Question 1

Which of the following statements about nominal GDP and real GDP is correct?

Accepted Answer

A)  Nominal GDP is a better gauge of economic well-being than is real GDP. 
B)  Real GDP is a better gauge of economic well-being than is nominal GDP. 
C)  Real GDP and nominal GDP are equally good measures of economic well-being. 
D)  Nominal GDP reflects the economy's ability to satisfy people's needs and desires,but Real GDP does not. 
A)  Nominal GDP is a better gauge of economic well-being than is real GDP. 
B)  Real GDP is a better gauge of economic well-being than is nominal GDP. 
C)  Real GDP and nominal GDP are equally good measures of economic well-being. 
D)  Nominal GDP reflects the economy's ability to satisfy people's needs and desires,but Real GDP does not. B

Question 2

Which of the following statements about GDP is correct?

Accepted Answer

A)  Nominal GDP values production at current prices,whereas real GDP values production at constant prices. 
B)  Nominal GDP values production at constant prices,whereas real GDP values production at current prices. 
C)  Nominal GDP values production at market prices,whereas real GDP values production at the cost of the resources used in the production process. 
D)  Nominal GDP consistently underestimates the value of production,whereas real GDP consistently overestimates the value of production. 
A)  Nominal GDP values production at current prices,whereas real GDP values production at constant prices. 
B)  Nominal GDP values production at constant prices,whereas real GDP values production at current prices. 
C)  Nominal GDP values production at market prices,whereas real GDP values production at the cost of the resources used in the production process. 
D)  Nominal GDP consistently underestimates the value of production,whereas real GDP consistently overestimates the value of production. A

Question 3

GDP per person tells us the income and expenditure of the

Accepted Answer

A)  richest person in the economy. 
B)  poorest person in the economy. 
C)  average person in the economy. 
D)  entire economy. 
A)  richest person in the economy. 
B)  poorest person in the economy. 
C)  average person in the economy. 
D)  entire economy. C

Question 4

Which of the following is not an example of a nondurable good?

Accepted Answer

A)  a loaf of bread 
B)  a pair of jeans 
C)  a microwave 
D)  a pound of bacon 
A)  a loaf of bread 
B)  a pair of jeans 
C)  a microwave 
D)  a pound of bacon

Question 5

Changes in real GDP reflect only changes in the amounts being produced.

Accepted Answer

A) True 
 B)False

Question 6

Table 23-2
The table below contains data for the country of Wrexington for the year 2008.
  
-Refer to Table 23-2.What were Wrexington's exports in 2008?

Accepted Answer

A)  -$32 
B)  $32 
C)  $88 
D)  $120 
A)  -$32 
B)  $32 
C)  $88 
D)  $120

Question 7

In the United States in 2007,government purchases of goods and services were

Accepted Answer

A)  larger than consumption,but smaller than investment. 
B)  larger than investment,but smaller than consumption. 
C)  smaller than both consumption and investment. 
D)  larger than both consumption and investment. 
A)  larger than consumption,but smaller than investment. 
B)  larger than investment,but smaller than consumption. 
C)  smaller than both consumption and investment. 
D)  larger than both consumption and investment.

Question 8

In the economy of Wrexington in 2008,consumption was one-half of GDP,government purchases were $2000 more than investment,investment was one-sixth of GDP,and the value of imports exceeded the value of exports by $500.What was Wrexington's GDP in 2008?

Accepted Answer

A)  $3000 
B)  $4500 
C)  $9000 
D)  $15,000 
A)  $3000 
B)  $4500 
C)  $9000 
D)  $15,000

Question 9

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Accepted Answer

A)  longer life expectancy and a lower percentage of the population that is literate. 
B)  longer life expectancy and a higher percentage of the population that is literate. 
C)  very nearly the same life expectancy and a lower percentage of the population that is literate. 
D)  very nearly the same life expectancy and a higher percentage of the population that is literate. 
A)  longer life expectancy and a lower percentage of the population that is literate. 
B)  longer life expectancy and a higher percentage of the population that is literate. 
C)  very nearly the same life expectancy and a lower percentage of the population that is literate. 
D)  very nearly the same life expectancy and a higher percentage of the population that is literate.

Question 10

GDP does not directly measure those things that make life worthwhile,but it does measure our ability to obtain many of the inputs into a worthwhile life.

Accepted Answer

A) True 
 B)False

Question 11

Consider two items that might be included in GDP: (1)the estimated rental value of owner-occupied housing and (2)purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Accepted Answer

A)  Both item (1)and item (2)are included in the consumption component of GDP. 
B)  Item (1)is included in the consumption component of GDP,while item (2)is included in the investment component of GDP. 
C)  Item (1)is included in the investment component of GDP,while item (2)is included in the consumption component of GDP. 
D)  Only item (2)is included in GDP,and it is included in the investment component. 
A)  Both item (1)and item (2)are included in the consumption component of GDP. 
B)  Item (1)is included in the consumption component of GDP,while item (2)is included in the investment component of GDP. 
C)  Item (1)is included in the investment component of GDP,while item (2)is included in the consumption component of GDP. 
D)  Only item (2)is included in GDP,and it is included in the investment component.

Question 12

A steel company sells some steel to a bicycle company for $150.The bicycle company uses the steel to produce a bicycle,which it sells for $250.Taken together,these two transactions contribute

Accepted Answer

A)  $150 to GDP. 
B)  $250 to GDP. 
C)  between $250 and $400 to GDP,depending on the profit earned by the bicycle company when it sold the bicycle. 
D)  $400 to GDP. 
A)  $150 to GDP. 
B)  $250 to GDP. 
C)  between $250 and $400 to GDP,depending on the profit earned by the bicycle company when it sold the bicycle. 
D)  $400 to GDP.

Question 13

Net exports equal

Accepted Answer

A)  exports plus imports. 
B)  exports minus imports. 
C)  imports minus exports. 
D)  GDP minus imports. 
A)  exports plus imports. 
B)  exports minus imports. 
C)  imports minus exports. 
D)  GDP minus imports.

Question 14

In the economy of Wrexington in 2008,real GDP was $25 billion and the GDP deflator was 68.What was Wrexington's nominal GDP in 2008?

Accepted Answer

A)  $2.72 billion 
B)  $17 billion 
C)  $36.8 billion 
D)  $43 billion 
A)  $2.72 billion 
B)  $17 billion 
C)  $36.8 billion 
D)  $43 billion

Question 15

Which of the following newspaper headlines is more closely related to what microeconomists study than to what macroeconomists study?

Accepted Answer

A)  Unemployment rate rises from 5 percent to 5.5 percent. 
B)  Real GDP grows by 3.1 percent in the third quarter. 
C)  Retail sales at stores show large gains. 
D)  The price of oranges rises after an early frost. 
A)  Unemployment rate rises from 5 percent to 5.5 percent. 
B)  Real GDP grows by 3.1 percent in the third quarter. 
C)  Retail sales at stores show large gains. 
D)  The price of oranges rises after an early frost.

Question 16

The government of Wrexington,a country which has adopted American GDP accounting conventions,has calculated that the seasonally-adjusted market value of all final goods and services produced within Wrexington in quarter 1 was $5 billion.The government will report that GDP in quarter 1 was

Accepted Answer

A)  $1.25 billion at an annual rate. 
B)  $4 billion at an annual rate. 
C)  $5 billion at an annual rate. 
D)  $20 billion at an annual rate. 
A)  $1.25 billion at an annual rate. 
B)  $4 billion at an annual rate. 
C)  $5 billion at an annual rate. 
D)  $20 billion at an annual rate.

Question 17

Suppose that twenty-five years ago a country had nominal GDP of $1,000,a GDP deflator of 200,and a population of 100.Today it has nominal GDP of $3,000,a GDP deflator of 400,and population of 150.What happened to the real GDP per person?

Accepted Answer

A)  It more than doubled. 
B)  It increased,but it less than doubled. 
C)  It was unchanged. 
D)  It decreased. 
A)  It more than doubled. 
B)  It increased,but it less than doubled. 
C)  It was unchanged. 
D)  It decreased.

Question 18

Suppose an economy's production consists only of corn and soybeans.In 2005,20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel.In 2004,the price of corn was $2 per bushel and the price of soybeans was $1 per bushel.Using 2004 as the base year,it follows that,for 2005,

Accepted Answer

A)  nominal GDP is $50,real GDP is $100,and the GDP deflator is 50. 
B)  nominal GDP is $50,real GDP is $100,and the GDP deflator is 200. 
C)  nominal GDP is $100,real GDP is $50,and the GDP deflator is 50. 
D)  nominal GDP is $100,real GDP is $50,and the GDP deflator is 200. 
A)  nominal GDP is $50,real GDP is $100,and the GDP deflator is 50. 
B)  nominal GDP is $50,real GDP is $100,and the GDP deflator is 200. 
C)  nominal GDP is $100,real GDP is $50,and the GDP deflator is 50. 
D)  nominal GDP is $100,real GDP is $50,and the GDP deflator is 200.

Question 19

U.S.real GDP is substantially higher today than it was 60 years ago.What does this tell us,and what does it not tell us,about the well-being of U.S.residents?

Accepted Answer

Since this is in real terms,it tells us

Question 20

A country reported nominal GDP of $200 billion in 2008 and $180 billion in 2007.It also reported a GDP deflator of 125 in 2008 and 105 in 2007.Between 2007 and 2008,

Accepted Answer

A)  real output and the price level both rose. 
B)  real output rose and the price level fell. 
C)  real output fell and the price level rose. 
D)  real output and the price level both fell. 
A)  real output and the price level both rose. 
B)  real output rose and the price level fell. 
C)  real output fell and the price level rose. 
D)  real output and the price level both fell.

Exam 23: Measuring a Nations Income

Which of the following statements about nominal GDP and real GDP is correct?

Which of the following statements about GDP is correct?

GDP per person tells us the income and expenditure of the

Which of the following is not an example of a nondurable good?

Changes in real GDP reflect only changes in the amounts being produced.

Table 23-2 The table below contains data for the country of Wrexington for the year 2008. -Refer to Table 23-2.What were Wrexington's exports in 2008?

In the United States in 2007,government purchases of goods and services were

In the economy of Wrexington in 2008,consumption was one-half of GDP,government purchases were $2000 more than investment,investment was one-sixth of GDP,and the value of imports exceeded the value of exports by $500.What was Wrexington's GDP in 2008?

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

GDP does not directly measure those things that make life worthwhile,but it does measure our ability to obtain many of the inputs into a worthwhile life.

Consider two items that might be included in GDP: (1)the estimated rental value of owner-occupied housing and (2)purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

A steel company sells some steel to a bicycle company for $150.The bicycle company uses the steel to produce a bicycle,which it sells for $250.Taken together,these two transactions contribute

Net exports equal

In the economy of Wrexington in 2008,real GDP was $25 billion and the GDP deflator was 68.What was Wrexington's nominal GDP in 2008?

Which of the following newspaper headlines is more closely related to what microeconomists study than to what macroeconomists study?

The government of Wrexington,a country which has adopted American GDP accounting conventions,has calculated that the seasonally-adjusted market value of all final goods and services produced within Wrexington in quarter 1 was $5 billion.The government will report that GDP in quarter 1 was

Suppose that twenty-five years ago a country had nominal GDP of $1,000,a GDP deflator of 200,and a population of 100.Today it has nominal GDP of $3,000,a GDP deflator of 400,and population of 150.What happened to the real GDP per person?

U.S.real GDP is substantially higher today than it was 60 years ago.What does this tell us,and what does it not tell us,about the well-being of U.S.residents?

A country reported nominal GDP of $200 billion in 2008 and $180 billion in 2007.It also reported a GDP deflator of 125 in 2008 and 105 in 2007.Between 2007 and 2008,

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

Application: 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 of Microeconomics

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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