Question 1

For developed countries like the United States, GDP will always exceed GNP.

Accepted Answer

A) True 
 B)False

Question 2

The purchase by a household in China of a CD produced in the United States is included in U.S.

Accepted Answer

A)  consumption expenditures. 
B)  investment expenditures. 
C)  government purchases. 
D)  net exports. 
A)  consumption expenditures. 
B)  investment expenditures. 
C)  government purchases. 
D)  net exports.

Question 3

Even though it is generally true that the more goods and services people have, the better off they are, GDP provides only a rough measure of well-being. Assuming language is not an issue, what other factors besides GDP might you consider when deciding where to live and work?

Accepted Answer

Factors not included in GDP which you mi

Question 4

Which of the following is not an example of a transfer payment?

Accepted Answer

A)  unemployment insurance payments 
B)  health insurance payments to an army private 
C)  social security payments to retirees 
D)  social security payments to disabled persons 
A)  unemployment insurance payments 
B)  health insurance payments to an army private 
C)  social security payments to retirees 
D)  social security payments to disabled persons

Question 5

Which of the following equations correctly measures GDP in an economy?

Accepted Answer

A)  GDP = C + I + G + X 
B)  GDP = C + net I + G + NX 
C)  GDP = C + I + G + NX 
D)  GDP = C + G + I - taxes 
A)  GDP = C + I + G + X 
B)  GDP = C + net I + G + NX 
C)  GDP = C + I + G + NX 
D)  GDP = C + G + I - taxes

Question 6

Which of the following could cause nominal GDP to decrease, but real GDP to increase?

Accepted Answer

A)  The price level rises and the quantity of final goods and services produced rises. 
B)  The price level falls and the quantity of final goods and services produced rises. 
C)  The price level rises and the quantity of final goods and services produced falls. 
D)  The price level falls and the quantity of final goods and services produced falls. 
A)  The price level rises and the quantity of final goods and services produced rises. 
B)  The price level falls and the quantity of final goods and services produced rises. 
C)  The price level rises and the quantity of final goods and services produced falls. 
D)  The price level falls and the quantity of final goods and services produced falls.

Question 7

Disposable personal income is defined as

Accepted Answer

A)  personal income less personal taxes plus indirect sales taxes. 
B)  personal income less transfer payments plus personal taxes. 
C)  personal income less personal taxes. 
D)  personal income less depreciation. 
A)  personal income less personal taxes plus indirect sales taxes. 
B)  personal income less transfer payments plus personal taxes. 
C)  personal income less personal taxes. 
D)  personal income less depreciation.

Question 8

Which of the following statements is true?

Accepted Answer

A)  A decrease in the crime rate increases GDP as people will spend more on security. 
B)  Household production is counted in GDP as it amounts to real production. 
C)  GDP accounting rules do not adjust for production that pollutes the economy. 
D)  GDP growth distributes income equally to people in the economy. 
A)  A decrease in the crime rate increases GDP as people will spend more on security. 
B)  Household production is counted in GDP as it amounts to real production. 
C)  GDP accounting rules do not adjust for production that pollutes the economy. 
D)  GDP growth distributes income equally to people in the economy.

Question 9

Table 19-5
   Consider the table above showing three stages of production of an automobile.
-Refer to Table 19-5. The value of each automobile in gross domestic product equals

Accepted Answer

A)  $7,000. 
B)  $15,000. 
C)  $18,000. 
D)  $25,000. 
A)  $7,000. 
B)  $15,000. 
C)  $18,000. 
D)  $25,000.

Question 10

In 2013, Ford Motor Company's sales were rising. These events were caused by

Accepted Answer

A)  an economic recession. 
B)  an economic expansion. 
C)  an increase in advertising. 
D)  improving quality of service. 
A)  an economic recession. 
B)  an economic expansion. 
C)  an increase in advertising. 
D)  improving quality of service.

Question 11

Scenario 19-1
CANOES-R-US makes canoes. It buys the shell of the canoe from another firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1,200.
-Refer to Scenario 19-1. The value of each canoe in gross domestic product equals

Accepted Answer

A)  $1,200. 
B)  $800. 
C)  $500. 
D)  $400. 
A)  $1,200. 
B)  $800. 
C)  $500. 
D)  $400.

Question 12

If prices rise on average in the U.S. economy, the purchasing power of a dollar declines.

Accepted Answer

A) True 
 B)False

Question 13

If a country passes a labor law limiting the number of hours of work per week, GDP would ________ and leisure would ________.

Accepted Answer

A)  decrease; increase 
B)  increase; increase 
C)  decrease; decrease 
D)  increase; decrease 
A)  decrease; increase 
B)  increase; increase 
C)  decrease; decrease 
D)  increase; decrease

Question 14

Which of the following would be directly counted in GDP in 2014?

Accepted Answer

A)  kitchen cabinets purchased from Home Depot in 2014 to be installed in a house built in 1997 
B)  kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a brand new country-style home 
C)  kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a farm house built in 1950 
D)  none of the above 
A)  kitchen cabinets purchased from Home Depot in 2014 to be installed in a house built in 1997 
B)  kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a brand new country-style home 
C)  kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a farm house built in 1950 
D)  none of the above

Question 15

Nominal GDP is GDP in a given year

Accepted Answer

A)  adjusted for inflation. 
B)  adjusted for anticipated inflation. 
C)  valued in the prices of that year. 
D)  valued in the prices of the base year. 
A)  adjusted for inflation. 
B)  adjusted for anticipated inflation. 
C)  valued in the prices of that year. 
D)  valued in the prices of the base year.

Question 16

Under what circumstances would the GDP deflator be less than 100 after the base year?

Accepted Answer

A)  The GDP deflator will be less than 100 if there has been inflation relative to the base year. 
B)  The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year. 
C)  The GDP deflator will be less than 100 if there has been deflation relative to the base year. 
D)  There are no circumstances under which the GDP deflator could be less than 100. 
A)  The GDP deflator will be less than 100 if there has been inflation relative to the base year. 
B)  The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year. 
C)  The GDP deflator will be less than 100 if there has been deflation relative to the base year. 
D)  There are no circumstances under which the GDP deflator could be less than 100.

Question 17

Table 19-26
  
-Gross national product, GNP, of the United States is the market value of all final goods and services

Accepted Answer

A)  produced within the United States. 
B)  consumed within the United States. 
C)  produced by citizens of the United States anywhere in the world. 
D)  consumed by citizens of the United States anywhere in the world. 
A)  produced within the United States. 
B)  consumed within the United States. 
C)  produced by citizens of the United States anywhere in the world. 
D)  consumed by citizens of the United States anywhere in the world.

Question 18

In 2013, Kendall Ford, an automobile dealership, spent $20,000 on a new car lift for its repair shop, $2,000 on a new copy machine for its sales division, and $600,000 on Ford Motor company stock. Unsold cars and trucks were valued at $400,000 on January 1, 2013 and unsold cars and trucks were valued at $900,000 on December 31, 2013. What is Kendall Ford's total investment spending in 2013?

Accepted Answer

A)  $22,000 
B)  $322,000 
C)  $522,000 
D)  $1,022,000 
A)  $22,000 
B)  $322,000 
C)  $522,000 
D)  $1,022,000

Question 19

Government spending ________ is included in gross domestic product.

Accepted Answer

A)  at federal, state, and local levels of government 
B)  at the federal level of government only 
C)  at state and local levels of government only 
D)  on defense goods only 
A)  at federal, state, and local levels of government 
B)  at the federal level of government only 
C)  at state and local levels of government only 
D)  on defense goods only

Question 20

The GDP deflator is the

Accepted Answer

A)  difference between real GDP and nominal GDP multiplied by 100. 
B)  difference between nominal GDP and real GDP divided by 100. 
C)  ratio of real GDP to nominal GDP multiplied by 100. 
D)  ratio of nominal GDP to real GDP multiplied by 100. 
A)  difference between real GDP and nominal GDP multiplied by 100. 
B)  difference between nominal GDP and real GDP divided by 100. 
C)  ratio of real GDP to nominal GDP multiplied by 100. 
D)  ratio of nominal GDP to real GDP multiplied by 100.

Exam 19: GDP: Measuring Total Production and Income

For developed countries like the United States, GDP will always exceed GNP.

The purchase by a household in China of a CD produced in the United States is included in U.S.

Even though it is generally true that the more goods and services people have, the better off they are, GDP provides only a rough measure of well-being. Assuming language is not an issue, what other factors besides GDP might you consider when deciding where to live and work?

Which of the following is not an example of a transfer payment?

Which of the following equations correctly measures GDP in an economy?

Which of the following could cause nominal GDP to decrease, but real GDP to increase?

Disposable personal income is defined as

Which of the following statements is true?

Table 19-5 Consider the table above showing three stages of production of an automobile. -Refer to Table 19-5. The value of each automobile in gross domestic product equals

In 2013, Ford Motor Company's sales were rising. These events were caused by

If prices rise on average in the U.S. economy, the purchasing power of a dollar declines.

If a country passes a labor law limiting the number of hours of work per week, GDP would ________ and leisure would ________.

Which of the following would be directly counted in GDP in 2014?

Nominal GDP is GDP in a given year

Under what circumstances would the GDP deflator be less than 100 after the base year?

Table 19-26 -Gross national product, GNP, of the United States is the market value of all final goods and services

Government spending ________ is included in gross domestic product.

The GDP deflator is the

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

If a country passes a labor law limiting the number of hours of work per week, GDP would and leisure would .