Question 1

U.S.GDP includes the market value of rental housing,but not the market value of owner-occupied housing.

Accepted Answer

A) True 
 B)False

Question 2

National income differs from net national product in that it includes business subsidies and excludes

Accepted Answer

A)  profits of corporations. 
B)  indirect business taxes. 
C)  retained earnings of corporations. 
D)  depreciation. 
A)  profits of corporations. 
B)  indirect business taxes. 
C)  retained earnings of corporations. 
D)  depreciation.

Question 3

A transfer payment is

Accepted Answer

A)  a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location. 
B)  a payment that is automatically transferred from your bank account to pay a bill or some other obligation. 
C)  a form of government spending that is not made in exchange for a currently produced good or service. 
D)  the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure. 
A)  a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location. 
B)  a payment that is automatically transferred from your bank account to pay a bill or some other obligation. 
C)  a form of government spending that is not made in exchange for a currently produced good or service. 
D)  the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure.

Question 4

GDP adds together many different kinds of products into a single measure of the value of economic activity by using market prices.

Accepted Answer

A) True 
 B)False

Question 5

For an economy as a whole,income must equal expenditure because

Accepted Answer

A)  the number of firms is equal to the number of households in an economy. 
B)  international law requires that income equal expenditure. 
C)  every dollar of spending by some buyer is a dollar of income for some seller. 
D)  every dollar of saving by some consumer is a dollar of spending by some other consumer. 
A)  the number of firms is equal to the number of households in an economy. 
B)  international law requires that income equal expenditure. 
C)  every dollar of spending by some buyer is a dollar of income for some seller. 
D)  every dollar of saving by some consumer is a dollar of spending by some other consumer.

Question 6

Periods during which real GDP rises are called recessions.

Accepted Answer

A) True 
 B)False

Question 7

If consumption is $1800,GDP is $4300,government purchases are $1000,imports are $700,and investment is $1200,then exports are $300.

Accepted Answer

A) True 
 B)False

Question 8

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 2007,Batterland's real GDP was

Accepted Answer

A)  $540. 
B)  $700. 
C)  $810. 
D)  $1050. 
A)  $540. 
B)  $700. 
C)  $810. 
D)  $1050.

Question 9

Which of the following is not a correct statement about the growth of real GDP in the U.S.economy?

Accepted Answer

A)  Real GDP in 2004 was almost four times its 1965 level. 
B)  Growth was steady between 1965 and 2004. 
C)  Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did. 
D)  The output of goods and services produced grew on average about 3.2 percent per year between 1965 and 2004. 
A)  Real GDP in 2004 was almost four times its 1965 level. 
B)  Growth was steady between 1965 and 2004. 
C)  Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did. 
D)  The output of goods and services produced grew on average about 3.2 percent per year between 1965 and 2004.

Question 10

If a state made a previously-illegal activity,such as gambling or prostitution,legal,then,other things equal,GDP

Accepted Answer

A)  necessarily decreases. 
B)  necessarily increases. 
C)  doesn't change because both legal and illegal production are included in GDP. 
D)  doesn't change because these activities are never included in GDP. 
A)  necessarily decreases. 
B)  necessarily increases. 
C)  doesn't change because both legal and illegal production are included in GDP. 
D)  doesn't change because these activities are never included in GDP.

Question 11

Suppose the government passes a law eliminating holidays and,as a result,the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year).Based on this scenario,which of the following statements is correct?

Accepted Answer

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

Question 12

Between 1929 and 1933,NNP measured in current prices fell from $96 billion to $48 billion.Over the same period,the relevant price index fell from 100 to 75.
a.
What was the percentage decline in nominal NNP from 1929 to1933?
b.
What was the percentage decline in real NNP from 1929 to 1933? Show your work.

Accepted Answer

a.
NNP measured in current prices is nom

Question 13

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

Accepted Answer

A)  $1130 
B)  $1601 
C)  $1837 
D)  $2544 
A)  $1130 
B)  $1601 
C)  $1837 
D)  $2544

Question 14

In computing GDP,market prices are used to value final goods and services because

Accepted Answer

A)  market prices do not change much over time,so it is easy to make comparisons between years. 
B)  market prices reflect the values of goods and services. 
C)  if market prices are out of line with how people value goods,the government sets price ceilings and price floors. 
D)  None of the above is correct;market prices are not used in computing GDP. 
A)  market prices do not change much over time,so it is easy to make comparisons between years. 
B)  market prices reflect the values of goods and services. 
C)  if market prices are out of line with how people value goods,the government sets price ceilings and price floors. 
D)  None of the above is correct;market prices are not used in computing GDP.

Question 15

Darla,a Canadian citizen,works only in the United States.The value of the output she produces is

Accepted Answer

A)  included in both U.S.GDP and U.S.GNP. 
B)  included in U.S.GDP,but it is not included in U.S.GNP. 
C)  included in U.S.GNP,but it is not included in U.S.GDP. 
D)  included in neither U.S.GDP nor U.S.GNP. 
A)  included in both U.S.GDP and U.S.GNP. 
B)  included in U.S.GDP,but it is not included in U.S.GNP. 
C)  included in U.S.GNP,but it is not included in U.S.GDP. 
D)  included in neither U.S.GDP nor U.S.GNP.

Question 16

The value of goods added to a firm's inventory in a certain year is treated as

Accepted Answer

A)  consumption,since the goods will be sold to consumers in another period. 
B)  saving,since the goods are being saved until they are sold in another period. 
C)  investment,since GDP aims to measure the value of the economy's production that year. 
D)  spending on durable goods,since the goods could not be inventoried unless they were durable. 
A)  consumption,since the goods will be sold to consumers in another period. 
B)  saving,since the goods are being saved until they are sold in another period. 
C)  investment,since GDP aims to measure the value of the economy's production that year. 
D)  spending on durable goods,since the goods could not be inventoried unless they were durable.

Question 17

U.S.GDP excludes the production of most illegal goods.

Accepted Answer

A) True 
 B)False

Question 18

In the actual economy,households

Accepted Answer

A)  spend all of their income. 
B)  divide their income among spending,taxes,and saving. 
C)  buy all goods and services produced in the economy. 
D)  Both (a)and (c)are correct. 
A)  spend all of their income. 
B)  divide their income among spending,taxes,and saving. 
C)  buy all goods and services produced in the economy. 
D)  Both (a)and (c)are correct.

Question 19

Greg,a U.S.citizen,works only in Canada.The value of the output he produces is

Accepted Answer

A)  included in both U.S.GDP and U.S.GNP. 
B)  included in U.S.GDP,but it is not included in U.S.GNP. 
C)  included in U.S.GNP,but it is not included in U.S.GDP. 
D)  included in neither U.S.GDP nor U.S.GNP. 
A)  included in both U.S.GDP and U.S.GNP. 
B)  included in U.S.GDP,but it is not included in U.S.GNP. 
C)  included in U.S.GNP,but it is not included in U.S.GDP. 
D)  included in neither U.S.GDP nor U.S.GNP.

Question 20

Consumption consists of spending by households on goods and services,with the exception of

Accepted Answer

A)  purchase of intangible services. 
B)  purchases of durable goods. 
C)  purchases of new houses. 
D)  spending on education. 
A)  purchase of intangible services. 
B)  purchases of durable goods. 
C)  purchases of new houses. 
D)  spending on education.

Exam 23: Measuring a Nations Income

U.S.GDP includes the market value of rental housing,but not the market value of owner-occupied housing.

National income differs from net national product in that it includes business subsidies and excludes

A transfer payment is

GDP adds together many different kinds of products into a single measure of the value of economic activity by using market prices.

For an economy as a whole,income must equal expenditure because

Periods during which real GDP rises are called recessions.

If consumption is $1800,GDP is $4300,government purchases are $1000,imports are $700,and investment is $1200,then exports are $300.

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 2007,Batterland's real GDP was

Which of the following is not a correct statement about the growth of real GDP in the U.S.economy?

If a state made a previously-illegal activity,such as gambling or prostitution,legal,then,other things equal,GDP

Suppose the government passes a law eliminating holidays and,as a result,the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year).Based on this scenario,which of the following statements is correct?

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

In computing GDP,market prices are used to value final goods and services because

Darla,a Canadian citizen,works only in the United States.The value of the output she produces is

The value of goods added to a firm's inventory in a certain year is treated as

U.S.GDP excludes the production of most illegal goods.

In the actual economy,households

Greg,a U.S.citizen,works only in Canada.The value of the output he produces is

Consumption consists of spending by households on goods and services,with the exception of

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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