Question 1

Government purchases include spending on goods and services by

Accepted Answer

A) the federal government,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 as household spending by employees of those governments. 
A) the federal government,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 as household spending by employees of those governments.

Question 2

The U.S.Air Force pays a Turkish citizen $30,000 to work on a U.S.base in Turkey.As a result,

Accepted Answer

A) U.S.government purchases increase by $30,000;U.S.net exports decrease by $30,000;and U.S.GDP is unaffected. 
B) U.S.government purchases increase by $30,000;U.S.net exports are unaffected;and U.S.GDP increases by $30,000. 
C) U.S.government purchases,net exports,and GDP are unaffected. 
D) U.S.government purchases are unaffected;U.S.net exports decrease by $30,000;and U.S.GDP decreases by $30,000. 
A) U.S.government purchases increase by $30,000;U.S.net exports decrease by $30,000;and U.S.GDP is unaffected. 
B) U.S.government purchases increase by $30,000;U.S.net exports are unaffected;and U.S.GDP increases by $30,000. 
C) U.S.government purchases,net exports,and GDP are unaffected. 
D) U.S.government purchases are unaffected;U.S.net exports decrease by $30,000;and U.S.GDP decreases by $30,000.

Question 3

When an American household purchases a bottle of Italian wine for $100,

Accepted Answer

A) U.S.consumption does not change,U.S.net exports decrease by $100,and U.S.GDP decreases by $100. 
B) U.S.consumption does not change,U.S.net exports increase by $100,and U.S.GDP increases by $100. 
C) U.S.consumption increases by $100,U.S.net exports decrease by $100,and U.S.GDP does not change. 
D) U.S.consumption increases by $100,U.S.net exports do not change,and U.S.GDP increases by $100. 
A) U.S.consumption does not change,U.S.net exports decrease by $100,and U.S.GDP decreases by $100. 
B) U.S.consumption does not change,U.S.net exports increase by $100,and U.S.GDP increases by $100. 
C) U.S.consumption increases by $100,U.S.net exports decrease by $100,and U.S.GDP does not change. 
D) U.S.consumption increases by $100,U.S.net exports do not change,and U.S.GDP increases by $100.

Question 4

In the economy of Talikastan in 2015,consumption was $6000,exports were $1000,GDP was $10,000,government purchases were $1800,and imports were $1200.What was Talikastan's investment in 2015?

Accepted Answer

A) $0 
B) $1200 
C) $2400 
D) $5600 
A) $0 
B) $1200 
C) $2400 
D) $5600

Question 5

Suppose a country has government expenditures of $3,500,taxes of $2,200,consumption of $9,000,exports of $2,500,imports of $2,700,transfer payments of $750,capital depreciation of $800,and investment of $3,000.GDP equals

Accepted Answer

A) $24,450. 
B) $11,550. 
C) $15,300. 
D) $20,700. 
A) $24,450. 
B) $11,550. 
C) $15,300. 
D) $20,700.

Question 6

Which of the following represents a transfer payment?

Accepted Answer

A) You transfer $1,000 from your bank account to a mutual fund. 
B) The government sends your grandfather his Social Security check. 
C) You make a payment to get legal documents showing you purchased a previously owned home. 
D) Your employer automatically transfers $100 each month from your wages to a non-taxable medical spending account. 
A) You transfer $1,000 from your bank account to a mutual fund. 
B) The government sends your grandfather his Social Security check. 
C) You make a payment to get legal documents showing you purchased a previously owned home. 
D) Your employer automatically transfers $100 each month from your wages to a non-taxable medical spending account.

Question 7

Consider two items that might be included in GDP: (1)the estimated rental value of owner-occupied housing and (2)purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Accepted Answer

A) Both item (1)and item (2)are included in the consumption component of GDP. 
B) Item (1)is included in the consumption component of GDP,while item (2)is included in the investment component of GDP. 
C) Item (1)is included in the investment component of GDP,while item (2)is included in the consumption component of GDP. 
D) Only item (2)is included in GDP,and it is included in the investment component. 
A) Both item (1)and item (2)are included in the consumption component of GDP. 
B) Item (1)is included in the consumption component of GDP,while item (2)is included in the investment component of GDP. 
C) Item (1)is included in the investment component of GDP,while item (2)is included in the consumption component of GDP. 
D) Only item (2)is included in GDP,and it is included in the investment component.

Question 8

A good is produced by a firm in 2009,added to the firm's inventory in 2010,and sold to a household in 2010.As a result,on net,

Accepted Answer

A) 2009 GDP increased and 2010 GDP decreased. 
B) 2009 GDP decreased and 2010 GDP increased. 
C) 2009 GDP did not change and 2010 GDP increased. 
D) 2009 GDP increased and 2010 GDP did not change. 
A) 2009 GDP increased and 2010 GDP decreased. 
B) 2009 GDP decreased and 2010 GDP increased. 
C) 2009 GDP did not change and 2010 GDP increased. 
D) 2009 GDP increased and 2010 GDP did not change.

Question 9

Transfer payments

Accepted Answer

A) are payments that flow from government to households. 
B) are not made in exchange for currently produced goods or services. 
C) alter household income,but they do not reflect the economy's production. 
D) All of the above are correct. 
A) are payments that flow from government to households. 
B) are not made in exchange for currently produced goods or services. 
C) alter household income,but they do not reflect the economy's production. 
D) All of the above are correct.

Question 10

All of the following are examples of a nondurable good except

Accepted Answer

A) a pencil. 
B) one gallon of gasoline. 
C) a queen-size bed. 
D) a pair of shoes. 
A) a pencil. 
B) one gallon of gasoline. 
C) a queen-size bed. 
D) a pair of shoes.

Question 11

If a U.S.citizen buys a television made in Korea by a Korean firm,then

Accepted Answer

A) U.S.net exports decrease and U.S.GDP decreases. 
B) U.S.net exports are unaffected and U.S.GDP decreases. 
C) U.S.net exports are unaffected and U.S.GDP is unaffected. 
D) U.S.net exports decrease and U.S.GDP is unaffected. 
A) U.S.net exports decrease and U.S.GDP decreases. 
B) U.S.net exports are unaffected and U.S.GDP decreases. 
C) U.S.net exports are unaffected and U.S.GDP is unaffected. 
D) U.S.net exports decrease and U.S.GDP is unaffected.

Question 12

In the United States in 2015,government purchases of goods and services were

Accepted Answer

A) larger than consumption,but smaller than investment. 
B) larger than investment,but smaller than consumption. 
C) smaller than both consumption and investment. 
D) larger than both consumption and investment. 
A) larger than consumption,but smaller than investment. 
B) larger than investment,but smaller than consumption. 
C) smaller than both consumption and investment. 
D) larger than both consumption and investment.

Question 13

A stove is produced by a firm in 2014,added to the firm's inventory in 2014,and sold to a household in 2015.It follows that

Accepted Answer

A) the value of the good is added to the investment category of 2014 GDP,added to the consumption category of 2015 GDP,and subtracted from the investment category of 2015 GDP. 
B) the value of the good is added to the investment category of 2014 GDP,added to the consumption category of 2015 GDP,and not included in the investment category of 2015 GDP. 
C) the value of the good is added to the investment category of 2014 GDP,subtracted from the consumption category of 2015 GDP,and not included in the investment category of 2015 GDP. 
D) the value of the good is added to the investment category of 2014 GDP,subtracted from the consumption category of 2015 GDP,and added to the investment category of 2015 GDP. 
A) the value of the good is added to the investment category of 2014 GDP,added to the consumption category of 2015 GDP,and subtracted from the investment category of 2015 GDP. 
B) the value of the good is added to the investment category of 2014 GDP,added to the consumption category of 2015 GDP,and not included in the investment category of 2015 GDP. 
C) the value of the good is added to the investment category of 2014 GDP,subtracted from the consumption category of 2015 GDP,and not included in the investment category of 2015 GDP. 
D) the value of the good is added to the investment category of 2014 GDP,subtracted from the consumption category of 2015 GDP,and added to the investment category of 2015 GDP.

Question 14

The Carters' oldest son attends Big State University.He and his parents pay all his fees and tuition.These payments count in GDP as

Accepted Answer

A) investment. 
B) government spending. 
C) consumption of services. 
D) consumption of durable goods. 
A) investment. 
B) government spending. 
C) consumption of services. 
D) consumption of durable goods.

Question 15

An identity is an equation that

Accepted Answer

A) describes an equilibrium. 
B) pertains to macroeconomics,not to microeconomics. 
C) must be true because of how the variables in the equation are defined. 
D) involves final goods,not intermediate goods. 
A) describes an equilibrium. 
B) pertains to macroeconomics,not to microeconomics. 
C) must be true because of how the variables in the equation are defined. 
D) involves final goods,not intermediate goods.

Question 16

If a U.S.company buys an electrical generator made in Japan by a Japanese firm,and the Japanese firm uses the payment to buy stocks issued by a U.S.company then

Accepted Answer

A) U.S.exports and U.S imports increase. 
B) U.S.exports but not U.S.imports increase. 
C) U.S.imports but not U.S.exports increase. 
D) neither U.S.exports nor U.S.imports increase. 
A) U.S.exports and U.S imports increase. 
B) U.S.exports but not U.S.imports increase. 
C) U.S.imports but not U.S.exports increase. 
D) neither U.S.exports nor U.S.imports increase.

Question 17

Which of the following is included in government purchases?

Accepted Answer

A) unemployment benefits a state pays 
B) Social Security payments the U.S.government makes 
C) the services of a U.S.government attorney valued at the cost of her salary 
D) All of the above are correct. 
A) unemployment benefits a state pays 
B) Social Security payments the U.S.government makes 
C) the services of a U.S.government attorney valued at the cost of her salary 
D) All of the above are correct.

Question 18

Recently,the U.S.national income accounts have switched to calling government purchases

Accepted Answer

A) government spending and transfer payments. 
B) transfer payments and gross investment by government. 
C) government consumption expenditure and gross investment. 
D) government wages,salaries,and investment expenditure. 
A) government spending and transfer payments. 
B) transfer payments and gross investment by government. 
C) government consumption expenditure and gross investment. 
D) government wages,salaries,and investment expenditure.

Question 19

Household spending on education is counted in which component or subcomponent of GDP?

Accepted Answer

A) consumption of durable goods 
B) consumption of nondurable goods 
C) consumption of services 
D) investment 
A) consumption of durable goods 
B) consumption of nondurable goods 
C) consumption of services 
D) investment

Question 20

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.

Exam 10: Measuring a Nations Income: The Components of GDP

Government purchases include spending on goods and services by

The U.S.Air Force pays a Turkish citizen $30,000 to work on a U.S.base in Turkey.As a result,

When an American household purchases a bottle of Italian wine for $100,

In the economy of Talikastan in 2015,consumption was $6000,exports were $1000,GDP was $10,000,government purchases were $1800,and imports were $1200.What was Talikastan's investment in 2015?

Suppose a country has government expenditures of $3,500,taxes of $2,200,consumption of $9,000,exports of $2,500,imports of $2,700,transfer payments of $750,capital depreciation of $800,and investment of $3,000.GDP equals

Which of the following represents a transfer payment?

Consider two items that might be included in GDP: (1)the estimated rental value of owner-occupied housing and (2)purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

A good is produced by a firm in 2009,added to the firm's inventory in 2010,and sold to a household in 2010.As a result,on net,

Transfer payments

All of the following are examples of a nondurable good except

If a U.S.citizen buys a television made in Korea by a Korean firm,then

In the United States in 2015,government purchases of goods and services were

A stove is produced by a firm in 2014,added to the firm's inventory in 2014,and sold to a household in 2015.It follows that

The Carters' oldest son attends Big State University.He and his parents pay all his fees and tuition.These payments count in GDP as

An identity is an equation that

If a U.S.company buys an electrical generator made in Japan by a Japanese firm,and the Japanese firm uses the payment to buy stocks issued by a U.S.company then

Which of the following is included in government purchases?

Recently,the U.S.national income accounts have switched to calling government purchases

Household spending on education is counted in which component or subcomponent of GDP?

A transfer payment is a payment made by

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion