Question 1

Table 23-3
The table below contains data for the country of Wrexington for the year 2008.
  
-Refer to Table 23-3.What was Wrexington's GDP in 2008?

Accepted Answer

A)  $4623 
B)  $5731 
C)  $6037 
D)  $6839 
A)  $4623 
B)  $5731 
C)  $6037 
D)  $6839

Question 2

Which of the following is correct?

Accepted Answer

A)  Nominal GDP measures base-year production using base-year prices,whereas real GDP measures current production using current prices. 
B)  Nominal GDP measures current production using base-year prices,whereas real GDP measures current production using current prices. 
C)  Nominal GDP measures current production using current prices,whereas real GDP measures base-year production using base-year prices. 
D)  Nominal GDP measures current production using current prices,whereas real GDP measures current production using base-year prices. 
A)  Nominal GDP measures base-year production using base-year prices,whereas real GDP measures current production using current prices. 
B)  Nominal GDP measures current production using base-year prices,whereas real GDP measures current production using current prices. 
C)  Nominal GDP measures current production using current prices,whereas real GDP measures base-year production using base-year prices. 
D)  Nominal GDP measures current production using current prices,whereas real GDP measures current production using base-year prices.

Question 3

Transactions involving items produced in the past,such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale,are

Accepted Answer

A)  included in current GDP because GDP measures the value of all goods and services sold in the current year. 
B)  included in current GDP but valued at their original prices. 
C)  not included in current GDP because GDP only measures the value of goods and services produced in the current year. 
D)  not included in current GDP because these items have no current value. 
A)  included in current GDP because GDP measures the value of all goods and services sold in the current year. 
B)  included in current GDP but valued at their original prices. 
C)  not included in current GDP because GDP only measures the value of goods and services produced in the current year. 
D)  not included in current GDP because these items have no current value.

Question 4

Real GDP is the yearly production of final goods and services valued at

Accepted Answer

A)  current prices. 
B)  constant prices. 
C)  expected future prices. 
D)  the ratio of current prices to constant prices. 
A)  current prices. 
B)  constant prices. 
C)  expected future prices. 
D)  the ratio of current prices to constant prices.

Question 5

If nominal GDP is $8 trillion and real GDP is $10 trillion,then the GDP deflator is

Accepted Answer

A)  80,and this indicates that the price level has decreased by 20 percent since the base year. 
B)  80,and this indicates that the price level has increased by 80 percent since the base year. 
C)  125,and this indicates that the price level has increased by 25 percent since the base year. 
D)  125,and this indicates that the price level has increased by 125 percent since the base year. 
A)  80,and this indicates that the price level has decreased by 20 percent since the base year. 
B)  80,and this indicates that the price level has increased by 80 percent since the base year. 
C)  125,and this indicates that the price level has increased by 25 percent since the base year. 
D)  125,and this indicates that the price level has increased by 125 percent since the base year.

Question 6

If consumption is $4000,exports are $300,government purchases are $1000,imports are $400,and investment is $800,then GDP is $5700.

Accepted Answer

A) True 
 B)False

Question 7

Quality Motors is a Japanese-owned company that produces automobiles;all of its automobiles are produced in American plants.In 2007,Quality Motors produced $20 million worth of automobiles,with $12 million in sales to Americans,$6 million in sales to Canadians,and $2 million worth of automobiles added to Quality Motors' inventory.The transactions just described contribute how much to U.S.GDP for 2007?

Accepted Answer

A)  $12 million 
B)  $14 million 
C)  $20 million 
D)  $34 million 
A)  $12 million 
B)  $14 million 
C)  $20 million 
D)  $34 million

Question 8

If real GDP is higher in one country than in another,then we can be sure that the standard of living is higher in the country with the higher real GDP.

Accepted Answer

A) True 
 B)False

Question 9

Since it is counted as investment,why doesn't the purchase of earthmoving equipment from China by a U.S.corporation increase U.S.GDP?

Accepted Answer

The purchase of foreign equipment is cou

Question 10

In the United States in 2007,purchases of capital equipment,inventories,and structures represented approximately

Accepted Answer

A)  5 percent of GDP. 
B)  15 percent of GDP. 
C)  19 percent of GDP. 
D)  70 percent of GDP. 
A)  5 percent of GDP. 
B)  15 percent of GDP. 
C)  19 percent of GDP. 
D)  70 percent of GDP.

Question 11

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.In 2006,Batterland's real GDP was

Accepted Answer

A)  $100. 
B)  $390. 
C)  $400. 
D)  $540. 
A)  $100. 
B)  $390. 
C)  $400. 
D)  $540.

Question 12

Real GDP per person tells us the income and expenditure of the average person in the economy.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a question that macroeconomists address?

Accepted Answer

A)  Why is average income high in some countries while it is low in others? 
B)  Why does the price of oil rise when war erupts in the Middle East? 
C)  Why do production and employment expand in some years and contract in others? 
D)  Why do prices rise rapidly in some periods of time while they are more stable in other periods? 
A)  Why is average income high in some countries while it is low in others? 
B)  Why does the price of oil rise when war erupts in the Middle East? 
C)  Why do production and employment expand in some years and contract in others? 
D)  Why do prices rise rapidly in some periods of time while they are more stable in other periods?

Question 14

In the economy of Wrexington in 2008,consumption was $3000,exports were $200,GDP was $8000,government purchases were $1000,and imports were $600.What was Wrexington's investment in 2008?

Accepted Answer

A)  $3200 
B)  $3600 
C)  $3800 
D)  $4400 
A)  $3200 
B)  $3600 
C)  $3800 
D)  $4400

Question 15

During the third quarter of 2006,a firm produces consumer goods and adds some of those goods to its inventory.During the fourth quarter of 2006,the firm sells the goods at a retail outlet,with the result that the value of its inventory at the end of the fourth quarter is smaller than the value of its inventory at the end of the third quarter.These actions affect which component(s)of fourth-quarter GDP?

Accepted Answer

A)  These actions affect only consumption,and they affect consumption positively. 
B)  These actions affect only investment,and they affect investment positively. 
C)  These actions affect consumption positively and investment negatively. 
D)  These actions affect both consumption and investment positively. 
A)  These actions affect only consumption,and they affect consumption positively. 
B)  These actions affect only investment,and they affect investment positively. 
C)  These actions affect consumption positively and investment negatively. 
D)  These actions affect both consumption and investment positively.

Question 16

If the GDP deflator in 2006 was 160 and the GDP deflator in 2007 was 180,then the inflation rate in 2007 was 12.5%.

Accepted Answer

A) True 
 B)False

Question 17

In 2007,U.S.net exports were

Accepted Answer

A)  positive and about 2 percent the size of GDP. 
B)  positive and about 5 percent the size of GDP. 
C)  negative and about 2 percent the size of GDP. 
D)  negative and about 5 percent the size of GDP. 
A)  positive and about 2 percent the size of GDP. 
B)  positive and about 5 percent the size of GDP. 
C)  negative and about 2 percent the size of GDP. 
D)  negative and about 5 percent the size of GDP.

Question 18

The term real GDP refers to a country's actual GDP as opposed to its estimated GDP.

Accepted Answer

A) True 
 B)False

Question 19

If a U.S.citizen buys a television made in Korea by a Korean firm,then

Accepted Answer

A)  U.S.net exports decrease and U.S.GDP decreases. 
B)  U.S.net exports are unaffected and U.S.GDP decreases. 
C)  U.S.net exports are unaffected and U.S.GDP is unaffected. 
D)  U.S.net exports decrease and U.S.GDP is unaffected. 
A)  U.S.net exports decrease and U.S.GDP decreases. 
B)  U.S.net exports are unaffected and U.S.GDP decreases. 
C)  U.S.net exports are unaffected and U.S.GDP is unaffected. 
D)  U.S.net exports decrease and U.S.GDP is unaffected.

Question 20

Unlike national income,personal income

Accepted Answer

A)  includes retained earnings,corporate income taxes and social insurance contributions,and excludes interest and transfer payments received by households from government. 
B)  excludes retained earnings,corporate income taxes,social insurance contributions,and interest and transfer payments received by households from government. 
C)  excludes retained earnings,corporate income taxes and social insurance contributions,and includes interest and transfer payments received by households from government. 
D)  includes retained earnings,corporate income taxes,social insurance contributions,and interest and transfer payments received by households from government. 
A)  includes retained earnings,corporate income taxes and social insurance contributions,and excludes interest and transfer payments received by households from government. 
B)  excludes retained earnings,corporate income taxes,social insurance contributions,and interest and transfer payments received by households from government. 
C)  excludes retained earnings,corporate income taxes and social insurance contributions,and includes interest and transfer payments received by households from government. 
D)  includes retained earnings,corporate income taxes,social insurance contributions,and interest and transfer payments received by households from government.

Exam 23: Measuring a Nations Income

Table 23-3 The table below contains data for the country of Wrexington for the year 2008. -Refer to Table 23-3.What was Wrexington's GDP in 2008?

Which of the following is correct?

Transactions involving items produced in the past,such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale,are

Real GDP is the yearly production of final goods and services valued at

If nominal GDP is $8 trillion and real GDP is $10 trillion,then the GDP deflator is

If consumption is $4000,exports are $300,government purchases are $1000,imports are $400,and investment is $800,then GDP is $5700.

If real GDP is higher in one country than in another,then we can be sure that the standard of living is higher in the country with the higher real GDP.

Since it is counted as investment,why doesn't the purchase of earthmoving equipment from China by a U.S.corporation increase U.S.GDP?

In the United States in 2007,purchases of capital equipment,inventories,and structures represented approximately

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.In 2006,Batterland's real GDP was

Real GDP per person tells us the income and expenditure of the average person in the economy.

Which of the following is not a question that macroeconomists address?

In the economy of Wrexington in 2008,consumption was $3000,exports were $200,GDP was $8000,government purchases were $1000,and imports were $600.What was Wrexington's investment in 2008?

If the GDP deflator in 2006 was 160 and the GDP deflator in 2007 was 180,then the inflation rate in 2007 was 12.5%.

In 2007,U.S.net exports were

The term real GDP refers to a country's actual GDP as opposed to its estimated GDP.

If a U.S.citizen buys a television made in Korea by a Korean firm,then

Unlike national income,personal income

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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