Question 1

U.S.GNP

Accepted Answer

A) includes production of foreigners working in the U.S.and production of U.S.citizens working in foreign countries. 
B) includes production of foreigners working in the U.S.but excludes production of U.S.citizens working in foreign countries. 
C) excludes production of foreigners working in the U.S.but includes production by U.S.citizens working in foreign countries. 
D) excludes production of foreigners working in the U.S.and production by U.S.citizens working in foreign countries. 
A) includes production of foreigners working in the U.S.and production of U.S.citizens working in foreign countries. 
B) includes production of foreigners working in the U.S.but excludes production of U.S.citizens working in foreign countries. 
C) excludes production of foreigners working in the U.S.but includes production by U.S.citizens working in foreign countries. 
D) excludes production of foreigners working in the U.S.and production by U.S.citizens working in foreign countries.

Question 2

An automobile factory in Michigan uses $100,000 worth of parts purchased from foreign countries along with U.S.inputs to produce 30 cars worth $20,000 each.Twenty of these cars are sold and 10 are left in inventory.How much did these actions add to GDP?

Accepted Answer

A) $300,000 
B) $500,000 
C) $600,000 
D) $700,000 
A) $300,000 
B) $500,000 
C) $600,000 
D) $700,000

Question 3

Which of the following transactions is not included in GDP?

Accepted Answer

A) oranges sold to households by a grocer. 
B) orange juice sold by a restaurant to its diners. 
C) oranges sold by a farmer to a grocery store. 
D) All of the above are included in GDP. 
A) oranges sold to households by a grocer. 
B) orange juice sold by a restaurant to its diners. 
C) oranges sold by a farmer to a grocery store. 
D) All of the above are included in GDP.

Question 4

Gasoline is considered a final good if it is sold by a

Accepted Answer

A) gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. 
B) pipeline operator to a gasoline station in San Francisco. 
C) gasoline station to a motorist in Los Angeles. 
D) All of the above are correct. 
A) gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. 
B) pipeline operator to a gasoline station in San Francisco. 
C) gasoline station to a motorist in Los Angeles. 
D) All of the above are correct.

Question 5

A professional gambler moves from a state where gambling is illegal to a state where gambling is legal.Most of his income was,and continues to be,from gambling.His move

Accepted Answer

A) raises GDP. 
B) decreases GDP. 
C) doesn't change GDP because gambling is never included in GDP. 
D) doesn't change GDP because in either case his income is included. 
A) raises GDP. 
B) decreases GDP. 
C) doesn't change GDP because gambling is never included in GDP. 
D) doesn't change GDP because in either case his income is included.

Question 6

Suppose an apartment complex converts to a condominium,so that the former renters are now owners of their housing units.Suppose further that a current estimate of the value of the condominium owners' housing services is the same as the rent they previously paid.What happens to GDP as a result of this conversion?

Accepted Answer

A) GDP necessarily increases. 
B) GDP necessarily decreases. 
C) GDP is unaffected because neither the rent nor the estimate of the value owner-occupied housing services is included in GDP. 
D) GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services. 
A) GDP necessarily increases. 
B) GDP necessarily decreases. 
C) GDP is unaffected because neither the rent nor the estimate of the value owner-occupied housing services is included in GDP. 
D) GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services.

Question 7

Which of the following transactions adds to U.S.GDP for 2015?

Accepted Answer

A) In 2015,Ann sells a car that she bought in 2011 to Bill for $7,000. 
B) An American management consultant works in Canada during the summer of 2015 and earns the equivalent of $40,000 during that time. 
C) When Ken and Kim were both single,they lived in separate apartments and each paid $800 in rent.Ken and Kim got married in 2015 and they bought a previously unoccupied house that,according to reliable estimates,could be rented for $1,700 per month. 
D) None of the above transactions adds to U.S.GDP for 2015. 
A) In 2015,Ann sells a car that she bought in 2011 to Bill for $7,000. 
B) An American management consultant works in Canada during the summer of 2015 and earns the equivalent of $40,000 during that time. 
C) When Ken and Kim were both single,they lived in separate apartments and each paid $800 in rent.Ken and Kim got married in 2015 and they bought a previously unoccupied house that,according to reliable estimates,could be rented for $1,700 per month. 
D) None of the above transactions adds to U.S.GDP for 2015.

Question 8

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

Accepted Answer

A) decreases. 
B) 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) decreases. 
B) 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 9

Suppose that an economy produces 30,000 units of good A which sells at $3 a unit and 60,000 units of good B which sells at $2 per unit.Production of good A contributes

Accepted Answer

A) 1/2 times as much to GDP as the production of good B. 
B) 3/2 times as much to GDP as the production of good B. 
C) 3/4 times as much to GDP as the production of good B. 
D) 4/3 times as much to GDP as production of good B. 
A) 1/2 times as much to GDP as the production of good B. 
B) 3/2 times as much to GDP as the production of good B. 
C) 3/4 times as much to GDP as the production of good B. 
D) 4/3 times as much to GDP as production of good B.

Question 10

U.S.GDP and U.S.GNP are related as follows:

Accepted Answer

A) GNP = GDP + Value of exported goods - Value of imported goods. 
B) GNP = GDP - Value of exported goods + Value of imported goods. 
C) GNP = GDP + Income earned by foreigners in the U.S.- Income earned by U.S.citizens abroad. 
D) GNP = GDP - Income earned by foreigners in the U.S.+ Income earned by U.S.citizens abroad. 
A) GNP = GDP + Value of exported goods - Value of imported goods. 
B) GNP = GDP - Value of exported goods + Value of imported goods. 
C) GNP = GDP + Income earned by foreigners in the U.S.- Income earned by U.S.citizens abroad. 
D) GNP = GDP - Income earned by foreigners in the U.S.+ Income earned by U.S.citizens abroad.

Question 11

Unlike national income,personal income

Accepted Answer

A) includes retained earnings,indirect business taxes,corporate income taxes and social insurance contributions,and excludes interest and transfer payments received by households from the government. 
B) excludes retained earnings,indirect business taxes corporate income taxes,social insurance contributions and interest and transfer payments received by households from the government. 
C) excludes retained earnings,indirect business taxes,corporate income taxes and social insurance contributions,and includes interest and transfer payments received by households from the government. 
D) includes retained earnings,indirect business taxes,corporate income taxes,social insurance contributions,and interest and transfer payments received by households from the government. 
A) includes retained earnings,indirect business taxes,corporate income taxes and social insurance contributions,and excludes interest and transfer payments received by households from the government. 
B) excludes retained earnings,indirect business taxes corporate income taxes,social insurance contributions and interest and transfer payments received by households from the government. 
C) excludes retained earnings,indirect business taxes,corporate income taxes and social insurance contributions,and includes interest and transfer payments received by households from the government. 
D) includes retained earnings,indirect business taxes,corporate income taxes,social insurance contributions,and interest and transfer payments received by households from the government.

Question 12

Which of the following is included in GDP?

Accepted Answer

A) marijuana purchased legally in Colorado. 
B) marijuana purchased illegally from a drug dealer. 
C) marijuana produced and consumed by a man in his attic 
D) All of the above are included in GDP. 
A) marijuana purchased legally in Colorado. 
B) marijuana purchased illegally from a drug dealer. 
C) marijuana produced and consumed by a man in his attic 
D) All of the above are included in GDP.

Question 13

Jackie,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 14

A farmer sells $25,000 worth of apples to individuals who take them home to eat,$50,000 worth of apples to a company that uses them all to produce cider,and $75,000 worth of apples to a grocery store that will sell them to households.How much of the farmer's sales will be included as apples in GDP?

Accepted Answer

A) $25,000 
B) $150,000 
C) $100,000 
D) $125,000 
A) $25,000 
B) $150,000 
C) $100,000 
D) $125,000

Question 15

Consider two cars manufactured by Chevrolet in 2014.During 2014,Chevrolet sells one of the two cars to Emily for $20,000.Later in the same year,Emily sells the car to Jim for $18,000.The second automobile,with a market value of $19,000,is unsold at the end of 2014 and it remains in Chevrolet's inventory.The transactions just described contribute how much to GDP for 2014?

Accepted Answer

A) $20,000 
B) $37,000 
C) $38,000 
D) $39,000 
A) $20,000 
B) $37,000 
C) $38,000 
D) $39,000

Question 16

Disposable personal income is

Accepted Answer

A) the total income earned by a nation's permanent residents. 
B) the total income earned by a nation's residents in the production of goods and services. 
C) the income that households and non-corporate businesses receive. 
D) the income that households and businesses have remaining after satisfying their obligations to the government. 
A) the total income earned by a nation's permanent residents. 
B) the total income earned by a nation's residents in the production of goods and services. 
C) the income that households and non-corporate businesses receive. 
D) the income that households and businesses have remaining after satisfying their obligations to the government.

Question 17

U.S.GDP

Accepted Answer

A) includes production of foreigners working in the U.S.and production by U.S.residents working in foreign countries. 
B) includes production of foreigners working in the U.S.but excludes production by U.S.residents working in foreign countries. 
C) excludes production of foreigners working in the U.S.but includes production by U.S.residents working in foreign countries. 
D) excludes production of foreigners working in the U.S.and production by U.S.residents working in foreign countries. 
A) includes production of foreigners working in the U.S.and production by U.S.residents working in foreign countries. 
B) includes production of foreigners working in the U.S.but excludes production by U.S.residents working in foreign countries. 
C) excludes production of foreigners working in the U.S.but includes production by U.S.residents working in foreign countries. 
D) excludes production of foreigners working in the U.S.and production by U.S.residents working in foreign countries.

Question 18

Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread.Wholesome Wheat sells the bread to the public for $22.00.Taking these two transactions into account,what is the effect on GDP?

Accepted Answer

A) GDP increases by $10.00 
B) GDP increases by $12.00 
C) GDP increases by $22.00 
D) GDP increases by $32.00 
A) GDP increases by $10.00 
B) GDP increases by $12.00 
C) GDP increases by $22.00 
D) GDP increases by $32.00

Question 19

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities.It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000.How much do these actions add to GDP?

Accepted Answer

A) $55,000 
B) $65,000 
C) $120,000 
D) None of the above are correct. 
A) $55,000 
B) $65,000 
C) $120,000 
D) None of the above are correct.

Question 20

Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000.In 2014 she sold the house for $260,000.Which of the following statements is correct regarding the sale of the house?

Accepted Answer

A) The 2014 sale increased 2014 GDP by $260,000 and had no effect on 2011 GDP. 
B) The 2014 sale increased 2014 GDP by $20,000 and had no effect on 2011 GDP. 
C) The 2014 sale increased 2014 GDP by $260,000;furthermore,the 2014 sale caused 2011 GDP to be revised upward by $20,000. 
D) The 2014 sale affected neither 2014 GDP nor 2011 GDP. 
A) The 2014 sale increased 2014 GDP by $260,000 and had no effect on 2011 GDP. 
B) The 2014 sale increased 2014 GDP by $20,000 and had no effect on 2011 GDP. 
C) The 2014 sale increased 2014 GDP by $260,000;furthermore,the 2014 sale caused 2011 GDP to be revised upward by $20,000. 
D) The 2014 sale affected neither 2014 GDP nor 2011 GDP.

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

U.S.GNP

An automobile factory in Michigan uses $100,000 worth of parts purchased from foreign countries along with U.S.inputs to produce 30 cars worth $20,000 each.Twenty of these cars are sold and 10 are left in inventory.How much did these actions add to GDP?

Which of the following transactions is not included in GDP?

Gasoline is considered a final good if it is sold by a

A professional gambler moves from a state where gambling is illegal to a state where gambling is legal.Most of his income was,and continues to be,from gambling.His move

Which of the following transactions adds to U.S.GDP for 2015?

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

Suppose that an economy produces 30,000 units of good A which sells at $3 a unit and 60,000 units of good B which sells at $2 per unit.Production of good A contributes

U.S.GDP and U.S.GNP are related as follows:

Unlike national income,personal income

Which of the following is included in GDP?

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

A farmer sells $25,000 worth of apples to individuals who take them home to eat,$50,000 worth of apples to a company that uses them all to produce cider,and $75,000 worth of apples to a grocery store that will sell them to households.How much of the farmer's sales will be included as apples in GDP?

Disposable personal income is

U.S.GDP

Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread.Wholesome Wheat sells the bread to the public for $22.00.Taking these two transactions into account,what is the effect on GDP?

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities.It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000.How much do these actions add to GDP?

Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000.In 2014 she sold the house for $260,000.Which of the following statements is correct regarding the sale of the house?

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

Application International Trade: Part A

Application International Trade: Part B