Question 1

In years of economic contraction, firms throughout the economy increase their production of goods and services, employment rises, and jobs are easy to find.

Accepted Answer

A) True 
 B)False

Question 2

The government's purchases of goods but not its purchases of services are included in GDP.

Accepted Answer

A) True 
 B)False

Question 3

Table 23-1
The following table contains data for Mindalion for the year 2019.
​
 $$\begin{array} { | l | l | } 
\hline \text { GDP } & \$ 700 \
\hline \text { Income earned by citizens abroad } & \$ 13 \
\hline \text { Income foreigners earn here } & \$ 12 \
\hline \text { Losses from depreciation } & \$ 5 \
\hline \text { Indirect business taxes } & \$ 10 \
\hline \text { Statistical discrepancy } & \$ 0 \
\hline \text { Retained earnings } & \$ 8 \
\hline \text { Corporate income taxes } & \$ 12 \
\hline \text { Social insurance contributions } & \$ 30 \
\hline \text { Interest paid to households by government } & \$ 8 \
\hline \text { Transfer payments to households from government } & \$ 55 \
\hline \text { Personal taxes } & \$ 60 \
\hline \text { Nontax payments to government } & \$ 11 \
\hline
\end{array}$$
-Refer to Table 23-1. Gross national product for Mindalion in 2019 is

Accepted Answer

A) $696. 
B) $700. 
C) $701. 
D) $725. 
A) $696. 
B) $700. 
C) $701. 
D) $725.

Question 4

Table 23-6
The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009.
Prices and Quantities
  
-Refer to Table 23-6. What was the inflation rate for 2010? Show your work.

Accepted Answer

2009 is the base year so the GDP Deflato

Question 5

A farmer produces carrots and sells them to Fresh Juice, which makes carrot juice. The carrots produced by the farmer are called

Accepted Answer

A) inventory goods. 
B) transitory goods. 
C) final goods. 
D) intermediate goods. 
A) inventory goods. 
B) transitory goods. 
C) final goods. 
D) intermediate goods.

Question 6

What are transfer payments, and how do they affect the calculation of GDP?

Accepted Answer

Transfer payments are income b

Question 7

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

Accepted Answer

The GDP Deflator = 1

Question 8

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

Accepted Answer

A) GDP would definitely increase, despite the fact that GDP includes leisure. 
B) GDP would definitely increase because GDP excludes leisure. 
C) GDP could either increase or decrease because GDP includes leisure. 
D) GDP could either increase or decrease because GDP excludes leisure. 
A) GDP would definitely increase, despite the fact that GDP includes leisure. 
B) GDP would definitely increase because GDP excludes leisure. 
C) GDP could either increase or decrease because GDP includes leisure. 
D) GDP could either increase or decrease because GDP excludes leisure.

Question 9

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Accepted Answer

The answer of A farmer sells sugar to a candy...

Question 10

While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services provided by teachers and exterminators.

Accepted Answer

A) True 
 B)False

Question 11

Between 1929 and 1933, NNP measured in current prices fell from $96 billion to $48 billion. Over the same period, the relevant price index fell from 100 to 75.
a.What was the percentage decline in nominal NNP from 1929 to1933?
b.What was the percentage decline in real NNP from 1929 to 1933? Show your work.

Accepted Answer

a.
NNP measured in current prices is nom

Question 12

If the value of an economy's imports exceeds the value of that economy's exports, then net exports is a negative number.

Accepted Answer

A) True 
 B)False

Question 13

In the GDP accounts production equals

Accepted Answer

A) income. 
B) income + saving. 
C) income − government expenditures. 
D) income − imports. 
A) income. 
B) income + saving. 
C) income − government expenditures. 
D) income − imports.

Question 14

Calculate the inflation rate for a country where the GDP deflator rises from 120 to 165.

Accepted Answer

The answer of Calculate the inflation rate for a country...

Question 15

Table 23-2
The following table contains data for country Mindalion for the year 2019.
​
 $$\begin{array} { | l | l | } 
\hline \text { Household purchases of durable goods } & \$ 1,695 \
\hline \text { Household purchases of nondurable goods } & \$ 1,717 \
\hline \text { Household purchases of services } & \$ 400 \
\hline \text { Household purchases of new housing } & \$ 704 \
\hline \text { Purchases of capital equipment } & \$ 310 \
\hline \text { Inventory changes } & \$ 399 \
\hline \text { Purchases of new structures } & \$ 611 \
\hline \text { Depreciati on } & \$ 117 \
\hline \text { Salaries of government workers } & \$ 1,422 \
\hline \text { Government expenditures on public works } & \$ 589 \
\hline \text { Transfer payments } & \$ 777 \
\hline \text { Foreign purchases of domestically produced goods } & \$ 88 \
\hline \text { Domestic purchases of foreign goods } & \$ 140 \
\hline
\end{array}$$
-Refer to Table 23-2. What were country Mindalion's imports in 2019?

Accepted Answer

A) ?$52 
B) $52 
C) $88 
D) $140 
A) ?$52 
B) $52 
C) $88 
D) $140

Question 16

The value of goods added to a firm's inventory in a certain year is treated as

Accepted Answer

A) consumption, since the goods will be sold to consumers in another period. 
B) intermediate goods, and so is not included in that year's GDP. 
C) investment, since GDP aims to measure the value of the economy's production that year. 
D) spending on durable goods, since the goods could not be inventoried unless they were durable. 
A) consumption, since the goods will be sold to consumers in another period. 
B) intermediate goods, and so is not included in that year's GDP. 
C) investment, since GDP aims to measure the value of the economy's production that year. 
D) spending on durable goods, since the goods could not be inventoried unless they were durable.

Question 17

Real GDP is a better gauge of economic well-being than is nominal GDP.

Accepted Answer

A) True 
 B)False

Question 18

The basic tools of supply and demand are central to microeconomic analysis but are of little use to macroeconomics.

Accepted Answer

A) True 
 B)False

Question 19

Disposable personal income is

Accepted Answer

A) the total income earned by a nation's permanent residents. 
B) the total income earned by a nation's residents in the production of goods and services. 
C) the income that households and non-corporate businesses receive. 
D) the income that households and businesses have remaining after satisfying their obligations to the government. 
A) the total income earned by a nation's permanent residents. 
B) the total income earned by a nation's residents in the production of goods and services. 
C) the income that households and non-corporate businesses receive. 
D) the income that households and businesses have remaining after satisfying their obligations to the government.

Question 20

In the actual economy, households

Accepted Answer

A) spend all of their income. 
B) divide their income among spending, taxes, and saving. 
C) buy all goods and services produced in the economy. 
D) save all of their income. 
A) spend all of their income. 
B) divide their income among spending, taxes, and saving. 
C) buy all goods and services produced in the economy. 
D) save all of their income.

Exam 23: Measuring a Nations Income

In years of economic contraction, firms throughout the economy increase their production of goods and services, employment rises, and jobs are easy to find.

The government's purchases of goods but not its purchases of services are included in GDP.

Table 23-6 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. Prices and Quantities -Refer to Table 23-6. What was the inflation rate for 2010? Show your work.

A farmer produces carrots and sells them to Fresh Juice, which makes carrot juice. The carrots produced by the farmer are called

What are transfer payments, and how do they affect the calculation of GDP?

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services provided by teachers and exterminators.

If the value of an economy's imports exceeds the value of that economy's exports, then net exports is a negative number.

In the GDP accounts production equals

Calculate the inflation rate for a country where the GDP deflator rises from 120 to 165.

The value of goods added to a firm's inventory in a certain year is treated as

Real GDP is a better gauge of economic well-being than is nominal GDP.

The basic tools of supply and demand are central to microeconomic analysis but are of little use to macroeconomics.

Disposable personal income is

In the actual economy, households

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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