Question 1

The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the government eliminates all environmental regulations and,as a result,the production of goods and services increases,but there is considerably more pollution.Based on this scenario,which of the following statements is correct?

Accepted Answer

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

Question 3

In the economy of Wrexington in 2008,consumption was $3000,GDP was $5500,government purchases were $1000,imports were $2000,and investment was $1000.What were Wrexington's exports in 2008?

Accepted Answer

A)  -$1500 
B)  $500 
C)  $1500 
D)  $2500 
A)  -$1500 
B)  $500 
C)  $1500 
D)  $2500

Question 4

In the economy of Wrexington in 2008,consumption was $500,exports were $200,GDP was $1200,government purchases were $250,and investment was $300.What were Wrexington's imports in 2008?

Accepted Answer

A)  -$150 
B)  -$50 
C)  $50 
D)  $150 
A)  -$150 
B)  -$50 
C)  $50 
D)  $150

Question 5

GDP is defined as

Accepted Answer

A)  the market value of all goods and services produced within a country in a given period of time. 
B)  the market value of all goods and services produced by the citizens of a country,regardless of where they are living,in a given period of time. 
C)  the market value of all final goods and services produced within a country in a given period of time. 
D)  the market value of all final goods and services produced by the citizens of a country,regardless of where they are living,in a given period of time. 
A)  the market value of all goods and services produced within a country in a given period of time. 
B)  the market value of all goods and services produced by the citizens of a country,regardless of where they are living,in a given period of time. 
C)  the market value of all final goods and services produced within a country in a given period of time. 
D)  the market value of all final goods and services produced by the citizens of a country,regardless of where they are living,in a given period of time.

Question 6

U.S.GDP and U.S.GNP are related as follows:

Accepted Answer

A)  GNP = GDP + Value of exported goods - Value of imported goods. 
B)  GNP = GDP - Value of exported goods + Value of imported goods. 
C)  GNP = GDP + Income earned by foreigners in the U.S.- Income earned by U.S.citizens abroad. 
D)  GNP = GDP - Income earned by foreigners in the U.S.+ Income earned by U.S.citizens abroad. 
A)  GNP = GDP + Value of exported goods - Value of imported goods. 
B)  GNP = GDP - Value of exported goods + Value of imported goods. 
C)  GNP = GDP + Income earned by foreigners in the U.S.- Income earned by U.S.citizens abroad. 
D)  GNP = GDP - Income earned by foreigners in the U.S.+ Income earned by U.S.citizens abroad.

Question 7

A country reported nominal GDP of $100 billion in 2008 and $75 billion in 2007.It also reported a GDP deflator of 125 in 2008 and 120 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.

Question 8

If nominal GDP is $10,000 and real GDP is $8,000,then the GDP deflator is 125.

Accepted Answer

A) True 
 B)False

Question 9

In the economy of Wrexington in 2008,exports were $200,GDP was $2000,government purchases were $300,imports were $130,and investment was $400.What was Wrexington's consumption in 2008?

Accepted Answer

A)  $970 
B)  $1230 
C)  $1370 
D)  $1630 
A)  $970 
B)  $1230 
C)  $1370 
D)  $1630

Question 10

The investment component of GDP refers to financial investment in stocks and bonds.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

Accepted Answer

A)  spending on education 
B)  the purchase of stocks and bonds 
C)  the purchase of a new house 
D)  the purchase of durable goods such as stoves and washing machines 
A)  spending on education 
B)  the purchase of stocks and bonds 
C)  the purchase of a new house 
D)  the purchase of durable goods such as stoves and washing machines

Question 12

For an economy as a whole,income must exceed expenditure.

Accepted Answer

A) True 
 B)False

Question 13

GDP includes only the value of final goods because the value of intermediate goods is already included in the prices of the final goods.

Accepted Answer

A) True 
 B)False

Question 14

Table 23-1
The table below contains data for the country of Wrexington for the year 2006.
  
-Refer to Table 23-1.Disposable personal income for Wrexington in 2006 is

Accepted Answer

A)  $56. 
B)  $66. 
C)  $116. 
D)  $126. 
A)  $56. 
B)  $66. 
C)  $116. 
D)  $126.

Question 15

Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide and sells it to Chewy Chomp,Inc. ,which uses the rawhide to produce and sell dog chews.With each $2 of rawhide that it buys from Rolling Rawhide,Chewy Chomp,Inc.produces a dog chew and sells it for $5.Neither firm had any inventory at the beginning of 2007.During that year,Rolling Rawhide produced enough rawhide for 1000 dog chews.Chewy Chomp,Inc.bought 75% of that rawhide for $1500 and promised to buy the remaining 25% for $500 in 2008.Chewy Chomp,Inc.produced 750 dog chews during 2007 and sold each one during that year for $5.What was the economy's GDP for 2007?

Accepted Answer

A)  $3750 
B)  $4250 
C)  $5250 
D)  $5750 
A)  $3750 
B)  $4250 
C)  $5250 
D)  $5750

Question 16

Table 23-5
The table below contains data for the country of Batterland,which produces only waffles and pancakes.The base year is 2006.
  
-Refer to Table 23-5.From 2007 to 2008,Batterland's output grew

Accepted Answer

A)  14.3%. 
B)  31.4%. 
C)  48.1%. 
D)  155.6%. 
A)  14.3%. 
B)  31.4%. 
C)  48.1%. 
D)  155.6%.

Question 17

Economists use the term inflation to describe a situation in which the economy's overall production level is rising.

Accepted Answer

A) True 
 B)False

Question 18

Spots,Inc.produces ink and sells it to Write on Target,which makes pens.The ink produced by Spots,Inc.is called

Accepted Answer

A)  an inventory good. 
B)  a transitory good. 
C)  a preliminary good. 
D)  an intermediate good. 
A)  an inventory good. 
B)  a transitory good. 
C)  a preliminary good. 
D)  an intermediate good.

Question 19

In the economy of Wrexington in 2008,consumption was $5300,GDP was $8800,government purchases were $1800,imports were $500,and investment was $2000.What were Wrexington's exports in 2008?

Accepted Answer

A)  -$800 
B)  -$300 
C)  $200 
D)  $300 
A)  -$800 
B)  -$300 
C)  $200 
D)  $300

Question 20

The basic tools of supply and demand are as central to macroeconomic analysis as they are to microeconomic analysis.

Accepted Answer

A) True 
 B)False

Exam 23: Measuring a Nations Income

The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions.

Suppose the government eliminates all environmental regulations and,as a result,the production of goods and services increases,but there is considerably more pollution.Based on this scenario,which of the following statements is correct?

In the economy of Wrexington in 2008,consumption was $3000,GDP was $5500,government purchases were $1000,imports were $2000,and investment was $1000.What were Wrexington's exports in 2008?

In the economy of Wrexington in 2008,consumption was $500,exports were $200,GDP was $1200,government purchases were $250,and investment was $300.What were Wrexington's imports in 2008?

GDP is defined as

U.S.GDP and U.S.GNP are related as follows:

A country reported nominal GDP of $100 billion in 2008 and $75 billion in 2007.It also reported a GDP deflator of 125 in 2008 and 120 in 2007.Between 2007 and 2008,

If nominal GDP is $10,000 and real GDP is $8,000,then the GDP deflator is 125.

In the economy of Wrexington in 2008,exports were $200,GDP was $2000,government purchases were $300,imports were $130,and investment was $400.What was Wrexington's consumption in 2008?

The investment component of GDP refers to financial investment in stocks and bonds.

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

For an economy as a whole,income must exceed expenditure.

GDP includes only the value of final goods because the value of intermediate goods is already included in the prices of the final goods.

Table 23-1 The table below contains data for the country of Wrexington for the year 2006. -Refer to Table 23-1.Disposable personal income for Wrexington in 2006 is

Table 23-5 The table below contains data for the country of Batterland,which produces only waffles and pancakes.The base year is 2006. -Refer to Table 23-5.From 2007 to 2008,Batterland's output grew

Economists use the term inflation to describe a situation in which the economy's overall production level is rising.

Spots,Inc.produces ink and sells it to Write on Target,which makes pens.The ink produced by Spots,Inc.is called

In the economy of Wrexington in 2008,consumption was $5300,GDP was $8800,government purchases were $1800,imports were $500,and investment was $2000.What were Wrexington's exports in 2008?

The basic tools of supply and demand are as central to macroeconomic analysis as they are to microeconomic analysis.

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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