that, but Mrs. Leak did not begin to thaw until Laura said something about
black-currant tea. It seemed that Mrs. Leak shared Laura’s liking for
distillations. That evening she remarked that the table-beer was of her own
brewing, and lingered a while with the folded cloth in her hand to explain
the recipe. After that Laura was given every evening a glass of home-made
wine: dandelion, cowslip, elderberry, ashkey, or mangold. By her
appreciation and her inquiries she entrapped Mrs. Leak into pausing longer
and longer before she carried away the supper-tray. Before January was out
it had become an established thing that after placing the bedroom
candlestick on the cleared table Mrs. Leak would sit down and talk for half
an hour or so.
There was an indoor pleasantness about these times. Through the wall
came the sound of Mr. Leak snoring in the kitchen. The two women sat by
the fire, tilting their glasses and drinking in small peaceful sips. The
lamplight shone upon the tidy room and the polished table, lighting topaz in
the dandelion wine, spilling pools of crimson through the flanks of the
bottle of plum gin. It shone on the contented drinkers, and threw their large,
close-at-hand shadows upon the wall. When Mrs. Leak smoothed her apron
the shadow solemnified the gesture as though she were moulding an
universe. Laura’s nose and chin were defined as sharply as the peaks on a
holly leaf.
Mrs. Leak did most of the talking. She talked well. She knew a great
deal about everybody, and she was not content to quit a character until she
had brought it to life for her listener.
Mrs. Leak’s favourite subject was the Misses Larpent, Miss Minnie and
Miss Jane. Miss Minnie was seventy-three, Miss Jane four years younger.
Neither of them had known a day’s illness, nor any bodily infirmity, nor any
relenting of their faculties. They would live for many years yet, if only to
thwart their debauched middle-aged nephew, the heir to the estate. Perhaps
Miss Willowes had seen Lazzard Court on one of her walks? Yes, Laura had
seen it, looking down from a hill-top—the park where sheep were penned
among the grouped chestnut trees, the long white house with its
expressionless façade—and had heard the stable-clock striking a deserted
noon.
The drive of Lazzard Court was five miles long from end to end. The
house had fourteen principal bedrooms and a suite for Royalty. Mrs. Leak
had been in service at Lazzard Court before her marriage; she knew the
house inside and out, and described it to Laura till Laura felt that there was
not one of the fourteen principal bedrooms which she did not know. The
blue room, the yellow room, the Chinese room, the buff room, the balcony
room, the needle-work room—she had slept in them all. Nay, she had
awakened in the Royal bed, and pulling aside the red damask curtains had
looked to the window to see the sun shining upon the tulip tree.
No visitors slept in the stately bedrooms now, Lazzard Court was very
quiet. People in the villages, said Mrs. Leak coldly, called Miss Minnie and
Miss Jane two old screws. Mrs. Leak knew better. The old ladies spent
lordily upon their pleasures, and economised elsewhere that they might be
able to do so. When they invited the Bishop to lunch and gave him stewed
rabbit, blackberry pudding, and the best peaches and Madeira that his
Lordship was likely to taste in his life, he fared no worse and no better than
they fared themselves. Lazzard Court was famous for its racing-stable. To
the upkeep of this all meaner luxuries were sacrificed—suitable bonnets,
suitable subscriptions, bedroom fires, salmon and cucumber. But the stable-
yard was like the forecourt of a temple. Every morning after breakfast Miss
Jane would go round the stables and feel the horses’ legs, her gnarled old
hand with its diamond rings slipping over the satin coat.
Nothing escaped the sisters. The dairy, the laundry, the glass-houses, the
poultry-yard, all were scrutinised. If any servant were found lacking he or
she was called before Miss Minnie in the Justice Room. Mrs. Leak had
never suffered such an interview, but she had seen others come away, white-
faced, or weeping with apron thrown over head. Even the coffins were
made on the estate. Each sister had chosen her elm and had watched it
felled, with sharp words for the woodman when he aimed amiss.
When Mrs. Leak had given the last touches to Miss Minnie and Miss
Jane, she made Laura’s flesh creep with the story of the doctor who took the
new house up on the hill. He had been a famous doctor in London, but
when he came to Great Mop no one would have anything to do with him. It
was said he came as an interloper, watching for old Dr. Halley to die that he
might step into his shoes. He grew more and more morose in his lonely
house, soon the villagers said he drank; at last came the morning when he
and his wife were found dead. He had shot her and then himself, so it
appeared, and the verdict at the inquest was of Insanity. The chief witnesses
were another London doctor, a great man for the brain, who had advised his
friend to lead a peaceful country life; and the maidservant, who had heard
ranting talk and cries late one evening, and ran out of the house in terror,
banging the door behind her, to spend the night with her mother in the
village.
After the doctor, Mrs. Leak called up Mr. Jones the clergyman. Laura
had seen his white beard browsing among the tombs. He looked like a
blessed goat tethered on hallowed grass. He lived alone with his books of
Latin and Hebrew and his tame owl which he tried to persuade to sleep in
his bedroom. He had dismissed red-haired Emily, the sexton’s niece, for
pouring hot water on a mouse. Emily had heated the water with the kindest
intentions, but she was dismissed nevertheless. Mrs. Leak made much of
this incident, for it was Mr. Jones’s only act of authority. In all other
administrations he was guided by Mr. Gurdon, the clerk.
Mr. Gurdon’s beard was red and curly (Laura knew him by sight also).
Fiery down covered his cheeks, his eyes were small and truculent, and he
lived in a small surprised cottage near the church. Every morning he walked
forth to the Rectory to issue his orders for the day—this old woman was to
be visited with soup, that young one with wrath; and more manure should
be ordered for the Rectory cabbages. For Mr. Gurdon was Mr. Jones’s
gardener, as well as his clerk.
Mr. Gurdon had even usurped the clergyman’s perquisite of quarrelling
with the organist. Henry Perry was the organist. He had lost one leg and
three fingers in a bus accident, so there was scarcely any other profession
he could have taken up. And he had always been fond of playing tunes, for
his mother, who was a superior widow, had a piano at Rose Cottage.
Mr. Gurdon said that Henry Perry encouraged the choir boys to laugh at
him. After church he used to hide behind a yew tree to pounce out upon any
choir boys who desecrated the graves by leaping over them. When he
caught them he pinched them. Pinches are silent: they can be made use of in
sacred places where smacking would be irreverent. One summer Mr.
Gurdon told Mr. Jones to forbid the choir treat. Three days later some of the
boys were playing with a tricycle. They allowed it to get out of control, and
it began to run downhill. At the bottom of the hill was a sharp turn in the
road, and Mr. Gurdon’s cottage. The tricycle came faster and faster and
crashed through the fence into Mr. Gurdon, who was attending to his
lettuces and had his back turned. The boys giggled and ran away. Their
mothers did not take the affair so lightly. That evening Mr. Gurdon received
a large seed-cake, two dozen fresh eggs, a packet of cigarettes, and other
appeasing gifts. Next Sunday Mr. Jones in his kind tenor voice announced
that a member of the congregation wished to return thanks for mercies
lately received. Mr. Gurdon turned round in his place and glared at the choir
boys.
Much as he disliked Henry Perry, Mr. Gurdon had disliked the doctor
from London even more. The doctor had come upon him frightening an old
woman in a field, and had called him a damned bully and a hypocrite. Mr.
Gurdon had cursed him back, and swore to be even with him. The old
woman bore her defender no better will. She talked in a surly way about her
aunt, who was a gipsy and able to afflict people with lice by just looking at
them.
Laura did not hear this story from Mrs. Leak. It was told her some time
after by Mrs. Trumpet. Mrs. Trumpet hated Mr. Gurdon, though she was
very civil to him when he came into the shop. Few people in the village
liked Mr. Gurdon, but he commanded a great deal of politeness. Red and
burly and to be feared, the clerk reminded Laura of a red bull belonging to
the farmer. In one respect he was unlike the bull: Mr. Gurdon was a very
respectable man.
Mrs. Leak also told Laura about Mr. and Mrs. Ward, who kept the Lamb
and Flag; about Miss Carloe the dressmaker, who fed a pet hedgehog on
bread-and-milk; and about fat Mrs. Garland, who let lodgings in the
summer and was always so down at heel and jolly.
Although she knew so much about her neighbours, Mrs. Leak was not a
sociable woman. The Misses Larpent, the dead doctor, Mr. Jones, Mr.
Gurdon, and Miss Carloe—she called them up and caused them to pass
before Laura, but in a dispassionate way, rather like the Witch of Endor
calling up old Samuel. Nor was Great Mop a sociable village, at any rate
compared with the villages which Laura had known as a girl. Never had she
seen so little dropping in, leaning over fences, dawdling at the shop or in
the churchyard. Little laughter came from the taproom of the Lamb and
Flag. Once or twice she glanced in at the window as she passed by and saw
the men within sitting silent and abstracted with their mugs before them.
Even the bell-ringers when they had finished their practice broke up with
scant adieus, and went silently on their way. She had never met country
people like these before. Nor had she ever known a village that kept such
late hours. Lights were burning in the cottages till one and two in the
morning, and she had been awakened at later hours than those by the sound
of passing voices. She could hear quite distinctly, for her window was open
and faced upon the village street. She heard Miss Carloe say complainingly:
‘It’s all very well for you young ones. But my old bones ache so, it’s a
wonder how I get home!’ Then she heard the voice of red-haired Emily say:
‘No bones so nimble as old bones, Miss Carloe, when it comes to—’ and
then a voice unknown to Laura said ‘Hush’; and she heard no more, for a
cock crew. Another night, some time after this, she heard some one playing
a mouth-organ. The music came from far off, it sounded almost as if it were
being played out of doors. She lit a candle and looked at her watch—it was
half-past three. She got out of bed and listened at the window; it was a dark
night, and the hills rose up like a screen. The noise of the mouth-organ
came wavering and veering on the wind. A drunk man, perhaps? Yet what
drunk man would play on so steadily? She lay awake for an hour or more,
half puzzled, half lulled by the strange music, that never stopped, that never
varied, that seemed to have become part of the air.
Next day she asked Mrs. Leak what this strange music could be. Mrs.
Leak said that young Billy Thomas was distracted with toothache. He could
not sleep, and played for hours nightly upon his mouth-organ to divert
himself from the pain. On Wednesday the tooth-drawer would come to
Barleighs, and young Billy Thomas would be put out of his agony. Laura
was sorry for the sufferer, but she admired the circumstances. The highest
flights of her imagination had not risen to more than a benighted drunk.
Young Billy Thomas had a finer invention than she.
After a few months she left off speculating about the villagers. She
admitted that there was something about them which she could not fathom,
but she was content to remain outside the secret, whatever it was. She had
not come to Great Mop to concern herself with the hearts of men. Let her
stray up the valleys, and rest in the leafless woods that looked so warm with
their core of fallen red leaves, and find out her own secret, if she had one;
with autumn it might come back to question her. She wondered. She
thought not. She felt that nothing could ever again disturb her peace.
Wherever she strayed the hills folded themselves round her like the fingers
of a hand.
About this time she did an odd thing. In her wanderings she had found a
disused well. It was sunk at the side of a green lane, and grass and bushes
had grown up around its low rim, almost to conceal it; the wooden frame
was broken and mouldered, ropes and pulleys had long ago been taken
away, and the water was sunk far down, only distinguishable as an
uncertain reflection of the sky. Here, one evening, she brought her guide-
book and her map. Pushing aside the bushes she sat down upon the low rim
of the well. It was a still, mild evening towards the end of February, the
birds were singing, there was a smell of growth in the air, the light lingered
in the fields as though it were glad to linger. Looking into the well she
watched the reflected sky grow dimmer; and when she raised her eyes the
gathering darkness of the landscape surprised her. The time had come. She
took the guide-book and the map and threw them in.
She heard the disturbed water sidling against the walls of the well. She
scarcely knew what she had done, but she knew that she had done rightly,
whether it was that she had sacrificed to the place, or had cast herself upon
its mercies—content henceforth to know no more of it than did its own
children.
As she reached the village she saw a group of women standing by the
milestone. They were silent and abstracted as usual. When she greeted them
they returned her greeting, but they said nothing among themselves. After
she had gone by they turned as of one accord and began to walk up the field
path towards the wood. They were going to gather fuel, she supposed. To-
night their demeanour did not strike her as odd. She felt at one with them,
an inhabitant like themselves, and she would gladly have gone with them up
towards the wood. If they were different from other people, why shouldn’t
they be? They saw little of the world. Great Mop stood by itself at the head
of the valley, five miles from the main road, and cut off by the hills from the
other villages. It had a name for being different from other places. The man
who had driven Laura home from The Reason Why had said: ‘It’s not often
that a wagonette is seen at Great Mop. It’s an out-of-the-way place, if ever
there was one. There’s not such another village in Buckinghamshire for out-
of-the-way-ness. Well may it be called Great Mop, for there’s never a Little
Mop that I’ve heard of.’
People so secluded as the inhabitants of Great Mop would naturally be
rather silent, and keep themselves close. So Laura thought, and Mr. Saunter
was of the same opinion.
Mr. Saunter’s words had weight, for he spoke seldom. He was a serious,
brown young man, who after the war had refused to go back to his bank in
Birmingham. He lived in a wooden hut which he had put up with his own
hands, and kept a poultry-farm.
Laura first met Mr. Saunter when she was out walking, early one
darkish, wet, January morning. The lane was muddy; she picked her way,
her eyes to the ground. She did not notice Mr. Saunter until she was quite
close to him. He was standing bareheaded in the rain. His look was sad and
gentle, it reflected the mood of the weather, and several dead white hens
dangled from his hands. Laura exclaimed, softly, apologetically. This young
man was so perfectly of a piece with his surroundings that she felt herself to
be an intruder. She was about to turn back when his glance moved slowly
towards her. ‘Badger,’ he said; and smiled in an explanatory fashion. Laura
knew at once that he had been careless and had left the henhouse door
unfastened. She took pains that no shade of blame should mix itself with
her condolences. She did not even blame the badger. She knew that this was
a moment for nothing but kind words, and not too many of them.
Mr. Saunter was grateful. He invited her to come and see his birds. Side
by side they turned in silence through a field gate and walked into Mr.
Saunter’s field. Bright birds were on the sodden grass. As he went by they
hurried into their pens, expecting to be fed. ‘If you would care to come in,’
said Mr. Saunter, ‘I should like to make you a cup of tea.’
Mr. Saunters living-room was very untidy and homelike. A basket of
stockings lay on the table. Laura wondered if she might offer to help Mr.
Saunter with his mending. But after he had made the tea, he took up a
stocking and began to darn it. He darned much better than she did.
As she went home again she fell to wondering what animal Mr. Saunter
resembled. But in the end she decided that he resembled no animal except
man. Till now, Laura had rejected the saying that man is the noblest work of
nature. Half an hour with Mr. Saunter showed her that the saying was true.
So had Adam been the noblest work of nature, when he walked out among
the beasts, sole overseer of the garden, intact, with all his ribs about him,
his equilibrium as yet untroubled by Eve. She had misunderstood the saying
merely because she had not happened to meet a man before. Perhaps, like
other noble works, man is rare. Perhaps there is only one of him at a time:
first Adam; now Mr. Saunter. If that were the case, she was lucky to have
met him. This also was the result of coming to Great Mop.
So much did Mr. Saunter remind Laura of Adam that he made her feel
like Eve—for she was petitioned by an unladylike curiosity. She asked Mrs.
Leak about him. Mrs. Leak could tell her nothing that was not already
known to her, except that young Billy Thomas went up there every day on
his bicycle to lend Mr. Saunter a hand. Laura would not stoop to question
young Billy Thomas. She fought against her curiosity, and the spring came
to her aid.
This new year was changing her whole conception of spring. She had
thought of it as a denial of winter, a green spear that thrust through a
tyrant’s rusty armour. Now she saw it as something filial, gently unlacing
the helm of the old warrior and comforting his rough cheek. In February
came a spell of fine weather. She spent whole days sitting in the woods,
where the wood-pigeons moaned for pleasure on the boughs. Sometimes
two cock birds would tumble together in mid air, shrieking, and buffeting
with their wings, and then would fly back to the quivering boughs and nurse
the air into peace again. All round her the sap was rising up. She laid her
cheek against a tree and shut her eyes to listen. She expected to hear the tree
drumming like a telegraph pole.
It was so warm in the woods that she forgot that she sat there for shelter.
But though the wind blew lightly, it blew from the east. In March the wind
went round to the south-west. It brought rain. The bright, cold fields were
dimmed and warm to walk in now. Like embers the wet beech-leaves
smouldered in the woods.
All one day the wind had risen, and late in the evening it called her out.
She went up to the top of Cubbey Ridge, past the ruined windmill that
clattered with its torn sails. When she had come to the top of the Ridge she
stopped, with difficulty holding herself upright. She felt the wind swoop
down close to the earth. The moon was out hunting overhead, her pack of
black and white hounds ranged over the sky. Moon and wind and clouds
hunted an invisible quarry. The wind routed through the woods. Laura from
the hill-top heard the various surrounding woods cry out with different
voices. The spent gusts left the beech-hangers throbbing like sea caverns
through which the wave had passed, the fir plantation seemed to chant some
never-ending rune.
Listening to these voices, another voice came to her ear—the far-off
pulsation of a goods train labouring up a steep cutting. It was scarcely
audible, more perceptible as feeling than as sound, but by its regularity it
dominated all the other voices. It seemed to come nearer and nearer, to
inform her like the drumming of blood in her ears. She began to feel
defenceless, exposed to the possibility of an overwhelming terror. She
listened intently, trying not to think. Though the noise came from an
ordinary goods train, no amount of reasoning could stave off this terror. She
must yield herself, yield up all her attention, if she would escape. It was a
wicked sound. It expressed something eternally outcast and reprobated by
man, stealthily trafficking by night, unseen in the dark clefts of the hills.
Loud, separate, and abrupt, each pant of the engine trampled down her wits.
The wind and the moon and the ranging cloud pack were not the only
hunters abroad that night: something else was hunting among the hills,
hunting slowly, deliberately, sure of its quarry.
Suddenly she remembered the goods yard at Paddington, and all her
thoughts slid together again like a pack of hounds that have picked up the
scent. They streamed faster and faster; she clenched her hands and prayed
as when a child she had prayed in the hunting-field.
In the goods yard at Paddington she had almost pounced on the clue, the
clue to the secret country of her mind. The country was desolate and half-
lit, and she walked there alone, mistress of it, and mistress, too, of the terror
that roamed over the blank fields and haunted round her. Here was country
just so desolate and half-lit. She was alone, just as in her dreams, and the
terror had come to keep her company, and crouched by her side, half in
fawning, half in readiness to pounce. All this because of a goods train that
laboured up a cutting. What was this cabal of darkness, suborning her own
imagination to plot against her? What were these iron hunters doing near
mournful, ever-weeping Paddington?
‘Now! Now!’ said the moon, and plunged towards her through the
clouds.
Baffled, she stared back at the moon and shook her head. For a moment
it had seemed as though the clue were found, but it had slid through her
hands again. The train had reached the top of the cutting, with a shriek of
delight it began to pour itself downhill. She smiled. It amused her to
suppose it loaded with cabbages. Arrived at Paddington, the cabbages
would be diverted to Covent Garden. But inevitably, and with all the
augustness of due course, they would reach their bourne at Apsley Terrace.
They would shed all their midnight devilry in the pot, and be served up to
Henry and Caroline very pure and vegetable.
‘Lovely! lovely!’ she said, and began to descend the hill, for the night
was cold. Though her secret had eluded her again, she did not mind. She
knew that this time she had come nearer to catching it than ever before. If it
were attainable she would run it to earth here, sooner or later. Great Mop
was the likeliest place to find it.
The village was in darkness; it had gone to bed early, as good villages
should. Only Miss Carloe’s window was alight. Kind Miss Carloe, she
would sit up till all hours tempting her hedgehog with bread-and-milk.
Hedgehogs are nocturnal animals; they go out for walks at night, grunting,
and shoving out their black snouts. ‘Thrice the brindled cat hath mewed;
Thrice, and once the hedgepig whined. Harper cries, “ ’Tis time, ’tis
time.” ’ She found the key under the half-brick, and let herself in very
quietly. Only sleep sat up for her, waiting in the hushed house. Sleep took
her by the hand, and convoyed her up the narrow stairs. She fell asleep
almost as her head touched the pillow.
By the next day all this seemed very ordinary. She had gone out on a
windy night and heard a goods train. There was nothing remarkable in that.
It would have been a considerable adventure in London, but it was nothing
in the Chilterns. Yet she retained an odd feeling of respect for what had
happened, as though it had laid some command upon her that waited to be
interpreted and obeyed. She thought it over, and tried to make sense of it. If
it pointed to anything, it pointed to Paddington. She did what she could; she
wrote and invited Caroline to spend a day at Great Mop. She did not
suppose that this was the right interpretation, but she could think of no
other.
All the birds were singing as Laura went down the lane to meet
Caroline’s car. It was almost like summer, nothing could be more fortunate.
Caroline was dressed in sensible tweeds. ‘It was raining when I left
London,’ she said, and glanced severely at Laura’s cotton gown.
‘Was it?’ said Laura. ‘It hasn’t rained here.’ She stopped. She looked
carefully at the blue sky. There was not a cloud to be seen. ‘Perhaps it will
rain later on,’ she added. Caroline also looked at the sky, and said:
‘Probably.’
Conversation was a little difficult, for Laura did not know how much she
was still in disgrace. She asked after everybody in a rather guilty voice, and
heard how emphatically they all throve, and what a pleasant, cheerful
winter they had all spent. After that came the distance from Wickendon and
the hour of departure. In planning the conduct of the day, Laura had decided
to keep the church for after lunch. Before lunch she would show Caroline
the view. She had vaguely allotted an hour and a half to the view, but it took
scarcely twenty minutes. At least, that was the time it took walking up to
the windmill and down again. The view had taken no time at all. It was a
very clear day, and everything that could be seen was perceptible at the first
glance.
Caroline was so stoutly equipped for country walking that Laura had not
the heart to drag her up another hill. They visited the church instead. The
church was more successful. Caroline sank on her knees and prayed. This
gave Laura an opportunity to look round, for she had not been inside the
church before. It was extremely narrow, and had windows upon the south
side only, so that it looked like a holy corridor. Caroline prayed for some
time, and Laura made the most of it. Presently she was able to lead Caroline
down the corridor, murmuring: ‘That window was presented in 1901. There
is rather a nice brass in this corner. That bit of carving is old, it is the Wise
and the Foolish Virgins. Take care of the step.’
One foolish Virgin pleased Laura as being particularly lifelike. She stood
a little apart from the group, holding a flask close to her ear, and shaking it.
During lunch Laura felt that her stock of oil, too, was running very low. But
it was providentially renewed, for soon after lunch a perfect stranger fell off
a bicycle just outside Mrs. Leak’s door and sprained her ankle. Laura and
Caroline leapt up to succour her, and then there was a great deal of cold
compress and hot tea and animation. The perfect stranger was a Secretary to
a Guild. She asked Caroline if she did not think Great Mop a delightful
nook, and Caroline cordially agreed. They went on discovering Committees
in common till tea-time, and soon after went off together in Caroline’s car.
Just as Caroline stepped into the car she asked Laura if she had met any
nice people in the neighbourhood.
‘No. There aren’t any nice people,’ said Laura. Wondering if the bicycle
would stay like that, twined so casually round the driver’s neck, she had
released her attention one minute too soon.
As far as she knew this was her only slip throughout the day. It was a
pity. But Caroline would soon forget it; she might not even have heard it,
for the Secretary was talking loudly about Homes of Rest at the same
moment. Still, it was a pity. She might have remembered Mr. Saunter,
though perhaps she could not have explained him satisfactorily in the time.
She turned and walked slowly through the fields towards the poultry-
farm. She could not settle down to complete solitude so soon after
Caroline’s departure. She would decline gradually, using Mr. Saunter as an
intermediate step. He was feeding his poultry, going from pen to pen with a
zinc wheelbarrow and a large wooden spoon. The birds flew round him; he
had continually to stop and fend them off like a swarm of large midges.
Sometimes he would grasp a specially bothering bird and throw it back into
the pen as though it were a ball. She leant on the gate and watched him.
This young man who had been a bank-clerk and a soldier walked with the
easy, slow strides of a born countryman; he seemed to possess the earth
with each step. No doubt but he was like Adam. And she, watching him
from above—for the field sloped down from the gate to the pens—was like
God. Did God, after casting out the rebel angels and before settling down to
the peace of a heaven unpeopled of contradiction, use Adam as an
intermediate step?
On his way back to the hut Mr. Saunter noticed Laura. He came up and
leant on his side of the gate. Though the sun had gone down, the air was
still warm, and a disembodied daylight seemed to weigh upon the landscape
like a weight of sleep. The birds which had sung all day now sang louder
then ever.
‘Hasn’t it been a glorious day?’ said Mr. Saunter.
‘I have had my sister-in-law down,’ Laura answered. ‘She lives in
London.’
‘My people,’ said Mr. Saunter, ‘all live in the Midlands.’
‘Or in Australia,’ he added after a pause.
Mr. Saunter, seen from above, walking among his flocks and herds—for
even hens seemed ennobled into something Biblical by their relation to him
—was an impressive figure. Mr. Saunter leaning on the gate was a pleasant,
unaffected young man enough, but no more. Quitting him, Laura soon
forgot him as completely as she had forgotten Caroline. Caroline was a
tedious bluebottle; Mr. Saunter a gentle, furry brown moth; but she could
brush off one as easily as the other.
Laura even forgot that she had invited the moth to settle again; to come
to tea. It was only by chance that she had stayed indoors that afternoon,
making currant scones. To amuse herself she had cut the dough into
likenesses of the village people. Curious developments took place in the
baking. Miss Carloe’s hedgehog had swelled until it was almost as large as
its mistress. The dough had run into it, leaving a great hole in Miss Carloe’s
side. Mr. Jones had a lump on his back, as though he were carrying the
Black Dog in a bag; and a fancy portrait of Miss Larpent in her elegant
youth and a tight-fitting sweeping amazon had warped and twisted until it
was more like a gnarled thorn tree than a woman.
Laura felt slightly ashamed of her freak. It was unkind to play these
tricks with her neighbours’ bodies. But Mr. Saunter ate the strange shapes
without comment, quietly splitting open the villagers and buttering them.
He told her that he would soon lose the services of young Billy Thomas,
who was going to Lazzard Court as a footman.
‘I shouldn’t think young Billy Thomas would make much of a footman,’
said Laura.
‘I don’t know,’ he answered consideringly. ‘He’s very good at standing
still.’
Laura had brought her sensitive conscience into the country with her,
just as she had brought her umbrella, though so far she had not remembered
to use either. Now the conscience gave signs of life. Mr. Saunter was so
nice, and had eaten up those derisive scones, innocently under the
impression that they had been prepared for him; he had come with his gift
of eggs, all kindness and forethought while she had forgotten his existence;
and now he was getting up to go, thanking her and afraid that he had stayed
too long. She had acted unworthily by this young man, so dignified and
unassuming; she must do something to repair the slight she had put upon
him in her own mind. She offered herself as a substitute for young Billy
Thomas until Mr. Saunter could find some one else.
‘I don’t know anything about hens,’ she admitted. ‘But I am fond of
animals, and I am very obedient.’
It was agreed that she might go on the following day to help him with
the trap-nesting, and see how she liked it.
At first Mr. Saunter would not allow her to do more than walk round
with him upon planks specially put down to save her from the muddy
places, pencil the eggs, and drink tea afterwards. But she came so
punctually and showed such eagerness that as time went on she persuaded
him into allowing her a considerable share in the work.
There was much to do, for it was a busy time of year. The incubators had
fulfilled their time; Laura learnt how to lift out the newly-hatched chicks,
damp, almost lifeless from their birth-throes, and pack them into baskets. A
few hours after the chicks were plump and fluffy. They looked like bunches
of primroses in the moss-lined baskets.
Besides mothering his chicks Mr. Saunter was busy with a great re-
housing of the older birds. This was carried out after sundown, for the birds
were sleepy then, and easier to deal with. If moved by day they soon
revolted, and went back to their old pens. Even as it was there were always
a few sticklers, roosting uncomfortably among the newcomers, or standing
disconsolately before their old homes, closed against them.
Laura liked this evening round best of all. The April twilights were
marvellously young and still. A slender moon soared in the green sky; the
thick spring grass was heavy with dew, and the earth darkened about her
feet while overhead it still seemed quite light. Mr. Saunter would disappear
into the henhouse, a protesting squawking and scuffling would be heard;
then he would emerge with hens under either arm. He showed Laura how to
carry them, two at a time, their breasts in her hands, their wings held fast
between her arm and her side. She would tickle the warm breasts, warm and
surprisingly bony with quills under the soft plumage, and make soothing
noises.
At first she felt nervous with the strange burden, so meek and inanimate
one moment, so shrewish the next, struggling and beating with strong freed
wings. However many birds Mr. Saunter might be carrying, he was always
able to relieve her of hers. Immediately the termagant would subside, tamed
by the large sure grasp, meek as a dove, with rigid dangling legs, and head
turning sadly from side to side.
Laura never became as clever with the birds as Mr. Saunter. But when
she had overcome her nervousness she managed them well enough to give
herself a great deal of pleasure. They nestled against her, held fast in the
crook of her arm, while her fingers probed among the soft feathers and rigid
quills of their breasts. She liked to feel their acquiescence, their dependence
upon her. She felt wise and potent. She remembered the henwife in the
fairy-tales, she understood now why kings and queens resorted to the
henwife in their difficulties. The henwife held their destinies in the crook of
her arm, and hatched the future in her apron. She was sister to the spaewife,
and close cousin to the witch, but she practised her art under cover of
henwifery; she was not, like her sister and her cousin, a professional. She
lived unassumingly at the bottom of the king’s garden, wearing a large
white apron and very possibly her husband’s cloth cap; and when she saw
the king and queen coming down the gravel path she curtseyed
reverentially, and pretended it was the eggs they had come about. She was
easier of approach than the spaewife, who sat on a creepie and stared at the
smouldering peats till her eyes were red and unseeing; or the witch, who
lived alone in the wood, her cottage window all grown over with brambles.
But though she kept up this pretence of homeliness she was not inferior in
skill to the professionals. Even the pretence of homeliness was not quite so
homely as it might seem. Laura knew that the Russian witches live in small
huts mounted upon three giant hen’s legs, all yellow and scaly. The legs can
go; when the witch desires to move her dwelling the legs stalk through the
forest, clattering against the trees, and printing long scars upon the snow.
Following Mr. Saunter up and down between the pens, Laura almost
forgot where and who she was, so completely had she merged her
personality into the henwife’s. She walked back along the rutted track and
down the steep lane as obliviously as though she were flitting home on a
broomstick. All through April she helped Mr. Saunter. They were both sorry
when a new boy applied for the job and her duties came to an end. She
knew no more of Mr. Saunter at the close of this association than she had
known at its beginning. It could scarcely be said even that she liked him any
better, for from their first meeting she had liked him extremely. Time had
assured the liking, and that was all. So well assured was it, that she felt
perfectly free to wander away and forget him once more, certain of finding
him as likeable and well liked as before whenever she might choose to
return.
During her first months at Great Mop the moods of the winter landscape
and the renewing of spring had taken such hold of her imagination that she
thought no season could be more various and lovely. She had even written a
slightly precious letter to Titus—for somehow correspondence with Titus
was always rather attentive—declaring her belief that the cult of the
summer months was a piece of cockney obtuseness, a taste for sweet things,
and a preference for dry grass to strew their egg-shells upon. But with the
first summer days and the first cowslips she learnt better. She had known
that there would be cowslips in May; from the day she first thought of Great
Mop she had promised them to herself. She had meant to find them early
and watch the yellow blossoms unfolding upon the milky green stems. But
they were beforehand with her, or she had watched the wrong fields. When
she walked into the meadow it was bloomed over with cowslips, powdering
the grass in variable plenty, here scattered, there clustered, innumerable as
the stars in the Milky Way.
She knelt down among them and laid her face close to their fragrance.
The weight of all her unhappy years seemed for a moment to weigh her
bosom down to the earth; she trembled, understanding for the first time how
miserable she had been; and in another moment she was released. It was all
gone, it could never be again, and never had been. Tears of thankfulness ran
down her face. With every breath she drew, the scent of the cowslips flowed
in and absolved her.
She was changed, and knew it. She was humbler, and more simple. She
ceased to triumph mentally over her tyrants, and rallied herself no longer
with the consciousness that she had outraged them by coming to live at
Great Mop. The amusement she had drawn from their disapproval was a
slavish remnant, a derisive dance on the north bank of the Ohio. There was
no question of forgiving them. She had not, in any case, a forgiving nature;
and the injury they had done her was not done by them. If she were to start
forgiving she must needs forgive Society, the Law, the Church, the History
of Europe, the Old Testament, great-great-aunt Salome and her prayer-book,
the Bank of England, Prostitution, the Architect of Apsley Terrace, and half
a dozen other useful props of civilisation. All she could do was to go on
forgetting them. But now she was able to forget them without flouting them
by her forgetfulness.
Throughout May and June and the first fortnight of July she lived in
perfect idleness and contentment, growing every day more freckled and
more rooted in peace. On July 17th she was disturbed by a breath from the
world. Titus came down to see her. It was odd to be called Aunt Lolly
again. Titus did not use the term often; he addressed his friends of both
sexes and his relations of all ages as My Dear; but Aunt Lolly slipped out
now and again.
There was no need to show Titus the inside of the church. There was no
need even to take him up to the windmill and show him the view. He did all
that for himself, and got it over before breakfast—for Titus breakfasted for
three mornings at Great Mop. He had come for the day only, but he was too
pleased to go back. He was his own master now, he had rooms in
Bloomsbury and did not need even to send off a telegram. Mrs. Garland
who let lodgings in the summer was able to oblige him with a bedroom, full
of pincushions and earwigs and marine photographs; and Mrs. Trumpet
gave him all the benefit of all the experience he invoked in the choice of a
tooth-brush. For three days he sat about with Laura, and talked of his
intention to begin brewing immediately. He had refused to visit Italy with
his mother—he had rejected several flattering invitations from editors—
because brewing appealed to him more than anything else in the world.
This, he said, was the last night out before the wedding. On his return to
Bloomsbury he intended to let his rooms to an amiable Mahometan, and to
apprentice himself to his family brewery until he had learnt the family
trade.
Laura gave him many messages to Lady Place. It was clear before her in
an early morning light. She could exactly recall the smell of the shrubbery,
her mother flowing across the croquet lawn, her father’s voice as he called
up the dogs. She could see herself, too: her old self, for her present self had
no part in the place. She did not suppose she would ever return there,
although she was glad that Titus was faithful.
Titus departed. He wrote her a letter from Bloomsbury, saying that he
had struck a good bargain with the Mahometan, and was off to Somerset.
Ten days later she heard from Sibyl that he was coming to live at Great
Mop. She had scarcely time to assemble her feelings about this before he
was arrived.
Part 3
I T was the third week in August. The weather was sultry; day after day
Laura heard the village people telling each other that there was thunder in
the air. Every evening they stood in the village street, looking upwards,
and the cattle stood waiting in the fields. But the storm delayed. It hid
behind the hills, biding its time.
Laura had spent the afternoon in a field, a field of unusual form, for it
was triangular. On two sides it was enclosed by woodland, and because of
this it was already darkening into a premature twilight, as though it were a
room. She had been there for hours. Though it was sultry, she could not sit
still. She walked up and down, turning savagely when she came to the edge
of the field. Her limbs were tired, and she stumbled over the flints and
matted couch grass. Throughout the long afternoon a stock dove had cooed
in the wood. ‘Cool, cool, cool,’ it said, delighting in its green bower. Now it
had ceased, and there was no life in the woods. The sky was covered with a
thick uniform haze. No ray of the declining sun broke through it, but the
whole heavens were beginning to take on a dull, brassy pallor. The long
afternoon was ebbing away, stealthily, impassively, as though it were dying
under an anaesthetic.
Laura had not listened to the stock dove; she had not seen the haze
thickening overhead. She walked up and down in despair and rebellion. She
walked slowly, for she felt the weight of her chains. Once more they had
been fastened upon her. She had worn them for many years, acquiescently,
scarcely feeling their weight. Now she felt it. And, with their weight, she
felt their familiarity, and the familiarity was worst of all. Titus had seen her
starting out. He had cried; ‘Where are you off to, Aunt Lolly? Wait a
minute, and I’ll come too.’ She had feigned not to hear him and had walked
on. She had not turned her head until she was out of the village, she
expected at every moment to hear him come bounding up behind her. Had
he done so, she thought she would have turned round and snarled at him.
For she wanted, oh! how much she wanted, to be left alone for once. Even
when she felt pretty sure that she had escaped she could not profit by her
solitude, for Titus’s voice still jangled on her nerves. ‘Where are you off to,
Aunt Lolly? Wait a minute, and I’ll come too.’ She heard his very tones,

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Macroeconomics 21st Edition

McConnell Test Bank

A. determine which firms are likely to succeed or fail.

AACSB: Knowledge Application

A. Council of Economic Advisers.

AACSB: Knowledge Application

A. national income accounting.

AACSB: Knowledge Application

4. A nation's gross domestic product (GDP)

AACSB: Knowledge Application

5. A nation's gross domestic product (GDP)

A. can be found by summing C + Ig + G + Xn.

AACSB: Knowledge Application

A. national income minus all nonincome charges against output.

AACSB: Knowledge Application

7. Suppose Smith pays $100 to Jones.

AACSB: Knowledge Application

A. GDP in 2015 is $450 billion.

AACSB: Knowledge Application

9. National income accountants can avoid multiple counting by

A. including transfer payments in their calculations.

AACSB: Knowledge Application

10. Gross domestic product (GDP) measures and reports output

AACSB: Knowledge Application

AACSB: Knowledge Application

12. Final goods and services refers to

AACSB: Knowledge Application

13. If intermediate goods and services were included in GDP,

A. the GDP would be overstated.

AACSB: Knowledge Application

14. Which of the following is a final good or service?

A. a haircut purchased by a father for his 12-year-old son

AACSB: Knowledge Application

15. Which of the following is an intermediate good?

A. the purchase of gasoline for a ski trip to Colorado

AACSB: Knowledge Application

A. excluded from GDP in order to avoid double counting.

AACSB: Knowledge Application

17. The value added of a firm is the market value of

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Knowledge Application

20. Which of the following transactions would be included in GDP?

A. Mary buys a used book for $5 at a garage sale.

AACSB: Knowledge Application

21. Value added refers to

AACSB: Knowledge Application

AACSB: Knowledge Application

AACSB: Knowledge Application

24. Value added can be determined by

A. summing the profits of all enterprises in the economy.

AACSB: Knowledge Application

25. If depreciation exceeds gross investment,

A. the economy's stock of capital may be either growing or shrinking.

AACSB: Knowledge Application

26. The concept of net domestic investment refers to

AACSB: Knowledge Application

A. nominal GDP is rising but real GDP is declining.