Question 1

A transfer payment is a payment made by

Accepted Answer

A)  consumers,but not in exchange for a tangible product. 
B)  firms,but not in exchange for capital equipment. 
C)  foreigners,but not in exchange for a domestically-produced good or service. 
D)  government,but not in exchange for a currently produced good or service. 
A)  consumers,but not in exchange for a tangible product. 
B)  firms,but not in exchange for capital equipment. 
C)  foreigners,but not in exchange for a domestically-produced good or service. 
D)  government,but not in exchange for a currently produced good or service.

Question 2

National income is defined as

Accepted Answer

A)  the total income of a nation's permanent residents minus losses from depreciation. 
B)  the income that households and noncorporate businesses receive. 
C)  the total income earned by a nation's permanent residents in the production of goods and services. 
D)  the income that households and noncorporate businesses have left after satisfying all their obligations to the government. 
A)  the total income of a nation's permanent residents minus losses from depreciation. 
B)  the income that households and noncorporate businesses receive. 
C)  the total income earned by a nation's permanent residents in the production of goods and services. 
D)  the income that households and noncorporate businesses have left after satisfying all their obligations to the government.

Question 3

Government purchases include spending on goods and services by

Accepted Answer

A)  federal governments,but not by state or local governments. 
B)  federal and state governments,but not by local governments. 
C)  federal,state,and local governments. 
D)  federal,state,and local governments,as well household spending by employees of those governments. 
A)  federal governments,but not by state or local governments. 
B)  federal and state governments,but not by local governments. 
C)  federal,state,and local governments. 
D)  federal,state,and local governments,as well household spending by employees of those governments.

Question 4

An American company operates a fast food restaurant in Romania.Which of the following statements is accurate?

Accepted Answer

A)  The value of the goods and services produced by the restaurant is included in both Romanian GDP and U.S.GDP. 
B)  One-half of the value of the goods and services produced by the restaurant is included in Romanian GDP,and the other one-half of the value is included in U.S.GDP. 
C)  The value of the goods and services produced by the restaurant is included in Romanian GDP,but not in U.S.GDP. 
D)  The value of the goods and services produced by the restaurant is included in U.S.GDP,but not in Romanian GDP. 
A)  The value of the goods and services produced by the restaurant is included in both Romanian GDP and U.S.GDP. 
B)  One-half of the value of the goods and services produced by the restaurant is included in Romanian GDP,and the other one-half of the value is included in U.S.GDP. 
C)  The value of the goods and services produced by the restaurant is included in Romanian GDP,but not in U.S.GDP. 
D)  The value of the goods and services produced by the restaurant is included in U.S.GDP,but not in Romanian GDP.

Question 5

If total spending rises from one year to the next,then

Accepted Answer

A)  the economy must be producing a larger output of goods and services. 
B)  goods and services must be selling at higher prices. 
C)  either the economy must be producing a larger output of goods and services,or goods and services must be selling at higher prices,or both. 
D)  employment or productivity must be rising. 
A)  the economy must be producing a larger output of goods and services. 
B)  goods and services must be selling at higher prices. 
C)  either the economy must be producing a larger output of goods and services,or goods and services must be selling at higher prices,or both. 
D)  employment or productivity must be rising.

Question 6

Over time,people have come to rely more on market-produced goods and less on goods that they produce for themselves.For example,busy people with high incomes,rather than cleaning their own houses,hire people to clean their houses.By itself,this change has

Accepted Answer

A)  caused measured GDP to fall. 
B)  not caused any change in measured GDP. 
C)  caused measured GDP to rise. 
D)  probably changed measured GDP,but in an uncertain direction;the direction of the change depends on the difference in the quality of the cleaning that has resulted. 
A)  caused measured GDP to fall. 
B)  not caused any change in measured GDP. 
C)  caused measured GDP to rise. 
D)  probably changed measured GDP,but in an uncertain direction;the direction of the change depends on the difference in the quality of the cleaning that has resulted.

Question 7

Which of the following is not correct?

Accepted Answer

A)  GNP equals net national product plus losses from depreciation. 
B)  For most countries,including the United States,GDP and GNP are nearly the same. 
C)  GDP and GNP typically move in opposite directions. 
D)  Personal income equals disposable personal income plus personal taxes plus certain nontax payments. 
A)  GNP equals net national product plus losses from depreciation. 
B)  For most countries,including the United States,GDP and GNP are nearly the same. 
C)  GDP and GNP typically move in opposite directions. 
D)  Personal income equals disposable personal income plus personal taxes plus certain nontax payments.

Question 8

Table 23-4
The table below contains data for the country of Dachsland,which produces only pretzels and books.The base year is 2005.
  
-Refer to Table 23-4.In 2006,Dachsland's

Accepted Answer

A)  nominal GDP was $585,real GDP was $660,and the GDP deflator was 88.6. 
B)  nominal GDP was $585,real GDP was $670,and the GDP deflator was 87.3. 
C)  nominal GDP was $760,real GDP was $660,and the GDP deflator was 115.2. 
D)  nominal GDP was $760,real GDP was $670,and the GDP deflator was 113.4. 
A)  nominal GDP was $585,real GDP was $660,and the GDP deflator was 88.6. 
B)  nominal GDP was $585,real GDP was $670,and the GDP deflator was 87.3. 
C)  nominal GDP was $760,real GDP was $660,and the GDP deflator was 115.2. 
D)  nominal GDP was $760,real GDP was $670,and the GDP deflator was 113.4.

Question 9

GDP does not make adjustments for leisure time,environmental quality,or volunteer work.

Accepted Answer

A) True 
 B)False

Question 10

One bag of flour is sold for $1.00 to a bakery,which uses the flour to bake bread that is sold for $3.00 to consumers.A second bag of flour is sold to a consumer in a grocery store for $2.00.Taking these three transactions into account,what is the effect on GDP?

Accepted Answer

A)  GDP increases by $2.00. 
B)  GDP increases by $3.00. 
C)  GDP increases by $5.00. 
D)  GDP increases by $6.00. 
A)  GDP increases by $2.00. 
B)  GDP increases by $3.00. 
C)  GDP increases by $5.00. 
D)  GDP increases by $6.00.

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 GDP deflator was

Accepted Answer

A)  1 
B)  100 
C)  138.5. 
D)  540. 
A)  1 
B)  100 
C)  138.5. 
D)  540.

Question 12

If Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself,then GDP

Accepted Answer

A)  necessarily rises. 
B)  necessarily falls. 
C)  will be unaffected because the same service is produced in either case. 
D)  will be unaffected because car maintenance is not included in GDP. 
A)  necessarily rises. 
B)  necessarily falls. 
C)  will be unaffected because the same service is produced in either case. 
D)  will be unaffected because car maintenance is not included in GDP.

Question 13

In the economy of Wrexington in 2008,nominal GDP was $10 trillion and real GDP was $4 trillion.What was Wrexington's GDP deflator in 2008?

Accepted Answer

A)  25 
B)  40 
C)  250 
D)  400 
A)  25 
B)  40 
C)  250 
D)  400

Question 14

Table 23-4
The table below contains data for the country of Dachsland,which produces only pretzels and books.The base year is 2005.
  
-Refer to Table 23-4.Dachsland's inflation rate from 2006 to 2007 was

Accepted Answer

A)  16.4%. 
B)  24.3%. 
C)  41.0%. 
D)  44.7%. 
A)  16.4%. 
B)  24.3%. 
C)  41.0%. 
D)  44.7%.

Question 15

U.S.GDP was almost $14 billion in 2007.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not included in GDP?

Accepted Answer

A)  carrots grown in your garden and eaten by your family 
B)  carrots purchased at a farmer's market and eaten by your family 
C)  carrots purchased at a grocery store and eaten by your family 
D)  More than one of the above is not included in GDP. 
A)  carrots grown in your garden and eaten by your family 
B)  carrots purchased at a farmer's market and eaten by your family 
C)  carrots purchased at a grocery store and eaten by your family 
D)  More than one of the above is not included in GDP.

Question 17

Identify the immediate effect of each of the following events on U.S.GDP and its components.
a.
James receives a Social Security check.
b.
John buys an Italian sports car.
c.
Henry buys domestically produced tools for his construction company.

Accepted Answer

a.
Since this is a transfer payment,ther

Question 18

The information below was reported by the World Bank.On the basis of this information,which list below contains the correct ordering of GDP per person from highest to lowest?

Accepted Answer

A)  Kenya,Tanzania,Zimbabwe 
B)  Tanzania,Kenya,Zimbabwe 
C)  Zimbabwe,Kenya,Tanzania 
D)  Zimbabwe,Tanzania,Kenya 
A)  Kenya,Tanzania,Zimbabwe 
B)  Tanzania,Kenya,Zimbabwe 
C)  Zimbabwe,Kenya,Tanzania 
D)  Zimbabwe,Tanzania,Kenya

Question 19

A good is produced by a firm in 2007,added to the firm's inventory in 2007,and sold to a household in 2008.It follows that

Accepted Answer

A)  the value of the good is added to the investment category of 2007 GDP and added to the investment category of 2008 GDP. 
B)  the value of the good is added to the investment category of 2007 GDP and subtracted from the investment category of 2008 GDP. 
C)  the value of the good is subtracted from the investment category of 2007 GDP and added to the investment category of 2008 GDP. 
D)  the value of the good is subtracted from the investment category of 2007 GDP and subtracted from the investment category of 2008 GDP. 
A)  the value of the good is added to the investment category of 2007 GDP and added to the investment category of 2008 GDP. 
B)  the value of the good is added to the investment category of 2007 GDP and subtracted from the investment category of 2008 GDP. 
C)  the value of the good is subtracted from the investment category of 2007 GDP and added to the investment category of 2008 GDP. 
D)  the value of the good is subtracted from the investment category of 2007 GDP and subtracted from the investment category of 2008 GDP.

Question 20

In 2007,U.S.GDP was almost

Accepted Answer

A)  $10 trillion. 
B)  $14 trillion. 
C)  $46 trillion. 
D)  $302 trillion. 
A)  $10 trillion. 
B)  $14 trillion. 
C)  $46 trillion. 
D)  $302 trillion.

Exam 23: Measuring a Nations Income

A transfer payment is a payment made by

National income is defined as

Government purchases include spending on goods and services by

An American company operates a fast food restaurant in Romania.Which of the following statements is accurate?

If total spending rises from one year to the next,then

Over time,people have come to rely more on market-produced goods and less on goods that they produce for themselves.For example,busy people with high incomes,rather than cleaning their own houses,hire people to clean their houses.By itself,this change has

Which of the following is not correct?

Table 23-4 The table below contains data for the country of Dachsland,which produces only pretzels and books.The base year is 2005. -Refer to Table 23-4.In 2006,Dachsland's

GDP does not make adjustments for leisure time,environmental quality,or volunteer work.

One bag of flour is sold for $1.00 to a bakery,which uses the flour to bake bread that is sold for $3.00 to consumers.A second bag of flour is sold to a consumer in a grocery store for $2.00.Taking these three transactions into account,what is the effect on GDP?

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 GDP deflator was

If Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself,then GDP

In the economy of Wrexington in 2008,nominal GDP was $10 trillion and real GDP was $4 trillion.What was Wrexington's GDP deflator in 2008?

Table 23-4 The table below contains data for the country of Dachsland,which produces only pretzels and books.The base year is 2005. -Refer to Table 23-4.Dachsland's inflation rate from 2006 to 2007 was

U.S.GDP was almost $14 billion in 2007.

Which of the following is not included in GDP?

Identify the immediate effect of each of the following events on U.S.GDP and its components. a. James receives a Social Security check. b. John buys an Italian sports car. c. Henry buys domestically produced tools for his construction company.

The information below was reported by the World Bank.On the basis of this information,which list below contains the correct ordering of GDP per person from highest to lowest?

A good is produced by a firm in 2007,added to the firm's inventory in 2007,and sold to a household in 2008.It follows that

In 2007,U.S.GDP was almost

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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