Question 1

Which of the following is a shortcoming of GDP?

Accepted Answer

A) GDP excludes changes in inventories. 
B) GDP includes an estimate of illegal transactions. 
C) GDP excludes nonmarket transactions. 
D) GDP excludes business investment spending. 
A) GDP excludes changes in inventories. 
B) GDP includes an estimate of illegal transactions. 
C) GDP excludes nonmarket transactions. 
D) GDP excludes business investment spending.

Question 2

Answer the following questions:
a.What is the difference between gross domestic product and gross national product?
b.Give an example of a transaction that would be counted in GDP but not in GNP.
c.Give an example of a transaction that would be counted in GNP but not GDP.

Accepted Answer

a.
GDP is a measure of output produced w

Question 3

Given the following figures, by approximately what percentage did Michael's real income increase between 2008 and 2009? Michael's 2008 money income = $60,000
Michael's 2009 money income = $72,000
2008 CPI = 120.0
2009 CPI = 128.0

Accepted Answer

A) zero 
B) 6.7 percent 
C) 12.5 percent 
D) 20 percent 
A) zero 
B) 6.7 percent 
C) 12.5 percent 
D) 20 percent

Question 4

Which of the following is true of inflation?

Accepted Answer

A) It is an increase in the general price level of goods and services. 
B) The purchasing power of money increases as the result of inflation. 
C) Inflation is similar to interest payments on future money income, such as pensions and receipts from outstanding loans. 
D) Inflation has no effect on real resources. 
A) It is an increase in the general price level of goods and services. 
B) The purchasing power of money increases as the result of inflation. 
C) Inflation is similar to interest payments on future money income, such as pensions and receipts from outstanding loans. 
D) Inflation has no effect on real resources.

Question 5

Table 7-6
  
-Refer to Table 7-6. What was the value of national income?

Accepted Answer

A) $7,123 
B) $7,666 
C) $8,841 
D) $11,004 
A) $7,123 
B) $7,666 
C) $8,841 
D) $11,004

Question 6

Suppose that the nominal value of GDP increased by approximately 2 percent during a given year, but real GDP decreased by 3 percent. Which of the following best explains these events?

Accepted Answer

A) The money supply decreased by approximately 5 percent. 
B) Prices fell by approximately 5 percent. 
C) Prices increased by approximately 5 percent. 
D) The real productive capacity of the economy increased by approximately 5 percent. 
A) The money supply decreased by approximately 5 percent. 
B) Prices fell by approximately 5 percent. 
C) Prices increased by approximately 5 percent. 
D) The real productive capacity of the economy increased by approximately 5 percent.

Question 7

Suppose a country had $3.5 billion of net exports and bought $6.8 billion of goods and services from foreign countries. This country would have

Accepted Answer

A) $10.3 billion of exports and $6.8 billion of imports. 
B) $10.3 billion of imports and $6.8 billion of exports. 
C) $6.8 billion of exports and $3.5 billion of imports. 
D) $6.8 billion of imports and $3.5 billion of exports. 
A) $10.3 billion of exports and $6.8 billion of imports. 
B) $10.3 billion of imports and $6.8 billion of exports. 
C) $6.8 billion of exports and $3.5 billion of imports. 
D) $6.8 billion of imports and $3.5 billion of exports.

Question 8

Suppose you received a 3 percent increase in your nominal wage. Over the year, inflation ran about 6 percent. Which of the following is true?

Accepted Answer

A) Your real wage fell. 
B) Your nominal wage fell. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell, your real wage increased. 
E) Both nominal and real wages increased. 
A) Your real wage fell. 
B) Your nominal wage fell. 
C) Both your nominal and real wages decreased. 
D) Although your nominal wage fell, your real wage increased. 
E) Both nominal and real wages increased.

Question 9

Real GDP per person

Accepted Answer

A) minus real GDP per person from the previous period equals the growth rate of real GDP per person. 
B) provides more meaningful comparisons across time and countries than real GDP. 
C) provides a less useful measure of the standard of living than nominal GDP per person. 
D) All of the above are correct. 
A) minus real GDP per person from the previous period equals the growth rate of real GDP per person. 
B) provides more meaningful comparisons across time and countries than real GDP. 
C) provides a less useful measure of the standard of living than nominal GDP per person. 
D) All of the above are correct.

Question 10

Which of the following would contribute to GDP?

Accepted Answer

A) An American company buys stock in another American company. 
B) An American company produces goods in Canada. 
C) A Canadian company buys stock in an American company. 
D) A Canadian company produces goods in the United States. 
A) An American company buys stock in another American company. 
B) An American company produces goods in Canada. 
C) A Canadian company buys stock in an American company. 
D) A Canadian company produces goods in the United States.

Question 11

Which one of the following would count as investment in the national income accounts?

Accepted Answer

A) buying a U.S.government bond 
B) buying 100 shares of Wal-Mart stock 
C) buying an existing house 
D) a freight-hauling firm buying a new domestically produced truck 
A) buying a U.S.government bond 
B) buying 100 shares of Wal-Mart stock 
C) buying an existing house 
D) a freight-hauling firm buying a new domestically produced truck

Question 12

Which of the following about inventory changes and GDP is true?

Accepted Answer

A) Inventory investment adds to GDP because it represents goods produced during the current period. 
B) Inventory investment is subtracted from GDP because the goods were not sold during the period. 
C) Inventory investment does not affect GDP because the goods were not sold during the period. 
D) Inventory investment does not affect GDP because it does not represent goods produced during the period. 
A) Inventory investment adds to GDP because it represents goods produced during the current period. 
B) Inventory investment is subtracted from GDP because the goods were not sold during the period. 
C) Inventory investment does not affect GDP because the goods were not sold during the period. 
D) Inventory investment does not affect GDP because it does not represent goods produced during the period.

Question 13

The consumer price index (CPI) is designed to measure

Accepted Answer

A) the impact of price changes on the value of real GDP. 
B) the nominal value of consumer spending on food, clothing, and energy. 
C) the total spending of households as a percentage of GDP. 
D) the impact of price changes on the cost of the typical bundle of goods purchased by households. 
A) the impact of price changes on the value of real GDP. 
B) the nominal value of consumer spending on food, clothing, and energy. 
C) the total spending of households as a percentage of GDP. 
D) the impact of price changes on the cost of the typical bundle of goods purchased by households.

Question 14

The dollar value of GDP increased approximately 4 percent during the year, but real GDP fell 2 percent. Which of the following best explains this data?

Accepted Answer

A) The real capacity of the economy increased more rapidly than money output. 
B) In the international sector, there was a balance of trade deficit of approximately 2 percent of GDP. 
C) The inflation rate was approximately 6 percent during the year. 
D) The general level of prices rose approximately 2 percent. 
A) The real capacity of the economy increased more rapidly than money output. 
B) In the international sector, there was a balance of trade deficit of approximately 2 percent of GDP. 
C) The inflation rate was approximately 6 percent during the year. 
D) The general level of prices rose approximately 2 percent.

Question 15

What basket of goods is used to construct the CPI?

Accepted Answer

A) a random sample of all goods and services produced in the economy 
B) the goods and services that are typically bought by consumers as determined by government surveys 
C) only food, clothing, transportation, entertainment, and education 
D) the least expensive and the most expensive goods and services in each major category of consumer expenditures 
A) a random sample of all goods and services produced in the economy 
B) the goods and services that are typically bought by consumers as determined by government surveys 
C) only food, clothing, transportation, entertainment, and education 
D) the least expensive and the most expensive goods and services in each major category of consumer expenditures

Question 16

The GDP deflator is designed to adjust nominal GDP for changes in

Accepted Answer

A) the level of transfer payments. 
B) the quality of goods over time. 
C) the costs of economic bads such as pollution and crime. 
D) the general level of prices over time. 
A) the level of transfer payments. 
B) the quality of goods over time. 
C) the costs of economic bads such as pollution and crime. 
D) the general level of prices over time.

Question 17

The consumer price index is designed to measure the extent to which

Accepted Answer

A) the cost of a typical bundle (market basket) of consumer goods has changed over time. 
B) consumers have increased their spending over time. 
C) GDP is allocated to consumers, rather than to business or government, over time. 
D) prices paid by employers to resource owners have changed over time. 
A) the cost of a typical bundle (market basket) of consumer goods has changed over time. 
B) consumers have increased their spending over time. 
C) GDP is allocated to consumers, rather than to business or government, over time. 
D) prices paid by employers to resource owners have changed over time.

Question 18

Last year the Jones family earned $40,000. This year their income is $42,000. In an economy with an inflation rate of 10 percent, which of the following is correct?

Accepted Answer

A) The Jones' nominal income and real income have both fallen. 
B) The Jones' nominal income and real income have both risen. 
C) The Jones' nominal income has increased and their real income has fallen. 
D) The Jones' nominal income has decreased and their real income has risen. 
A) The Jones' nominal income and real income have both fallen. 
B) The Jones' nominal income and real income have both risen. 
C) The Jones' nominal income has increased and their real income has fallen. 
D) The Jones' nominal income has decreased and their real income has risen.

Question 19

Between 1991 and 2008, the federal minimum wage increased from $4.25 per hour to $6.55 per hour, while the CPI increased from 136.2 to 215.3. We can conclude from this that

Accepted Answer

A) the minimum wage increased in nominal and in real terms. 
B) the minimum wage decreased in nominal terms but increased in real terms. 
C) the minimum wage increased in nominal terms but decreased in real terms. 
D) more information is needed to determine what happened to the real minimum wage over the period. 
A) the minimum wage increased in nominal and in real terms. 
B) the minimum wage decreased in nominal terms but increased in real terms. 
C) the minimum wage increased in nominal terms but decreased in real terms. 
D) more information is needed to determine what happened to the real minimum wage over the period.

Question 20

If U.S. net exports are negative,

Accepted Answer

A) U.S.consumers are spending less on foreign goods than foreign consumers are spending on U.S.goods 
B) U.S.consumers are spending more on foreign goods than foreign consumers are spending on U.S.goods 
C) the government must promote imports to balance international trade 
D) U.S.consumers are spending more on foreign goods than they are spending on U.S.goods 
E) U.S.disposable income is low 
A) U.S.consumers are spending less on foreign goods than foreign consumers are spending on U.S.goods 
B) U.S.consumers are spending more on foreign goods than foreign consumers are spending on U.S.goods 
C) the government must promote imports to balance international trade 
D) U.S.consumers are spending more on foreign goods than they are spending on U.S.goods 
E) U.S.disposable income is low

Which of the following is a shortcoming of GDP?

Answer the following questions: a.What is the difference between gross domestic product and gross national product? b.Give an example of a transaction that would be counted in GDP but not in GNP. c.Give an example of a transaction that would be counted in GNP but not GDP.

Given the following figures, by approximately what percentage did Michael's real income increase between 2008 and 2009? Michael's 2008 money income = $60,000 Michael's 2009 money income = $72,000 2008 CPI = 120.0 2009 CPI = 128.0

Which of the following is true of inflation?

Table 7-6 -Refer to Table 7-6. What was the value of national income?

Suppose that the nominal value of GDP increased by approximately 2 percent during a given year, but real GDP decreased by 3 percent. Which of the following best explains these events?

Suppose a country had $3.5 billion of net exports and bought $6.8 billion of goods and services from foreign countries. This country would have

Suppose you received a 3 percent increase in your nominal wage. Over the year, inflation ran about 6 percent. Which of the following is true?

Real GDP per person

Which of the following would contribute to GDP?

Which one of the following would count as investment in the national income accounts?

Which of the following about inventory changes and GDP is true?

The consumer price index (CPI) is designed to measure

The dollar value of GDP increased approximately 4 percent during the year, but real GDP fell 2 percent. Which of the following best explains this data?

What basket of goods is used to construct the CPI?

The GDP deflator is designed to adjust nominal GDP for changes in

The consumer price index is designed to measure the extent to which

Last year the Jones family earned $40,000. This year their income is $42,000. In an economy with an inflation rate of 10 percent, which of the following is correct?

Between 1991 and 2008, the federal minimum wage increased from $4.25 per hour to $6.55 per hour, while the CPI increased from 136.2 to 215.3. We can conclude from this that

If U.S. net exports are negative,

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 of the following is a shortcoming of GDP?

Answer the following questions: a.What is the difference between gross domestic product and gross national product? b.Give an example of a transaction that would be counted in GDP but not in GNP. c.Give an example of a transaction that would be counted in GNP but not GDP.

Given the following figures, by approximately what percentage did Michael's real income increase between 2008 and 2009? Michael's 2008 money income = $60,000 Michael's 2009 money income = $72,000 2008 CPI = 120.0 2009 CPI = 128.0

Which of the following is true of inflation?

Table 7-6 -Refer to Table 7-6. What was the value of national income?

Suppose that the nominal value of GDP increased by approximately 2 percent during a given year, but real GDP decreased by 3 percent. Which of the following best explains these events?

Suppose a country had $3.5 billion of net exports and bought $6.8 billion of goods and services from foreign countries. This country would have

Suppose you received a 3 percent increase in your nominal wage. Over the year, inflation ran about 6 percent. Which of the following is true?

Real GDP per person

Which of the following would contribute to GDP?

Which one of the following would count as investment in the national income accounts?

Which of the following about inventory changes and GDP is true?

The consumer price index (CPI) is designed to measure

The dollar value of GDP increased approximately 4 percent during the year, but real GDP fell 2 percent. Which of the following best explains this data?

What basket of goods is used to construct the CPI?

The GDP deflator is designed to adjust nominal GDP for changes in

The consumer price index is designed to measure the extent to which

Last year the Jones family earned $40,000. This year their income is $42,000. In an economy with an inflation rate of 10 percent, which of the following is correct?

Between 1991 and 2008, the federal minimum wage increased from $4.25 per hour to $6.55 per hour, while the CPI increased from 136.2 to 215.3. We can conclude from this that

If U.S. net exports are negative,

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