Question 1

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

Accepted Answer

A) True 
 B)False

Question 2

After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are

Accepted Answer

A)  not included in GDP since they do not represent production. 
B)  not included in GDP since the government collects taxes to pay for them. 
C)  included in GDP since government expenditures on goods and services are included in GDP. 
D)  included in GDP only to the extent that the federal government, rather than state or local governments, paid for them. 
A)  not included in GDP since they do not represent production. 
B)  not included in GDP since the government collects taxes to pay for them. 
C)  included in GDP since government expenditures on goods and services are included in GDP. 
D)  included in GDP only to the extent that the federal government, rather than state or local governments, paid for them.

Question 3

A U.S. publisher purchases new computers that were manufactured in the U.S. This purchase by itself makes

Accepted Answer

A)  a positive contribution both to investment and to GDP. 
B)  a positive contribution both to consumption and to GDP. 
C)  a positive contribution to GDP, but it does not affect investment or consumption. 
D)  a positive contribution to investment, but it does not affect GDP. 
A)  a positive contribution both to investment and to GDP. 
B)  a positive contribution both to consumption and to GDP. 
C)  a positive contribution to GDP, but it does not affect investment or consumption. 
D)  a positive contribution to investment, but it does not affect GDP.

Question 4

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013.
  
-Refer to Table 23-6. In 2013, this country's GDP deflator was

Accepted Answer

A)  1.0. 
B)  100.0. 
C)  171.4. 
D)  240.0. 
A)  1.0. 
B)  100.0. 
C)  171.4. 
D)  240.0.

Question 5

Tyler and Camille both live in Oklahoma. A new-car dealer in Oklahoma bought a new car from the manufacturer for $18,000 and sold it to Tyler for $22,000. Later that year, Tyler sold the car to Camille for $17,000. By how much did these transactions contribute to U.S. GDP for the year?

Accepted Answer

A)  $18,000 
B)  $22,000 
C)  $39,000 
D)  $57,000 
A)  $18,000 
B)  $22,000 
C)  $39,000 
D)  $57,000

Question 6

Grapes are considered intermediate goods

Accepted Answer

A)  whether the purchaser uses them to make wine to sell or eats them. 
B)  if the purchaser uses them to make wine to sell others but not if the purchaser eats them. 
C)  if the purchaser eats them, but not if the purchaser uses to them to make wine to sell. 
D)  None of the above is correct. 
A)  whether the purchaser uses them to make wine to sell or eats them. 
B)  if the purchaser uses them to make wine to sell others but not if the purchaser eats them. 
C)  if the purchaser eats them, but not if the purchaser uses to them to make wine to sell. 
D)  None of the above is correct.

Question 7

In the national income accounts, depreciation is called

Accepted Answer

A)  "consumption of fixed capital." 
B)  "negative investment." 
C)  "diminished value." 
D)  "loss due to wear." 
A)  "consumption of fixed capital." 
B)  "negative investment." 
C)  "diminished value." 
D)  "loss due to wear."

Question 8

The percentage change in the price level from one period to another is called

Accepted Answer

A)  the growth rate. 
B)  the inflation rate. 
C)  the GDP deflator. 
D)  the unemployment rate. 
A)  the growth rate. 
B)  the inflation rate. 
C)  the GDP deflator. 
D)  the unemployment rate.

Question 9

A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called

Accepted Answer

A)  inventory goods. 
B)  transitory goods. 
C)  final goods. 
D)  intermediate goods. 
A)  inventory goods. 
B)  transitory goods. 
C)  final goods. 
D)  intermediate goods.

Question 10

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely

Accepted Answer

A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  may have increased, decreased, or stayed the same. 
A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  may have increased, decreased, or stayed the same.

Question 11

In 2014, a farmer grows and sells $3 million worth of corn to Big Flakes Cereal Company. Big Flakes Cereal Company produces $8 million worth of cereal in 2014, with sales to households during the year of $7 million. The unsold $1 million worth of cereal remains in Big Flake Cereal Company's inventory at the end of 2014. The transactions just described contribute how much to GDP for 2014?

Accepted Answer

A)  $3 million 
B)  $7 million 
C)  $8 million 
D)  $11 million 
A)  $3 million 
B)  $7 million 
C)  $8 million 
D)  $11 million

Question 12

Which of the following statements about GDP is correct?

Accepted Answer

A)  GDP measures two things at once: the total income of everyone in the economy and the unemployment rate of the economy's labor force. 
B)  Money continuously flows from households to government and then back to households, and GDP measures this flow of money. 
C)  GDP is to a nation's economy as household income is to a household. 
D)  All of the above are correct. 
A)  GDP measures two things at once: the total income of everyone in the economy and the unemployment rate of the economy's labor force. 
B)  Money continuously flows from households to government and then back to households, and GDP measures this flow of money. 
C)  GDP is to a nation's economy as household income is to a household. 
D)  All of the above are correct.

Question 13

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013.
  
-Refer to Table 23-6. In 2011, this country's nominal GDP was

Accepted Answer

A)  $260. 
B)  $440. 
C)  $620. 
D)  $760. 
A)  $260. 
B)  $440. 
C)  $620. 
D)  $760.

Question 14

When an Egyptian firm purchases a cement mixer from Slovakia,

Accepted Answer

A)  Egyptian investment does not change, Egyptian net exports decrease, Egyptian GDP decreases, Slovakian net exports increase, and Slovakian GDP increases. 
B)  Egyptian investment increases, Egyptian net exports decrease, Egyptian GDP is unaffected, Slovakian net exports increase, and Slovakian GDP increases. 
C)  Egyptian investment decreases, Egyptian net exports increase, Egyptian GDP is unaffected, Slovakian net exports decrease, and Slovakian GDP decreases. 
D)  Egyptian investment increases, Egyptian net exports do not change, Egyptian GDP increases, Slovakian net exports do not change, and Slovakian GDP is unaffected. 
A)  Egyptian investment does not change, Egyptian net exports decrease, Egyptian GDP decreases, Slovakian net exports increase, and Slovakian GDP increases. 
B)  Egyptian investment increases, Egyptian net exports decrease, Egyptian GDP is unaffected, Slovakian net exports increase, and Slovakian GDP increases. 
C)  Egyptian investment decreases, Egyptian net exports increase, Egyptian GDP is unaffected, Slovakian net exports decrease, and Slovakian GDP decreases. 
D)  Egyptian investment increases, Egyptian net exports do not change, Egyptian GDP increases, Slovakian net exports do not change, and Slovakian GDP is unaffected.

Question 15

Figure 23-1.  
-Refer to Figure 23-1. Which of the following pairs correctly identify X and Z?

Accepted Answer

A)  markets for factors of production and markets for goods and services 
B)  firms and households 
C)  GDP deflator and CPI 
D)  flow of dollars and flow of inputs and outputs 
A)  markets for factors of production and markets for goods and services 
B)  firms and households 
C)  GDP deflator and CPI 
D)  flow of dollars and flow of inputs and outputs

Question 16

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Accepted Answer

Since this is in real terms, it tells us

Question 17

Micah buys a used car for $10,000 and spends $200 on a new radio that is made in the U.S. The end result of these two transactions is

Accepted Answer

A)  U.S. consumption purchases increase by $200 and U.S. GDP increases by $200. 
B)  U.S. consumption purchases increase by $200 and U.S. GDP increases by $10,000. 
C)  U.S. consumption purchases increase by $10,000 and U.S. GDP increases by $10,200. 
D)  U.S. consumption purchases increase by $10,200 and U.S. GDP increases by $10,200. 
A)  U.S. consumption purchases increase by $200 and U.S. GDP increases by $200. 
B)  U.S. consumption purchases increase by $200 and U.S. GDP increases by $10,000. 
C)  U.S. consumption purchases increase by $10,000 and U.S. GDP increases by $10,200. 
D)  U.S. consumption purchases increase by $10,200 and U.S. GDP increases by $10,200.

Question 18

Table 23-11
The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009.
Prices and Quantities
  
-Refer to Table 23-11.
What was nominal GDP, real GDP, and the GDP deflator for 2008?

Accepted Answer

Nominal GDP was $4x100 + $50X1

Question 19

U.S. GDP excludes the production of most illegal goods.

Accepted Answer

A) True 
 B)False

Question 20

GDP per person tells us the income and expenditure of the

Accepted Answer

A)  richest person in the economy. 
B)  poorest person in the economy. 
C)  average person in the economy. 
D)  entire economy. 
A)  richest person in the economy. 
B)  poorest person in the economy. 
C)  average person in the economy. 
D)  entire economy.

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are

A U.S. publisher purchases new computers that were manufactured in the U.S. This purchase by itself makes

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2013, this country's GDP deflator was

Tyler and Camille both live in Oklahoma. A new-car dealer in Oklahoma bought a new car from the manufacturer for $18,000 and sold it to Tyler for $22,000. Later that year, Tyler sold the car to Camille for $17,000. By how much did these transactions contribute to U.S. GDP for the year?

Grapes are considered intermediate goods

In the national income accounts, depreciation is called

The percentage change in the price level from one period to another is called

A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely

Which of the following statements about GDP is correct?

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2011, this country's nominal GDP was

When an Egyptian firm purchases a cement mixer from Slovakia,

Figure 23-1. -Refer to Figure 23-1. Which of the following pairs correctly identify X and Z?

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Micah buys a used car for $10,000 and spends $200 on a new radio that is made in the U.S. The end result of these two transactions is

Table 23-11 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. Prices and Quantities -Refer to Table 23-11. What was nominal GDP, real GDP, and the GDP deflator for 2008?

U.S. GDP excludes the production of most illegal goods.

GDP per person tells us the income and expenditure of the

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 5: Measuring a Nations Income

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are

A U.S. publisher purchases new computers that were manufactured in the U.S. This purchase by itself makes

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2013, this country's GDP deflator was

Tyler and Camille both live in Oklahoma. A new-car dealer in Oklahoma bought a new car from the manufacturer for $18,000 and sold it to Tyler for $22,000. Later that year, Tyler sold the car to Camille for $17,000. By how much did these transactions contribute to U.S. GDP for the year?

Grapes are considered intermediate goods

In the national income accounts, depreciation is called

The percentage change in the price level from one period to another is called

A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely

Which of the following statements about GDP is correct?

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2011, this country's nominal GDP was

When an Egyptian firm purchases a cement mixer from Slovakia,

Figure 23-1. -Refer to Figure 23-1. Which of the following pairs correctly identify X and Z?

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Micah buys a used car for $10,000 and spends $200 on a new radio that is made in the U.S. The end result of these two transactions is

Table 23-11 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. Prices and Quantities -Refer to Table 23-11. What was nominal GDP, real GDP, and the GDP deflator for 2008?

U.S. GDP excludes the production of most illegal goods.

GDP per person tells us the income and expenditure of the

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters