Question 1

Gross domestic product is defined as

Accepted Answer

A)  the quantity of all final goods and services demanded within a country in a given period of time. 
B)  the quantity of all final goods and services supplied within a country 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)  Both (a)and (b)are correct. 
A)  the quantity of all final goods and services demanded within a country in a given period of time. 
B)  the quantity of all final goods and services supplied within a country 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)  Both (a)and (b)are correct.

Question 2

A Minnesota farmer buys a new tractor made in Iowa by a German company.As a result,

Accepted Answer

A)  U.S.investment and GDP increase,but German GDP is unaffected. 
B)  U.S.investment and German GDP increase,but U.S.GDP is unaffected. 
C)  U.S.investment,U.S.GDP,and German GDP are unaffected,because tractors are intermediate goods. 
D)  U.S.investment,U.S.GDP,and German GDP all increase. 
A)  U.S.investment and GDP increase,but German GDP is unaffected. 
B)  U.S.investment and German GDP increase,but U.S.GDP is unaffected. 
C)  U.S.investment,U.S.GDP,and German GDP are unaffected,because tractors are intermediate goods. 
D)  U.S.investment,U.S.GDP,and German GDP all increase.

Question 3

If someone in the United States buys a surfboard produced in Australia,then that purchase is included in both the consumption component of U.S.GDP and the net exports component of U.S.GDP.

Accepted Answer

A) True 
 B)False

Question 4

Changes in the GDP deflator reflect only changes in the prices of goods and services.

Accepted Answer

A) True 
 B)False

Question 5

If the value of an economy's imports exceeds the value of that economy's exports,then net exports is a negative number.

Accepted Answer

A) True 
 B)False

Question 6

In the economy of Wrexington in 2008,consumption was $4000,exports were $800,GDP was $9500,imports were $200,and investment was $1000.What were Wrexington's government purchases in 2008?

Accepted Answer

A)  $3700 
B)  $3900 
C)  $5100 
D)  $5500 
A)  $3700 
B)  $3900 
C)  $5100 
D)  $5500

Question 7

Suppose there are only two firms in an economy: Cowhide,Inc.produces leather and sells it to Couches,Inc. ,which produces and sells leather furniture.With each $1,000 of leather that it buys from Cowhide,Inc. ,Couches,Inc.produces a couch and sells it for $3,000.Neither firm had any inventory at the beginning of 2006.During that year,Cowhide produced enough leather for 20 couches.Couches,Inc.bought 80% of that leather for $16,000 and promised to buy the remaining 20% for $4,000 in 2007.Couches,Inc.produced 16 couches during 2006 and sold each one during that year for $3,000.What was the economy's GDP for the 2006?

Accepted Answer

A)  $48,000 
B)  $52,000 
C)  $64,000 
D)  $68,000 
A)  $48,000 
B)  $52,000 
C)  $64,000 
D)  $68,000

Question 8

Over the last few decades,Americans have chosen to cook less at home and eat more at restaurants.This change in behavior,by itself,has

Accepted Answer

A)  reduced measured GDP. 
B)  not affected measured GDP. 
C)  increased measured GDP only to the extent that the value of the restaurant meals exceeded the value of meals previously cooked at home. 
D)  increased measured GDP by the full value of the restaurant meals. 
A)  reduced measured GDP. 
B)  not affected measured GDP. 
C)  increased measured GDP only to the extent that the value of the restaurant meals exceeded the value of meals previously cooked at home. 
D)  increased measured GDP by the full value of the restaurant meals.

Question 9

Which of the following examples of household spending is categorized as investment rather than consumption?

Accepted Answer

A)  expenditures on durable goods such as automobiles and refrigerators 
B)  expenditures on intangibles items such as medical care 
C)  expenditures on new housing 
D)  All of the above are correct. 
A)  expenditures on durable goods such as automobiles and refrigerators 
B)  expenditures on intangibles items such as medical care 
C)  expenditures on new housing 
D)  All of the above are correct.

Question 10

Which of the following is not included in U.S.GDP?

Accepted Answer

A)  unpaid cleaning and maintenance of houses 
B)  services such as those provided by lawyers and hair stylists 
C)  the estimated rental value of owner-occupied housing 
D)  production of foreign citizens living in the United States 
A)  unpaid cleaning and maintenance of houses 
B)  services such as those provided by lawyers and hair stylists 
C)  the estimated rental value of owner-occupied housing 
D)  production of foreign citizens living in the United States

Question 11

Table 23-1
The table below contains data for the country of Wrexington for the year 2006.
  
-Refer to Table 23-1.Net national product for Wrexington in 2006 is

Accepted Answer

A)  $96. 
B)  $104. 
C)  $106. 
D)  $114. 
A)  $96. 
B)  $104. 
C)  $106. 
D)  $114.

Question 12

In the economy of Wrexington in 2008,nominal GDP was $18 billion and the GDP deflator was 120.What was Wrexington's real GDP in 2008?

Accepted Answer

A)  $6.7 billion 
B)  $15 billion 
C)  $21.6 billion 
D)  $38 billion 
A)  $6.7 billion 
B)  $15 billion 
C)  $21.6 billion 
D)  $38 billion

Question 13

Which of the following statistic is usually regarded as the best single measure of a society's economic well-being?

Accepted Answer

A)  the unemployment rate 
B)  the inflation rate 
C)  gross domestic product 
D)  the trade deficit 
A)  the unemployment rate 
B)  the inflation rate 
C)  gross domestic product 
D)  the trade deficit

Question 14

An Italian company operates a pasta restaurant in the U.S.The value of the output produced by this pasta restaurant is included in

Accepted Answer

A)  U.S.GNP and Italian GNP. 
B)  U.S.GNP and Italian GDP. 
C)  U.S.GDP and Italian GNP. 
D)  U.S.GDP and Italian GDP. 
A)  U.S.GNP and Italian GNP. 
B)  U.S.GNP and Italian GDP. 
C)  U.S.GDP and Italian GNP. 
D)  U.S.GDP and Italian GDP.

Question 15

In the actual economy,goods and services are purchased by

Accepted Answer

A)  households,but not firms or the government. 
B)  households and firms,but not the government. 
C)  households and the government,but not firms. 
D)  households,firms,and the government. 
A)  households,but not firms or the government. 
B)  households and firms,but not the government. 
C)  households and the government,but not firms. 
D)  households,firms,and the government.

Question 16

A wind farm in Iowa buys a large turbine generator from a Swedish-owned factory located in Connecticut that uses workers who live in Connecticut.As a result,

Accepted Answer

A)  U.S.investment,GDP,and GNP all increase by the same amount. 
B)  U.S.investment increases,but GDP and GNP are unaffected by the purchase. 
C)  U.S.investment and GDP increase by the same amount,but U.S.GNP increases by a smaller amount. 
D)  U.S.investment and GNP increase by the same amount,but U.S.GDP increases by a smaller amount. 
A)  U.S.investment,GDP,and GNP all increase by the same amount. 
B)  U.S.investment increases,but GDP and GNP are unaffected by the purchase. 
C)  U.S.investment and GDP increase by the same amount,but U.S.GNP increases by a smaller amount. 
D)  U.S.investment and GNP increase by the same amount,but U.S.GDP increases by a smaller amount.

Question 17

If a U.S.citizen buys a dress made in Nepal by a Nepalese firm,then

Accepted Answer

A)  U.S.consumption increases,U.S.net exports decrease,and U.S.GDP decreases. 
B)  U.S.consumption increases,U.S.net exports decrease,and U.S.GDP is unaffected. 
C)  U.S.consumption decreases,U.S.net exports increase,and U.S.GDP increases. 
D)  U.S.consumption decreases,U.S.net exports increase,and U.S.GDP is unaffected. 
A)  U.S.consumption increases,U.S.net exports decrease,and U.S.GDP decreases. 
B)  U.S.consumption increases,U.S.net exports decrease,and U.S.GDP is unaffected. 
C)  U.S.consumption decreases,U.S.net exports increase,and U.S.GDP increases. 
D)  U.S.consumption decreases,U.S.net exports increase,and U.S.GDP is unaffected.

Question 18

Most goods whose purchases are included in the investment component of GDP are used to produce other goods.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is included in GDP?

Accepted Answer

A)  medical marijuana purchased from a government-run pharmacy by a glaucoma patient 
B)  recreational marijuana purchased from a drug dealer by a college student 
C)  recreational marijuana produced and consumed by a man in his attic 
D)  All of the above are included in GDP. 
A)  medical marijuana purchased from a government-run pharmacy by a glaucoma patient 
B)  recreational marijuana purchased from a drug dealer by a college student 
C)  recreational marijuana produced and consumed by a man in his attic 
D)  All of the above are included in GDP.

Question 20

An Iowan receives a Social Security check for $500,which he uses to purchase a $480 television made in Japan by a Japanese firm and a $20 dinner at a local restaurant.As a result,U.S.GDP

Accepted Answer

A)  does not change. 
B)  increases by $20. 
C)  increases by $520. 
D)  increases by $1000. 
A)  does not change. 
B)  increases by $20. 
C)  increases by $520. 
D)  increases by $1000.

Exam 23: Measuring a Nations Income

Gross domestic product is defined as

A Minnesota farmer buys a new tractor made in Iowa by a German company.As a result,

If someone in the United States buys a surfboard produced in Australia,then that purchase is included in both the consumption component of U.S.GDP and the net exports component of U.S.GDP.

Changes in the GDP deflator reflect only changes in the prices of goods and services.

If the value of an economy's imports exceeds the value of that economy's exports,then net exports is a negative number.

In the economy of Wrexington in 2008,consumption was $4000,exports were $800,GDP was $9500,imports were $200,and investment was $1000.What were Wrexington's government purchases in 2008?

Over the last few decades,Americans have chosen to cook less at home and eat more at restaurants.This change in behavior,by itself,has

Which of the following examples of household spending is categorized as investment rather than consumption?

Which of the following is not included in U.S.GDP?

Table 23-1 The table below contains data for the country of Wrexington for the year 2006. -Refer to Table 23-1.Net national product for Wrexington in 2006 is

In the economy of Wrexington in 2008,nominal GDP was $18 billion and the GDP deflator was 120.What was Wrexington's real GDP in 2008?

Which of the following statistic is usually regarded as the best single measure of a society's economic well-being?

An Italian company operates a pasta restaurant in the U.S.The value of the output produced by this pasta restaurant is included in

In the actual economy,goods and services are purchased by

A wind farm in Iowa buys a large turbine generator from a Swedish-owned factory located in Connecticut that uses workers who live in Connecticut.As a result,

If a U.S.citizen buys a dress made in Nepal by a Nepalese firm,then

Most goods whose purchases are included in the investment component of GDP are used to produce other goods.

Which of the following is included in GDP?

An Iowan receives a Social Security check for $500,which he uses to purchase a $480 television made in Japan by a Japanese firm and a $20 dinner at a local restaurant.As a result,U.S.GDP

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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