Question 1

Which one of the following events will reduce GDP?

Accepted Answer

A) Mrs.Lee hires a housekeeper. 
B) You buy the ingredients to bake a loaf of bread, but you burn the bread and throw it away. 
C) You decide to work five more hours per week at your bookkeeper job, even though you need more time to study. 
D) An automobile manufacturer lays off 200 workers as the result of a fire in the paint shop. 
A) Mrs.Lee hires a housekeeper. 
B) You buy the ingredients to bake a loaf of bread, but you burn the bread and throw it away. 
C) You decide to work five more hours per week at your bookkeeper job, even though you need more time to study. 
D) An automobile manufacturer lays off 200 workers as the result of a fire in the paint shop.

Question 2

When adjusting nominal GDP for price changes, it is preferable to use the GDP deflator rather than the consumer price index because

Accepted Answer

A) the GDP deflator is calculated for a narrow market basket of goods, approximating those items included in our measure of consumption expenditures. 
B) the GDP deflator calculates changes in the prices of items that more closely approximate those included in GDP. 
C) the GDP deflator is always less than the consumer price index, and therefore, it is a more stable index. 
D) the GDP deflator is the sum of the consumer price index and the wholesale price index. 
A) the GDP deflator is calculated for a narrow market basket of goods, approximating those items included in our measure of consumption expenditures. 
B) the GDP deflator calculates changes in the prices of items that more closely approximate those included in GDP. 
C) the GDP deflator is always less than the consumer price index, and therefore, it is a more stable index. 
D) the GDP deflator is the sum of the consumer price index and the wholesale price index.

Question 3

U.S. exports are

Accepted Answer

A) not included in U.S.GDP because they are consumed abroad 
B) included in U.S.GDP because they are produced domestically 
C) included in U.S.GDP because they represent an increase in inventories 
D) included in U.S.GDP as government purchases because the government decides what goods may be exported 
E) not included in U.S.GDP because they are not subject to a tariff 
A) not included in U.S.GDP because they are consumed abroad 
B) included in U.S.GDP because they are produced domestically 
C) included in U.S.GDP because they represent an increase in inventories 
D) included in U.S.GDP as government purchases because the government decides what goods may be exported 
E) not included in U.S.GDP because they are not subject to a tariff

Question 4

How much would be added to this year's GDP if you sold your four-year-old automobile for $4,000 and purchased a two-year-old model from an acquaintance for $10,000.

Accepted Answer

A) nothing 
B) $6,000 
C) $10,000 
D) $14,000 
A) nothing 
B) $6,000 
C) $10,000 
D) $14,000

Question 5

In recent years, people have benefited from greater amounts of leisure time. This trend

Accepted Answer

A) has caused GDP to rise. 
B) has caused GDP to fall. 
C) made GDP fluctuate randomly 
D) is not accounted for in GDP. 
A) has caused GDP to rise. 
B) has caused GDP to fall. 
C) made GDP fluctuate randomly 
D) is not accounted for in GDP.

Question 6

Madison, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

Accepted Answer

A) in U.S.GDP, but it is not included in German GDP. 
B) in German GDP, but it is not included in U.S.GDP. 
C) in both German GDP and U.S.GDP. 
D) in neither German GDP nor U.S.GDP. 
A) in U.S.GDP, but it is not included in German GDP. 
B) in German GDP, but it is not included in U.S.GDP. 
C) in both German GDP and U.S.GDP. 
D) in neither German GDP nor U.S.GDP.

Question 7

In an economy with persistent inflation,

Accepted Answer

A) real GDP will grow faster than nominal GDP. 
B) nominal GDP will grow faster than real GDP. 
C) nominal and real GDP will grow at the same rate. 
D) nominal and real GDP will both fall. 
A) real GDP will grow faster than nominal GDP. 
B) nominal GDP will grow faster than real GDP. 
C) nominal and real GDP will grow at the same rate. 
D) nominal and real GDP will both fall.

Question 8

The primary value of real GDP is its ability to measure year to year changes in

Accepted Answer

A) real output. 
B) income inequality. 
C) real social welfare. 
D) the general level of prices. 
A) real output. 
B) income inequality. 
C) real social welfare. 
D) the general level of prices.

Question 9

Table 7-5
  
-Refer to Table 7-5. Gross domestic product equals

Accepted Answer

A) $1,860. 
B) $1,380. 
C) $1,910. 
D) $4,170. 
A) $1,860. 
B) $1,380. 
C) $1,910. 
D) $4,170.

Question 10

Which of the following transactions would be included in this year's GDP?

Accepted Answer

A) Noah purchases a five-year-old house from William. 
B) Noah rents a five-year-old house from William. 
C) Noah purchases 100 shares of AT&T stock from William. 
D) Noah purchases an antique at William's garage sale. 
A) Noah purchases a five-year-old house from William. 
B) Noah rents a five-year-old house from William. 
C) Noah purchases 100 shares of AT&T stock from William. 
D) Noah purchases an antique at William's garage sale.

Question 11

Which of the following would be included in the government consumption and investment component of GDP?

Accepted Answer

A) the export of 100 fighter jets to Japan 
B) construction costs of a new public school building 
C) food stamps used by the Smith family 
D) a $1,000 check issued by the federal government as part of the Pell Grant program to help college students pay for school 
A) the export of 100 fighter jets to Japan 
B) construction costs of a new public school building 
C) food stamps used by the Smith family 
D) a $1,000 check issued by the federal government as part of the Pell Grant program to help college students pay for school

Question 12

Geri purchases a newly constructed house built by a private contractor. Her spending on the house is included in GDP as a part of

Accepted Answer

A) personal consumption expenditures. 
B) depreciation. 
C) gross private investment. 
D) personal saving. 
A) personal consumption expenditures. 
B) depreciation. 
C) gross private investment. 
D) personal saving.

Question 13

Jayden, a U.S. citizen, works only in Canada. The value that his labor contributes to U.S. output is

Accepted Answer

A) included in both U.S.GDP and U.S.GNP. 
B) included in U.S.GDP, but it is not included in U.S.GNP. 
C) included in U.S.GNP, but it is not included in U.S.GDP. 
D) included in neither U.S.GDP nor U.S.GNP. 
A) included in both U.S.GDP and U.S.GNP. 
B) included in U.S.GDP, but it is not included in U.S.GNP. 
C) included in U.S.GNP, but it is not included in U.S.GDP. 
D) included in neither U.S.GDP nor U.S.GNP.

Question 14

Last year your job at the university cafeteria paid you $9 an hour and the price of a ten-minute long distance call to your girlfriend in California was $4. This year your cafeteria job pays $9.90 per hour and the ten-minute phone call now costs $4.10. You are clearly

Accepted Answer

A) worse off because of inflation. 
B) worse off because the phone call is now relatively more expensive. 
C) better off because your wage rate went up. 
D) better off because the phone call now costs less work. 
A) worse off because of inflation. 
B) worse off because the phone call is now relatively more expensive. 
C) better off because your wage rate went up. 
D) better off because the phone call now costs less work.

Question 15

If on-the-job working conditions have improved over time,

Accepted Answer

A) real GDP will understate the growth rate of real income. 
B) real GDP will overstate the growth rate of real income. 
C) the GDP deflator will overestimate inflation. 
D) real GDP will overstate the growth rate of real income, and the GDP deflator will understate inflation. 
A) real GDP will understate the growth rate of real income. 
B) real GDP will overstate the growth rate of real income. 
C) the GDP deflator will overestimate inflation. 
D) real GDP will overstate the growth rate of real income, and the GDP deflator will understate inflation.

Question 16

National income is

Accepted Answer

A) personal income of individuals minus the taxes they pay. 
B) gross national product minus depreciation. 
C) employee compensation, self-employment income, interest, rents, plus corporate profits. 
D) consumption, investment, government expenditures, and net exports. 
A) personal income of individuals minus the taxes they pay. 
B) gross national product minus depreciation. 
C) employee compensation, self-employment income, interest, rents, plus corporate profits. 
D) consumption, investment, government expenditures, and net exports.

Question 17

If the price of pizzas has risen from $4 to $5 at the same time that the price of an hour of aerobics class has risen from $20 to $30, then

Accepted Answer

A) pizzas have become relatively more expensive. 
B) aerobics classes have become relatively more expensive. 
C) the relative prices of pizzas and aerobics classes have remained constant. 
D) workers' real income must have decreased. 
A) pizzas have become relatively more expensive. 
B) aerobics classes have become relatively more expensive. 
C) the relative prices of pizzas and aerobics classes have remained constant. 
D) workers' real income must have decreased.

Question 18

Which of the following would count as an investment expenditure in national income accounting?

Accepted Answer

A) General Motors hires 10 electrical engineers. 
B) Boeing purchases a new metal stretching machine used to produce airplane wings. 
C) Ms.Quantum buys 100 shares of Microsoft stock. 
D) A large corporation spends $10,000 per month on long-distance phone charges. 
A) General Motors hires 10 electrical engineers. 
B) Boeing purchases a new metal stretching machine used to produce airplane wings. 
C) Ms.Quantum buys 100 shares of Microsoft stock. 
D) A large corporation spends $10,000 per month on long-distance phone charges.

Question 19

Which of the following would increase GDP?

Accepted Answer

A) You buy 100 shares of Wal-Mart stock. 
B) Your car is destroyed by a fire, and you purchase a two-year-old car to replace it. 
C) Your car is damaged by a fire, and you hire a mechanic to repair it. 
D) Your car is damaged by a fire, and you reduce the number of hours you work to repair the car yourself. 
A) You buy 100 shares of Wal-Mart stock. 
B) Your car is destroyed by a fire, and you purchase a two-year-old car to replace it. 
C) Your car is damaged by a fire, and you hire a mechanic to repair it. 
D) Your car is damaged by a fire, and you reduce the number of hours you work to repair the car yourself.

Question 20

Table 7-7
  
-Refer to Table 7-7. Gross domestic product equals

Accepted Answer

A) $3,700. 
B) $3,900. 
C) $4,080. 
D) $4,480. 
A) $3,700. 
B) $3,900. 
C) $4,080. 
D) $4,480.

Which one of the following events will reduce GDP?

When adjusting nominal GDP for price changes, it is preferable to use the GDP deflator rather than the consumer price index because

U.S. exports are

How much would be added to this year's GDP if you sold your four-year-old automobile for $4,000 and purchased a two-year-old model from an acquaintance for $10,000.

In recent years, people have benefited from greater amounts of leisure time. This trend

Madison, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

In an economy with persistent inflation,

The primary value of real GDP is its ability to measure year to year changes in

Table 7-5 -Refer to Table 7-5. Gross domestic product equals

Which of the following transactions would be included in this year's GDP?

Which of the following would be included in the government consumption and investment component of GDP?

Geri purchases a newly constructed house built by a private contractor. Her spending on the house is included in GDP as a part of

Jayden, a U.S. citizen, works only in Canada. The value that his labor contributes to U.S. output is

Last year your job at the university cafeteria paid you $9 an hour and the price of a ten-minute long distance call to your girlfriend in California was $4. This year your cafeteria job pays $9.90 per hour and the ten-minute phone call now costs $4.10. You are clearly

If on-the-job working conditions have improved over time,

National income is

If the price of pizzas has risen from $4 to $5 at the same time that the price of an hour of aerobics class has risen from $20 to $30, then

Which of the following would count as an investment expenditure in national income accounting?

Which of the following would increase GDP?

Table 7-7 -Refer to Table 7-7. Gross domestic product equals

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 7: Taking the Nations Economic Pulse

Which one of the following events will reduce GDP?

When adjusting nominal GDP for price changes, it is preferable to use the GDP deflator rather than the consumer price index because

U.S. exports are

How much would be added to this year's GDP if you sold your four-year-old automobile for $4,000 and purchased a two-year-old model from an acquaintance for $10,000.

In recent years, people have benefited from greater amounts of leisure time. This trend

Madison, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

In an economy with persistent inflation,

The primary value of real GDP is its ability to measure year to year changes in

Table 7-5 -Refer to Table 7-5. Gross domestic product equals

Which of the following transactions would be included in this year's GDP?

Which of the following would be included in the government consumption and investment component of GDP?

Geri purchases a newly constructed house built by a private contractor. Her spending on the house is included in GDP as a part of

Jayden, a U.S. citizen, works only in Canada. The value that his labor contributes to U.S. output is

Last year your job at the university cafeteria paid you $9 an hour and the price of a ten-minute long distance call to your girlfriend in California was $4. This year your cafeteria job pays $9.90 per hour and the ten-minute phone call now costs $4.10. You are clearly

If on-the-job working conditions have improved over time,

National income is

If the price of pizzas has risen from $4 to $5 at the same time that the price of an hour of aerobics class has risen from $20 to $30, then

Which of the following would count as an investment expenditure in national income accounting?

Which of the following would increase GDP?

Table 7-7 -Refer to Table 7-7. Gross domestic product equals

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters