Question 1

Macroeconomists study

Accepted Answer

A)  the decisions of households and firms. 
B)  the interaction between households and firms. 
C)  economy-wide phenomena. 
D)  regulations on firms and unions. 
A)  the decisions of households and firms. 
B)  the interaction between households and firms. 
C)  economy-wide phenomena. 
D)  regulations on firms and unions.

Question 2

An American soldier stationed in California receives a paycheck from the federal government for $500,which she uses to purchase a $300 stereo made in Korea by a Korean firm and $200 worth of groceries produced in California.As a result,U.S.GDP increases by

Accepted Answer

A)  $200. 
B)  $500. 
C)  $700. 
D)  $1000. 
A)  $200. 
B)  $500. 
C)  $700. 
D)  $1000.

Question 3

Suppose an economy produces only eggs and ham.In 2005,100 dozen eggs are sold at $3 per dozen and 50 pounds of ham are sold at $4 per pound.In 2004,the base year,eggs sold at $1.50 per dozen and ham sold at $5 per pound.For 2005,

Accepted Answer

A)  nominal GDP is $400,real GDP is $500,and the GDP deflator is 80. 
B)  nominal GDP is $400,real GDP is $500,and the GDP deflator is 125. 
C)  nominal GDP is $500,real GDP is $400,and the GDP deflator is 80. 
D)  nominal GDP is $500,real GDP is $400,and the GDP deflator is 125. 
A)  nominal GDP is $400,real GDP is $500,and the GDP deflator is 80. 
B)  nominal GDP is $400,real GDP is $500,and the GDP deflator is 125. 
C)  nominal GDP is $500,real GDP is $400,and the GDP deflator is 80. 
D)  nominal GDP is $500,real GDP is $400,and the GDP deflator is 125.

Question 4

A country reported a nominal GDP of $85 billion in 2008 and $100 billion in 2007.It also reported a GDP deflator of 100 in 2008 and 105 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 5

Which of the following is included in the investment component of GDP?

Accepted Answer

A)  households' purchases of newly constructed homes 
B)  net additions to firms' inventories 
C)  firms' purchases of capital equipment 
D)  All of the above are correct. 
A)  households' purchases of newly constructed homes 
B)  net additions to firms' inventories 
C)  firms' purchases of capital equipment 
D)  All of the above are correct.

Question 6

Because every transaction has a buyer and a seller,

Accepted Answer

A)  GDP is more closely associated with an economy's income than it is with an economy's expenditure. 
B)  every transaction contributes equally to an economy's income and to its expenditure. 
C)  the number of firms must be equal to the number of households in a simple circular-flow diagram. 
D)  firms' profits are necessarily zero in a simple circular-flow diagram. 
A)  GDP is more closely associated with an economy's income than it is with an economy's expenditure. 
B)  every transaction contributes equally to an economy's income and to its expenditure. 
C)  the number of firms must be equal to the number of households in a simple circular-flow diagram. 
D)  firms' profits are necessarily zero in a simple circular-flow diagram.

Question 7

GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because

Accepted Answer

A)  the quality of these items is not high enough to contribute value to GDP. 
B)  measuring them is so difficult. 
C)  the government wants to discourage the production and consumption of these items. 
D)  these items are not reported on income tax forms. 
A)  the quality of these items is not high enough to contribute value to GDP. 
B)  measuring them is so difficult. 
C)  the government wants to discourage the production and consumption of these items. 
D)  these items are not reported on income tax forms.

Question 8

The inflation rate in year 2 equals
A) .
B) .
C) .
D) .

Accepted Answer

The answer of The inflation rate in year 2 equals
A)...

Question 9

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 2005,Dachsland's

Accepted Answer

A)  nominal GDP was greater than real GDP,and the GDP deflator was greater than 100. 
B)  nominal GDP was equal to real GDP,and the GDP deflator was equal to 1. 
C)  nominal GDP was less than real GDP,and the GDP deflator was less than 100. 
D)  nominal GDP was equal to real GDP,and the GDP deflator was equal to 100. 
A)  nominal GDP was greater than real GDP,and the GDP deflator was greater than 100. 
B)  nominal GDP was equal to real GDP,and the GDP deflator was equal to 1. 
C)  nominal GDP was less than real GDP,and the GDP deflator was less than 100. 
D)  nominal GDP was equal to real GDP,and the GDP deflator was equal to 100.

Question 10

During the current quarter,a firm produces consumer goods and adds some of those goods to its inventory rather than selling them.The value of the goods added to inventory is

Accepted Answer

A)  not included in the current quarter GDP. 
B)  included in the current quarter GDP as investment. 
C)  included in the current quarter GDP as consumption. 
D)  included in the current quarter GDP as a statistical discrepancy. 
A)  not included in the current quarter GDP. 
B)  included in the current quarter GDP as investment. 
C)  included in the current quarter GDP as consumption. 
D)  included in the current quarter GDP as a statistical discrepancy.

Question 11

In the economy of Wrexington in 2008,consumption was $6000,exports were $1000,GDP was $10,000,government purchases were $2000,and imports were $600.What was Wrexington's investment in 2008?

Accepted Answer

A)  $1400 
B)  $1600 
C)  $2400 
D)  $3600 
A)  $1400 
B)  $1600 
C)  $2400 
D)  $3600

Question 12

In the economy of Wrexington in 2008,real GDP was $5 trillion and the GDP deflator was 200.What was Wrexington's nominal GDP in 2008?

Accepted Answer

A)  $2.5 trillion 
B)  $10 trillion 
C)  $40 trillion 
D)  $100 trillion 
A)  $2.5 trillion 
B)  $10 trillion 
C)  $40 trillion 
D)  $100 trillion

Question 13

We would expect a macroeconomist,as opposed to a microeconomist,to be particularly interested in

Accepted Answer

A)  explaining how economic changes affect prices of particular goods. 
B)  devising policies to deal with market failures such as externalities and market power. 
C)  devising policies to promote low inflation. 
D)  identifying those markets that are competitive and those that are not competitive. 
A)  explaining how economic changes affect prices of particular goods. 
B)  devising policies to deal with market failures such as externalities and market power. 
C)  devising policies to promote low inflation. 
D)  identifying those markets that are competitive and those that are not competitive.

Question 14

A movie company makes 500,000 DVDs of one of its latest releases.It sells 300,000 of them before the end of the second quarter,and holds the others in its warehouse.How will the 200,000 unsold DVDs be treated in the GDP statistics?

Accepted Answer

A)  Since the DVDs eventually will be bought by consumers,they will be included as consumption in the second quarter. 
B)  Since the DVDs were not purchased in the second quarter,they will be counted as an increase in third-quarter GDP. 
C)  The DVDs will be counted as a change in inventory in the second quarter and so will be included in second-quarter GDP. 
D)  The DVDs will be counted as a change in inventory in the second quarter,and when sold in the third quarter will raise third-quarter GDP. 
A)  Since the DVDs eventually will be bought by consumers,they will be included as consumption in the second quarter. 
B)  Since the DVDs were not purchased in the second quarter,they will be counted as an increase in third-quarter GDP. 
C)  The DVDs will be counted as a change in inventory in the second quarter and so will be included in second-quarter GDP. 
D)  The DVDs will be counted as a change in inventory in the second quarter,and when sold in the third quarter will raise third-quarter GDP.

Question 15

Macroeconomics is the study of the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 16

Ralph pays someone to mow his lawn,while Mike mows his own lawn.Regarding these two practices,which of the following statements is correct?

Accepted Answer

A)  Only Ralph's payments are included in GDP. 
B)  Ralph's payments as well as the estimated value of Mike's mowing services are included in GDP. 
C)  Neither Ralph's payments nor the estimated value of Mike's mowing services is included in GDP. 
D)  Ralph's payments are definitely included in GDP,while the estimated value of Mike's mowing services is included in GDP only if Mike voluntarily provides his estimate of that value to the government. 
A)  Only Ralph's payments are included in GDP. 
B)  Ralph's payments as well as the estimated value of Mike's mowing services are included in GDP. 
C)  Neither Ralph's payments nor the estimated value of Mike's mowing services is included in GDP. 
D)  Ralph's payments are definitely included in GDP,while the estimated value of Mike's mowing services is included in GDP only if Mike voluntarily provides his estimate of that value to the government.

Question 17

Table 23-2
The table below contains data for the country of Wrexington for the year 2008.
  
-Refer to Table 23-2.What were Wrexington's net exports in 2008?

Accepted Answer

A)  -$32 
B)  $32 
C)  $88 
D)  $120 
A)  -$32 
B)  $32 
C)  $88 
D)  $120

Question 18

Table 23-2
The table below contains data for the country of Wrexington for the year 2008.
  
-Refer to Table 23-2.What was Wrexington's investment in 2008?

Accepted Answer

A)  $1178 
B)  $1295 
C)  $1882 
D)  $1999 
A)  $1178 
B)  $1295 
C)  $1882 
D)  $1999

Question 19

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

Accepted Answer

A)  personal income and personal disposable income. 
B)  estimates of GDP and actual GDP. 
C)  the income and expenditure approaches to the calculation of GDP. 
D)  the quarterly and annual approaches to the calculation of GDP. 
A)  personal income and personal disposable income. 
B)  estimates of GDP and actual GDP. 
C)  the income and expenditure approaches to the calculation of GDP. 
D)  the quarterly and annual approaches to the calculation of GDP.

Question 20

When an American doctor opens a practice in Bermuda,his production there is part of U.S.GDP.

Accepted Answer

A) True 
 B)False

Exam 23: Measuring a Nations Income

Macroeconomists study

An American soldier stationed in California receives a paycheck from the federal government for $500,which she uses to purchase a $300 stereo made in Korea by a Korean firm and $200 worth of groceries produced in California.As a result,U.S.GDP increases by

Suppose an economy produces only eggs and ham.In 2005,100 dozen eggs are sold at $3 per dozen and 50 pounds of ham are sold at $4 per pound.In 2004,the base year,eggs sold at $1.50 per dozen and ham sold at $5 per pound.For 2005,

A country reported a nominal GDP of $85 billion in 2008 and $100 billion in 2007.It also reported a GDP deflator of 100 in 2008 and 105 in 2007.Between 2007 and 2008,

Which of the following is included in the investment component of GDP?

Because every transaction has a buyer and a seller,

GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because

The inflation rate in year 2 equals A) . B) . C) . D) .

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 2005,Dachsland's

During the current quarter,a firm produces consumer goods and adds some of those goods to its inventory rather than selling them.The value of the goods added to inventory is

In the economy of Wrexington in 2008,consumption was $6000,exports were $1000,GDP was $10,000,government purchases were $2000,and imports were $600.What was Wrexington's investment in 2008?

In the economy of Wrexington in 2008,real GDP was $5 trillion and the GDP deflator was 200.What was Wrexington's nominal GDP in 2008?

We would expect a macroeconomist,as opposed to a microeconomist,to be particularly interested in

A movie company makes 500,000 DVDs of one of its latest releases.It sells 300,000 of them before the end of the second quarter,and holds the others in its warehouse.How will the 200,000 unsold DVDs be treated in the GDP statistics?

Macroeconomics is the study of the economy as a whole.

Ralph pays someone to mow his lawn,while Mike mows his own lawn.Regarding these two practices,which of the following statements is correct?

Table 23-2 The table below contains data for the country of Wrexington for the year 2008. -Refer to Table 23-2.What were Wrexington's net exports in 2008?

Table 23-2 The table below contains data for the country of Wrexington for the year 2008. -Refer to Table 23-2.What was Wrexington's investment in 2008?

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

When an American doctor opens a practice in Bermuda,his production there is part of 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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