Question 1

Which of the following would be most appropriate for the measurement of differences in the average standard of living of people at different points in time?

Accepted Answer

A) nominal GDP 
B) real GDP 
C) nominal GDP per capita 
D) real GDP per capita 
A) nominal GDP 
B) real GDP 
C) nominal GDP per capita 
D) real GDP per capita

Question 2

Explain the two approaches to calculating GDP.

Accepted Answer

One approach involves adding up the expe

Question 3

Suppose the CPI was 95 in 1955,and suppose currently the CPI is 475.According to the CPI,$100 today purchases the same amount of goods and services as

Accepted Answer

A) $20.00 purchased in 1955. 
B) $33.33 purchased in 1955. 
C) $47.50 purchased in 1955. 
D) None of the above is correct. 
A) $20.00 purchased in 1955. 
B) $33.33 purchased in 1955. 
C) $47.50 purchased in 1955. 
D) None of the above is correct.

Question 4

Double counting in the resource cost-income approach to GDP refers to

Accepted Answer

A) corporate income being taxed twice 
B) the amount of income taxes paid to states that is taxable by the federal government 
C) calculating GDP twice using the income and expenditures methods 
D) adding the value of exports to GDP and subtracting the value of imports 
E) counting the total value of a final output in addition to the value of the inputs used to make it 
A) corporate income being taxed twice 
B) the amount of income taxes paid to states that is taxable by the federal government 
C) calculating GDP twice using the income and expenditures methods 
D) adding the value of exports to GDP and subtracting the value of imports 
E) counting the total value of a final output in addition to the value of the inputs used to make it

Question 5

Use the table below to choose the correct answer.
Table 7-4
  
-Refer to Table 7-4.Gross domestic product equals

Accepted Answer

A) $3,550. 
B) $4,000. 
C) $4,150. 
D) $8,100. 
A) $3,550. 
B) $4,000. 
C) $4,150. 
D) $8,100.

Question 6

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

Accepted Answer

A) calculated for a more general market basket of goods than the consumer price index. 
B) always less than the consumer price index and,thus,is a more stable index. 
C) the sum of the consumer price index and the wholesale price index. 
D) the only price index adjusted annually for changes in the quality of products. 
A) calculated for a more general market basket of goods than the consumer price index. 
B) always less than the consumer price index and,thus,is a more stable index. 
C) the sum of the consumer price index and the wholesale price index. 
D) the only price index adjusted annually for changes in the quality of products.

Question 7

If the consumer price index (CPI)was 180 at year-end 2010 and 189 at year-end 2011,inflation during 2011 was

Accepted Answer

A) zero;prices were stable during 2009. 
B) 4.8 percent. 
C) 5 percent. 
D) 9 percent. 
A) zero;prices were stable during 2009. 
B) 4.8 percent. 
C) 5 percent. 
D) 9 percent.

Question 8

Gross domestic product is equal to the market value of all goods and services

Accepted Answer

A) exchanged during a period. 
B) produced domestically during a period. 
C) produced by the citizens of a nation during a period. 
D) produced domestically during a period minus the depreciation of productive assets. 
A) exchanged during a period. 
B) produced domestically during a period. 
C) produced by the citizens of a nation during a period. 
D) produced domestically during a period minus the depreciation of productive assets.

Question 9

If depreciation and indirect business taxes (including business transfers)were added to national income,the result would be equal to

Accepted Answer

A) gross domestic product (GDP). 
B) gross national product (GNP). 
C) net national product (NNP). 
D) personal income. 
A) gross domestic product (GDP). 
B) gross national product (GNP). 
C) net national product (NNP). 
D) personal income.

Question 10

When the consumer price index rises,the typical family

Accepted Answer

A) has to spend more dollars to maintain the same standard of living. 
B) can spend fewer dollars to maintain the same standard of living. 
C) finds that its standard of living is not affected. 
D) can offset the effects of rising prices by saving more. 
A) has to spend more dollars to maintain the same standard of living. 
B) can spend fewer dollars to maintain the same standard of living. 
C) finds that its standard of living is not affected. 
D) can offset the effects of rising prices by saving more.

Question 11

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 12

Which of the following correctly states the relationship between GDP and GNP for the U.S.?

Accepted Answer

A) GDP equals GNP minus the net income of foreigners. 
B) GDP equals GNP plus the net income of foreigners. 
C) GDP equals GNP minus indirect business taxes. 
D) GDP equals GNP. 
A) GDP equals GNP minus the net income of foreigners. 
B) GDP equals GNP plus the net income of foreigners. 
C) GDP equals GNP minus indirect business taxes. 
D) GDP equals GNP.

Question 13

If you wanted to measure whether the output of an economy was increasing or decreasing across time periods,you would use the real GDP data rather than the nominal GDP data because

Accepted Answer

A) exports are excluded from real GDP but not nominal. 
B) real GDP incorporates the impact of federal budget deficits and surpluses;nominal GDP does not. 
C) real GDP reflects the impact of transfer payments on the economy,but nominal GDP does not. 
D) real GDP adjusts for changes in the general level of prices,but nominal GDP does not. 
A) exports are excluded from real GDP but not nominal. 
B) real GDP incorporates the impact of federal budget deficits and surpluses;nominal GDP does not. 
C) real GDP reflects the impact of transfer payments on the economy,but nominal GDP does not. 
D) real GDP adjusts for changes in the general level of prices,but nominal GDP does not.

Question 14

Which of the following will contribute to GDP?

Accepted Answer

A) Your spouse cleans your house every Thursday. 
B) You sell an old bicycle for $100. 
C) You find your lost economics textbook. 
D) You pay a doctor $200 to treat an arm that you broke in an accident. 
A) Your spouse cleans your house every Thursday. 
B) You sell an old bicycle for $100. 
C) You find your lost economics textbook. 
D) You pay a doctor $200 to treat an arm that you broke in an accident.

Question 15

Suppose a market basket of goods and services costs $1,000 in the base year and the consumer price index (CPI)is currently 110.This indicates the price of the market basket of goods and services is now

Accepted Answer

A) $110. 
B) $1,000. 
C) $1,100. 
D) $1,225. 
A) $110. 
B) $1,000. 
C) $1,100. 
D) $1,225.

Question 16

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 17

When the quality of a good deteriorates,the purchasing power of the dollar

Accepted Answer

A) increases,so the CPI overstates the change in the cost of living if the quality change is not accounted for. 
B) increases,so the CPI understates the change in the cost of living if the quality change is not accounted for. 
C) decreases,so the CPI overstates the change in the cost of living if the quality change is not accounted for. 
D) decreases,so the CPI understates the change in the cost of living if the quality change is not accounted for. 
A) increases,so the CPI overstates the change in the cost of living if the quality change is not accounted for. 
B) increases,so the CPI understates the change in the cost of living if the quality change is not accounted for. 
C) decreases,so the CPI overstates the change in the cost of living if the quality change is not accounted for. 
D) decreases,so the CPI understates the change in the cost of living if the quality change is not accounted for.

Question 18

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 19

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 20

Suppose that nominal GDP increased by 3 percent,but the real GDP increased by only 1 percent during that same period.Which of the following best explains the phenomenon?

Accepted Answer

A) Prices increased by approximately 1 percent. 
B) Prices increased by approximately 2 percent. 
C) Prices increased by approximately 3 percent. 
D) Prices increased by approximately 4 percent. 
A) Prices increased by approximately 1 percent. 
B) Prices increased by approximately 2 percent. 
C) Prices increased by approximately 3 percent. 
D) Prices increased by approximately 4 percent.

Exam 7: Ataking the Nations Economic Pulse

Which of the following would be most appropriate for the measurement of differences in the average standard of living of people at different points in time?

Explain the two approaches to calculating GDP.

Suppose the CPI was 95 in 1955,and suppose currently the CPI is 475.According to the CPI,$100 today purchases the same amount of goods and services as

Double counting in the resource cost-income approach to GDP refers to

Use the table below to choose the correct answer. Table 7-4 -Refer to Table 7-4.Gross domestic product equals

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

If the consumer price index (CPI)was 180 at year-end 2010 and 189 at year-end 2011,inflation during 2011 was

Gross domestic product is equal to the market value of all goods and services

If depreciation and indirect business taxes (including business transfers)were added to national income,the result would be equal to

When the consumer price index rises,the typical family

In an economy with persistent inflation,

Which of the following correctly states the relationship between GDP and GNP for the U.S.?

If you wanted to measure whether the output of an economy was increasing or decreasing across time periods,you would use the real GDP data rather than the nominal GDP data because

Which of the following will contribute to GDP?

Suppose a market basket of goods and services costs $1,000 in the base year and the consumer price index (CPI)is currently 110.This indicates the price of the market basket of goods and services is now

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

When the quality of a good deteriorates,the purchasing power of the dollar

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

Which of the following would contribute to GDP?

Suppose that nominal GDP increased by 3 percent,but the real GDP increased by only 1 percent during that same period.Which of the following best explains the phenomenon?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

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

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney 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

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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