Question 1

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 2

Accurate measurement of GDP is important to business decision-makers because this information will help them better determine the

Accepted Answer

A)  general happiness of a country's citizens. 
B)  course of the economy and the direction of demand for their products. 
C)  economic well-being of a particular group within a country. 
D)  amount of leisure time available and the quality of life in a country. 
A)  general happiness of a country's citizens. 
B)  course of the economy and the direction of demand for their products. 
C)  economic well-being of a particular group within a country. 
D)  amount of leisure time available and the quality of life in a country.

Question 3

Use of real GDP to measure changes in national output from one period to another can be misleading if

Accepted Answer

A)  the price level is different for the two periods. 
B)  the share of production carried out in the nonmarket sector is different for the two periods. 
C)  the bundle of goods produced during the periods is quite similar. 
D)  the size of the export-import sector differs for the two periods. 
A)  the price level is different for the two periods. 
B)  the share of production carried out in the nonmarket sector is different for the two periods. 
C)  the bundle of goods produced during the periods is quite similar. 
D)  the size of the export-import sector differs for the two periods.

Question 4

The consumer price index is calculated using a fixed basket of goods. Will this always give an accurate representation of the changing cost of living to consumers? Why or why not?

Accepted Answer

The CPI tends to overstate inflation bec

Question 5

Your boss gives you an increase in the number of dollars you earn per hour. This increase in pay makes

Accepted Answer

A)  your nominal wage increase. If your nominal wage rose by a greater percentage than the price level, then your real wage also increased. 
B)  your nominal wage increase. If your nominal wage rose by a greater percentage than the price level, then your real wage decreased. 
C)  your real wage increase. If your real wage rose by a greater percentage than the price level, then your nominal wage also increased. 
D)  your real wage decrease. If your real wage rose by a greater percentage than the price level, then your nominal wage decreased. 
A)  your nominal wage increase. If your nominal wage rose by a greater percentage than the price level, then your real wage also increased. 
B)  your nominal wage increase. If your nominal wage rose by a greater percentage than the price level, then your real wage decreased. 
C)  your real wage increase. If your real wage rose by a greater percentage than the price level, then your nominal wage also increased. 
D)  your real wage decrease. If your real wage rose by a greater percentage than the price level, then your nominal wage decreased.

Question 6

The nominal salary paid to the president of the United States and the Consumer Price Index (CPI) are given for various years below. Table 7-9
  Refer to Table 7-9. During which of the above years was the purchasing power of the president's salary highest?

Accepted Answer

A)  1920 
B)  1940 
C)  1960 
D)  1980 
E)  2000 
A)  1920 
B)  1940 
C)  1960 
D)  1980 
E)  2000

Question 7

What do cost of living indexes across cities measure?

Accepted Answer

A)  The change in the general level of prices that occurred in each city during the year. 
B)  The average earnings of persons employed in the city during the year. 
C)  Differences in prices that affect the cost of purchasing a typical bundle of goods and services in each of the cities. 
D)  Changes in the earnings of the typical person working in each of the cities during the year. 
A)  The change in the general level of prices that occurred in each city during the year. 
B)  The average earnings of persons employed in the city during the year. 
C)  Differences in prices that affect the cost of purchasing a typical bundle of goods and services in each of the cities. 
D)  Changes in the earnings of the typical person working in each of the cities during the year.

Question 8

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 9

Use the table below to choose the correct answer. Table 7-3
  Refer to Table 7-3. Gross domestic product equals

Accepted Answer

A)  $1,100. 
B)  $1,120. 
C)  $1,190. 
D)  $1,220. 
A)  $1,100. 
B)  $1,120. 
C)  $1,190. 
D)  $1,220.

Question 10

Discuss the problems with GDP as a measure of a country's current production and income.

Accepted Answer

First, GDP does not count nonmarket prod

Question 11

In recent years, technological improvements and the Internet have substantially reduced transaction costs and expanded the availability of low-cost access to information, communications, and entertainment. Most economists believe that these changes

Accepted Answer

A)  cause GDP to overstate the growth rate of real output and the improvement in the well-being of people. 
B)  cause GDP to understate the growth rate of real output and the improvement in the well-being of people. 
C)  cause the consumer price index to increase more rapidly than the general level of prices. 
D)  reduce the gains from trade and thereby cause GDP to decline. 
A)  cause GDP to overstate the growth rate of real output and the improvement in the well-being of people. 
B)  cause GDP to understate the growth rate of real output and the improvement in the well-being of people. 
C)  cause the consumer price index to increase more rapidly than the general level of prices. 
D)  reduce the gains from trade and thereby cause GDP to decline.

Question 12

Answer the following questions:
a.In 2004, four major hurricanes hit Florida. Explain how this destruction of property, and the rebuilding that went on afterward, affected GDP.
b.Explain how GDP has trouble accounting for other parts of the economy as well.

Accepted Answer

a.The goods that are destroyed are not s

Question 13

If the GDP deflator in 2009 was 120 compared to a value of 100 during the 2004 base year, this would indicate that

Accepted Answer

A)  the inflation rate during 2009 was 20 percent. 
B)  the general level of prices during 2009 was 20 percent higher than during 2004. 
C)  the inflation rate during 2009 was 120 percent. 
D)  real GDP was 20 percent higher in 2009 than 2004. 
A)  the inflation rate during 2009 was 20 percent. 
B)  the general level of prices during 2009 was 20 percent higher than during 2004. 
C)  the inflation rate during 2009 was 120 percent. 
D)  real GDP was 20 percent higher in 2009 than 2004.

Question 14

Gross domestic product is

Accepted Answer

A)  the market value of all goods and services exchanged within a country during a time period. 
B)  the market value of all domestic assets, regardless of whether they are owned by citizens or foreigners. 
C)  the compensation received during a period for labor services plus interest, rents, and corporate profits. 
D)  the market value of final goods and services produced within a country during a time period. 
A)  the market value of all goods and services exchanged within a country during a time period. 
B)  the market value of all domestic assets, regardless of whether they are owned by citizens or foreigners. 
C)  the compensation received during a period for labor services plus interest, rents, and corporate profits. 
D)  the market value of final goods and services produced within a country during a time period.

Question 15

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

Question 16

The typical bundle of goods and services on which the GDP deflator is based

Accepted Answer

A)  is narrower than the one used to calculate the CPI. 
B)  is updated once every decade. 
C)  is the same as the one used to calculate the CPI. 
D)  is updated every year. 
A)  is narrower than the one used to calculate the CPI. 
B)  is updated once every decade. 
C)  is the same as the one used to calculate the CPI. 
D)  is updated every year.

Question 17

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

Accepted Answer

A)  Deion sends $100 to a hotel in Costa Rica as a deposit for his vacation. 
B)  Deion buys a travel guide written by a Costa Rican woman living in the United States. 
C)  Deion buys a shirt while on vacation in Costa Rica. 
D)  Deion spends money in an American-owned restaurant in Costa Rica. 
A)  Deion sends $100 to a hotel in Costa Rica as a deposit for his vacation. 
B)  Deion buys a travel guide written by a Costa Rican woman living in the United States. 
C)  Deion buys a shirt while on vacation in Costa Rica. 
D)  Deion spends money in an American-owned restaurant in Costa Rica.

Question 18

If the cost of living index in San Francisco was 210 compared to 100 in Kansas City, which of the following would be true?

Accepted Answer

A)  A $100,000 job in San Francisco would provide one with more than four times the purchasing power as a $50,000 job in Kansas City. 
B)  A $100,000 job in San Francisco would provide one with twice the purchasing power of a $50,000 job in Kansas City. 
C)  A $100,000 job in San Francisco would provide one with more purchasing power than a $50,000 job in Kansas City. 
D)  A $100,000 job in San Francisco would not provide one with as much purchasing power as a $50,000 job in Kansas City. 
A)  A $100,000 job in San Francisco would provide one with more than four times the purchasing power as a $50,000 job in Kansas City. 
B)  A $100,000 job in San Francisco would provide one with twice the purchasing power of a $50,000 job in Kansas City. 
C)  A $100,000 job in San Francisco would provide one with more purchasing power than a $50,000 job in Kansas City. 
D)  A $100,000 job in San Francisco would not provide one with as much purchasing power as a $50,000 job in Kansas City.

Question 19

An automobile manufacturing plant opens in Alabama, and its owner, all of the workers, and all raw materials are from Japan. How would the purchase of an automobile from this plant change U.S. GDP and GNP?

Accepted Answer

A)  It would increase GNP and GDP. 
B)  It would increase GNP and leave GDP unchanged. 
C)  It would increase GDP and leave GNP unchanged. 
D)  It would leave both GDP and GNP unchanged. 
A)  It would increase GNP and GDP. 
B)  It would increase GNP and leave GDP unchanged. 
C)  It would increase GDP and leave GNP unchanged. 
D)  It would leave both GDP and GNP unchanged.

Question 20

Refrigerators, air conditioners, and other appliances are now more durable and energy efficient​.  If there is an increase in the price of these products, which of the following is true?

Accepted Answer

A)  Statisticians involved in the construction of price indexes will be able to fully separate the difference between improved product quality and inflation. 
B)  Statisticians involved in the construction of price indexes will not be able to fully differentiate between improved product quality and inflation. 
C)  All of the price increase reflects inflation rather than the improvement in the quality of the product. 
D)  There will be no effect on inflation. 
A)  Statisticians involved in the construction of price indexes will be able to fully separate the difference between improved product quality and inflation. 
B)  Statisticians involved in the construction of price indexes will not be able to fully differentiate between improved product quality and inflation. 
C)  All of the price increase reflects inflation rather than the improvement in the quality of the product. 
D)  There will be no effect on inflation.

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

Accurate measurement of GDP is important to business decision-makers because this information will help them better determine the

Use of real GDP to measure changes in national output from one period to another can be misleading if

The consumer price index is calculated using a fixed basket of goods. Will this always give an accurate representation of the changing cost of living to consumers? Why or why not?

Your boss gives you an increase in the number of dollars you earn per hour. This increase in pay makes

The nominal salary paid to the president of the United States and the Consumer Price Index (CPI) are given for various years below. Table 7-9 Refer to Table 7-9. During which of the above years was the purchasing power of the president's salary highest?

What do cost of living indexes across cities measure?

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

Use the table below to choose the correct answer. Table 7-3 Refer to Table 7-3. Gross domestic product equals

Discuss the problems with GDP as a measure of a country's current production and income.

In recent years, technological improvements and the Internet have substantially reduced transaction costs and expanded the availability of low-cost access to information, communications, and entertainment. Most economists believe that these changes

Answer the following questions: a.In 2004, four major hurricanes hit Florida. Explain how this destruction of property, and the rebuilding that went on afterward, affected GDP. b.Explain how GDP has trouble accounting for other parts of the economy as well.

If the GDP deflator in 2009 was 120 compared to a value of 100 during the 2004 base year, this would indicate that

Gross domestic product is

If U.S. net exports are negative,

The typical bundle of goods and services on which the GDP deflator is based

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

If the cost of living index in San Francisco was 210 compared to 100 in Kansas City, which of the following would be true?

An automobile manufacturing plant opens in Alabama, and its owner, all of the workers, and all raw materials are from Japan. How would the purchase of an automobile from this plant change U.S. GDP and GNP?

Refrigerators, air conditioners, and other appliances are now more durable and energy efficient. If there is an increase in the price of these products, which of the following is true?

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

Special Topics

Filters

Exam 7: Taking the Nations Economic Pulse

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

Accurate measurement of GDP is important to business decision-makers because this information will help them better determine the

Use of real GDP to measure changes in national output from one period to another can be misleading if

The consumer price index is calculated using a fixed basket of goods. Will this always give an accurate representation of the changing cost of living to consumers? Why or why not?

Your boss gives you an increase in the number of dollars you earn per hour. This increase in pay makes

The nominal salary paid to the president of the United States and the Consumer Price Index (CPI) are given for various years below. Table 7-9 Refer to Table 7-9. During which of the above years was the purchasing power of the president's salary highest?

What do cost of living indexes across cities measure?

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

Use the table below to choose the correct answer. Table 7-3 Refer to Table 7-3. Gross domestic product equals

Discuss the problems with GDP as a measure of a country's current production and income.

In recent years, technological improvements and the Internet have substantially reduced transaction costs and expanded the availability of low-cost access to information, communications, and entertainment. Most economists believe that these changes

Answer the following questions: a.In 2004, four major hurricanes hit Florida. Explain how this destruction of property, and the rebuilding that went on afterward, affected GDP. b.Explain how GDP has trouble accounting for other parts of the economy as well.

If the GDP deflator in 2009 was 120 compared to a value of 100 during the 2004 base year, this would indicate that

Gross domestic product is

If U.S. net exports are negative,

The typical bundle of goods and services on which the GDP deflator is based

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

If the cost of living index in San Francisco was 210 compared to 100 in Kansas City, which of the following would be true?

An automobile manufacturing plant opens in Alabama, and its owner, all of the workers, and all raw materials are from Japan. How would the purchase of an automobile from this plant change U.S. GDP and GNP?

Refrigerators, air conditioners, and other appliances are now more durable and energy efficient​. If there is an increase in the price of these products, which of the following is true?

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

Special Topics

Filters

Refrigerators, air conditioners, and other appliances are now more durable and energy efficient. If there is an increase in the price of these products, which of the following is true?