Question 1

Which of the following would increase the GDP of the United States?

Accepted Answer

A) A resident of California buys a case of wine from a winery in France. 
B) A resident of Germany buys a software program from a company in Washington. 
C) A resident of Florida spends $3,000 on a vacation in Mexico. 
D) A Japanese investor purchases 100 shares of a computer company located in Illinois. 
A) A resident of California buys a case of wine from a winery in France. 
B) A resident of Germany buys a software program from a company in Washington. 
C) A resident of Florida spends $3,000 on a vacation in Mexico. 
D) A Japanese investor purchases 100 shares of a computer company located in Illinois.

Question 2

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 3

An important difference between the GDP deflator and the consumer price index is that

Accepted Answer

A) the GDP deflator reflects the prices of goods and services bought by producers,whereas the consumer price index reflects the prices of goods and services bought by consumers. 
B) the GDP deflator reflects the prices of all final goods and services produced domestically,whereas the consumer price index reflects the prices of some goods and services bought by consumers. 
C) the GDP deflator reflects the prices of all final goods and services produced by a nation's citizens,whereas the consumer price index reflects the prices of final goods and services bought by consumers. 
D) the GDP deflator reflects the prices of all goods and services bought by producers and consumers,whereas the consumer price index reflects the prices of final goods and services bought by consumers. 
A) the GDP deflator reflects the prices of goods and services bought by producers,whereas the consumer price index reflects the prices of goods and services bought by consumers. 
B) the GDP deflator reflects the prices of all final goods and services produced domestically,whereas the consumer price index reflects the prices of some goods and services bought by consumers. 
C) the GDP deflator reflects the prices of all final goods and services produced by a nation's citizens,whereas the consumer price index reflects the prices of final goods and services bought by consumers. 
D) the GDP deflator reflects the prices of all goods and services bought by producers and consumers,whereas the consumer price index reflects the prices of final goods and services bought by consumers.

Question 4

Anna,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 5

The price index in the first year is 110,in the second year is 100,and in the third year is 96.The economy experienced

Accepted Answer

A) 9.1 percent deflation between the first and second years,and 4 percent deflation between the second and third years. 
B) 9.1 percent deflation between the first and second years,and 9.6 percent deflation between the second and third years. 
C) 10 percent deflation between the first and second years,and 4 percent deflation between the second and third years. 
D) 10 percent deflation between the first and second years,and 8.7 percent deflation between the second and third years. 
A) 9.1 percent deflation between the first and second years,and 4 percent deflation between the second and third years. 
B) 9.1 percent deflation between the first and second years,and 9.6 percent deflation between the second and third years. 
C) 10 percent deflation between the first and second years,and 4 percent deflation between the second and third years. 
D) 10 percent deflation between the first and second years,and 8.7 percent deflation between the second and third years.

Question 6

The Consumer Price Index compares the

Accepted Answer

A) prices of all goods and services in the economy compared to the prices of those goods and services in a base year. 
B) prices of consumer goods and services that a household purchases to the prices of those goods and services purchased in a base year. 
C) prices of producer goods and services that are made for consumers to the prices of those goods and services in a base year. 
D) prices of goods and services that are purchased by producers to the prices of those goods and services in a base year. 
E) prices of goods and services that are purchased by consumer manufacturers to the prices of those goods and services in a base year. 
A) prices of all goods and services in the economy compared to the prices of those goods and services in a base year. 
B) prices of consumer goods and services that a household purchases to the prices of those goods and services purchased in a base year. 
C) prices of producer goods and services that are made for consumers to the prices of those goods and services in a base year. 
D) prices of goods and services that are purchased by producers to the prices of those goods and services in a base year. 
E) prices of goods and services that are purchased by consumer manufacturers to the prices of those goods and services in a base year.

Question 7

Jim,a U.S.citizen,gets a summer job working in Germany.His summer earnings

Accepted Answer

A) would count as part of U.S.GDP and German GNP. 
B) would count as part of U.S.GNP and German GDP. 
C) would count as part of U.S.GDP but would have no effect on Germany's GNP or GDP. 
D) would be double-counted,raising both U.S.GDP and German GDP. 
A) would count as part of U.S.GDP and German GNP. 
B) would count as part of U.S.GNP and German GDP. 
C) would count as part of U.S.GDP but would have no effect on Germany's GNP or GDP. 
D) would be double-counted,raising both U.S.GDP and German GDP.

Question 8

Which one of the following events will leave GDP unchanged?

Accepted Answer

A) You pay $500 to repair your car damaged in an accident. 
B) You buy a new domestic car to replace one that was stolen. 
C) You lose $500 playing blackjack with friends. 
D) You work extra hours this month to help make up for the money you lost playing blackjack. 
A) You pay $500 to repair your car damaged in an accident. 
B) You buy a new domestic car to replace one that was stolen. 
C) You lose $500 playing blackjack with friends. 
D) You work extra hours this month to help make up for the money you lost playing blackjack.

Question 9

Which of the following transactions would enter directly into the determination of GDP?

Accepted Answer

A) a bicycle you purchased at a garage sale 
B) the retirement check your uncle received for spending 25 years in the Marine Corps 
C) the DVD player you purchased from Best Buy 
D) the five shares of Microsoft stock your grandparents gave you for making an A in economics 
A) a bicycle you purchased at a garage sale 
B) the retirement check your uncle received for spending 25 years in the Marine Corps 
C) the DVD player you purchased from Best Buy 
D) the five shares of Microsoft stock your grandparents gave you for making an A in economics

Question 10

The 2008 box office receipts for the movie The Dark Knight were $997 million.By way of comparison,the 1975 receipts for Jaws were $470.6 million.If the Consumer Price Index was 53.8 in 1975 and 215.3 in 2008,which of the following is true?

Accepted Answer

A) The real receipts of The Dark Knight were almost four times greater than those for Jaws. 
B) The real receipts of Jaws were about 88 percent greater than those for The Dark Knight. 
C) The real receipts of The Dark Knight were more than three times those for Jaws. 
D) The real receipts of Jaws were about 33 percent greater than those for The Dark Knight. 
A) The real receipts of The Dark Knight were almost four times greater than those for Jaws. 
B) The real receipts of Jaws were about 88 percent greater than those for The Dark Knight. 
C) The real receipts of The Dark Knight were more than three times those for Jaws. 
D) The real receipts of Jaws were about 33 percent greater than those for The Dark Knight.

Question 11

If national income accountants fail to make an adequate adjustment for increases in the quality of goods and services over time,

Accepted Answer

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

Question 12

The price of CD players increases dramatically,causing a 1 percent increase in the CPI.The price increase will most likely cause the GDP deflator to increase by

Accepted Answer

A) more than 1 percent. 
B) less than 1 percent. 
C) 1 percent. 
D) None of the above is correct;this particular price increase will not affect the GDP deflator. 
A) more than 1 percent. 
B) less than 1 percent. 
C) 1 percent. 
D) None of the above is correct;this particular price increase will not affect the GDP deflator.

Question 13

If a used car dealer purchases a used car for $3,000,refurbishes it,and sells it for $8,000,the

Accepted Answer

A) dealer contributes value added equal to $5,000,but nothing is added to GDP. 
B) dealer contributes value added equal to $5,000,and consequently $5,000 is added to GDP. 
C) dealer contributes nothing to production because only existing goods are involved. 
D) dealer contributes value added equal to $8,000,but only $5,000 is added to GDP. 
A) dealer contributes value added equal to $5,000,but nothing is added to GDP. 
B) dealer contributes value added equal to $5,000,and consequently $5,000 is added to GDP. 
C) dealer contributes nothing to production because only existing goods are involved. 
D) dealer contributes value added equal to $8,000,but only $5,000 is added to GDP.

Question 14

In contrast with nominal GDP,real GDP refers to nominal GDP

Accepted Answer

A) minus exports. 
B) minus personal income taxes. 
C) corrected for price changes. 
D) corrected for depreciation. 
A) minus exports. 
B) minus personal income taxes. 
C) corrected for price changes. 
D) corrected for depreciation.

Question 15

If a country has attracted a relatively large number of foreign workers and a large amount of foreign investment,

Accepted Answer

A) national income will generally exceed gross national product. 
B) gross national product will generally exceed gross domestic product. 
C) net domestic product will generally exceed gross domestic product. 
D) gross domestic product will generally exceed gross national product. 
A) national income will generally exceed gross national product. 
B) gross national product will generally exceed gross domestic product. 
C) net domestic product will generally exceed gross domestic product. 
D) gross domestic product will generally exceed gross national product.

Question 16

Use the table below to answer the following question(s).
Table 7-12
  
-Refer to Table 7-12.Measured in terms of 2000 prices,real GDP in 2005 was

Accepted Answer

A) 600. 
B) 750. 
C) 900. 
D) 1,333. 
A) 600. 
B) 750. 
C) 900. 
D) 1,333.

Question 17

Use the table below to answer the following question(s).
Table 7-14
  
-Refer to Table 7-14.What is this country's net exports?

Accepted Answer

A) 35 
B) -35 
C) 115 
D) -115 
A) 35 
B) -35 
C) 115 
D) -115

Question 18

Consider the following information for the U.S.economy (figures in billions).
Table 7-2
  
-Refer to Table 7-2.Gross domestic product is equal to

Accepted Answer

A) $7,761. 
B) $11,004. 
C) $13,557. 
D) $14,055 
A) $7,761. 
B) $11,004. 
C) $13,557. 
D) $14,055

Question 19

Given the following figures,by approximately what percentage did Jeff's real income increase between 2004 and 2005?
Jeff's 2004 money income = $60,000
Jeff's 2005 money income = $72,000
2004 CPI = 120.0
2005 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 20

Suppose a country had $2.4 billion of net exports and bought $4.8 billion of goods and services from foreign countries.This country would have

Accepted Answer

A) $7.2 billion of exports and $4.8 billion of imports. 
B) $7.2 billion of imports and $4.8 billion of exports. 
C) $4.8 billion of exports and $2.4 billion of imports. 
D) $4.8 billion of imports and $2.4 billion of exports. 
A) $7.2 billion of exports and $4.8 billion of imports. 
B) $7.2 billion of imports and $4.8 billion of exports. 
C) $4.8 billion of exports and $2.4 billion of imports. 
D) $4.8 billion of imports and $2.4 billion of exports.

Exam 7: Ataking the Nations Economic Pulse

Which of the following would increase the GDP of the United States?

Which one of the following events will reduce GDP?

An important difference between the GDP deflator and the consumer price index is that

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

The price index in the first year is 110,in the second year is 100,and in the third year is 96.The economy experienced

The Consumer Price Index compares the

Jim,a U.S.citizen,gets a summer job working in Germany.His summer earnings

Which one of the following events will leave GDP unchanged?

Which of the following transactions would enter directly into the determination of GDP?

The 2008 box office receipts for the movie The Dark Knight were $997 million.By way of comparison,the 1975 receipts for Jaws were $470.6 million.If the Consumer Price Index was 53.8 in 1975 and 215.3 in 2008,which of the following is true?

If national income accountants fail to make an adequate adjustment for increases in the quality of goods and services over time,

The price of CD players increases dramatically,causing a 1 percent increase in the CPI.The price increase will most likely cause the GDP deflator to increase by

If a used car dealer purchases a used car for $3,000,refurbishes it,and sells it for $8,000,the

In contrast with nominal GDP,real GDP refers to nominal GDP

If a country has attracted a relatively large number of foreign workers and a large amount of foreign investment,

Use the table below to answer the following question(s). Table 7-12 -Refer to Table 7-12.Measured in terms of 2000 prices,real GDP in 2005 was

Use the table below to answer the following question(s). Table 7-14 -Refer to Table 7-14.What is this country's net exports?

Consider the following information for the U.S.economy (figures in billions). Table 7-2 -Refer to Table 7-2.Gross domestic product is equal to

Given the following figures,by approximately what percentage did Jeff's real income increase between 2004 and 2005? Jeff's 2004 money income = $60,000 Jeff's 2005 money income = $72,000 2004 CPI = 120.0 2005 CPI = 128.0

Suppose a country had $2.4 billion of net exports and bought $4.8 billion of goods and services from foreign countries.This country would have

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

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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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