Question 1

Much of macroeconomics attempts to explain

Accepted Answer

A)  changes in the price of oil and gasoline. 
B)  long-run growth and short-run fluctuations in real GDP. 
C)  changes in the growth rate of state government spending. 
D)  changes in the prices and quantities of individual goods and services. 
A)  changes in the price of oil and gasoline. 
B)  long-run growth and short-run fluctuations in real GDP. 
C)  changes in the growth rate of state government spending. 
D)  changes in the prices and quantities of individual goods and services.

Question 2

If the U.S. government reports that GDP in the third quarter was $16 trillion at an annual rate, then the amount of income and expenditure during quarter three was $4 trillion.

Accepted Answer

A) True 
 B)False

Question 3

Suppose an economy produces only burgers and bags of fries. In 2010, 4000 burgers are sold at $3 each and 6000 bags of fires are sold at $1.50 each. In 2008, the base year, burgers sold for $2.50 each and bags of fries sold for $2 each.

Accepted Answer

A)  nominal GDP is $22,000, real GDP is $21,000, and the GDP deflator is 95.45. 
B)  nominal GDP is $22,000, real GDP is $21,000, and the GDP deflator is 104.77. 
C)  nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 95.45. 
D)  nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 104.77. 
A)  nominal GDP is $22,000, real GDP is $21,000, and the GDP deflator is 95.45. 
B)  nominal GDP is $22,000, real GDP is $21,000, and the GDP deflator is 104.77. 
C)  nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 95.45. 
D)  nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 104.77.

Question 4

During the third quarter of this year a firm produces consumer goods and adds some of those goods to its inventory. During the fourth quarter of this year, the firm sells the goods at a retail outlet, with the result that the value of its inventory at the end of the fourth quarter is smaller than the value of its inventory at the end of the third quarter. These actions affect which components) of fourth-quarter GDP?

Accepted Answer

A)  they increase consumption and have no effect on investment 
B)  they increase consumption and decrease investment 
C)  they have no effect on either consumption or investment 
D)  they have no effect on consumption and decrease investment 
A)  they increase consumption and have no effect on investment 
B)  they increase consumption and decrease investment 
C)  they have no effect on either consumption or investment 
D)  they have no effect on consumption and decrease investment

Question 5

Which of the following always uses prices and quantities from the same period?

Accepted Answer

A)  both nominal and real GDP. 
B)  nominal GDP but not real GDP. 
C)  real GDP but not nominal GDP. 
D)  neither nominal or real GDP. 
A)  both nominal and real GDP. 
B)  nominal GDP but not real GDP. 
C)  real GDP but not nominal GDP. 
D)  neither nominal or real GDP.

Question 6

The government's purchases of goods but not its purchases of services are included in GDP.

Accepted Answer

A) True 
 B)False

Question 7

Economists use the term inflation to describe a situation in which the economy's overall production level is rising.

Accepted Answer

A) True 
 B)False

Question 8

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 9

A U.S.-owned automobile factory uses $50 million worth of materials produced in the U.S. and $10 million worth of material purchased from foreign countries to produce $100 million of automobiles. $70 million worth of these automobiles are purchased by U.S. consumers, $25 million are sold in foreign countries, and $5 million are added to inventory. How much of this production is included in U.S. GDP? By how much do these transactions alone affect U.S. net exports?

Accepted Answer

$90 million is inclu

Question 10

The basic tools of supply and demand are

Accepted Answer

A)  useful only in the analysis of economic behavior in individual markets. 
B)  useful in analyzing the overall economy, but not in analyzing individual markets. 
C)  central to microeconomic analysis, but seldom used in macroeconomic analysis. 
D)  central to macroeconomic analysis as well as to microeconomic analysis. 
A)  useful only in the analysis of economic behavior in individual markets. 
B)  useful in analyzing the overall economy, but not in analyzing individual markets. 
C)  central to microeconomic analysis, but seldom used in macroeconomic analysis. 
D)  central to macroeconomic analysis as well as to microeconomic analysis.

Question 11

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 2012, this country's real GDP was

Accepted Answer

A)  $510. 
B)  $690. 
C)  $930. 
D)  $780. 
A)  $510. 
B)  $690. 
C)  $930. 
D)  $780.

Question 12

GDP is defined as the

Accepted Answer

A)  value of all goods and services produced within a country in a given period of time. 
B)  value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. 
C)  value of all final goods and services produced within a country in a given period of time. 
D)  value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. 
A)  value of all goods and services produced within a country in a given period of time. 
B)  value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. 
C)  value of all final goods and services produced within a country in a given period of time. 
D)  value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

Question 13

Which of the following is a way to compute GDP?

Accepted Answer

A)  total income earned. 
B)  total expenditures on final goods. 
C)  add up the market values of all final goods and services. 
D)  All of the above are correct. 
A)  total income earned. 
B)  total expenditures on final goods. 
C)  add up the market values of all final goods and services. 
D)  All of the above are correct.

Question 14

National income is defined as

Accepted Answer

A)  the total income of a nation's permanent residents minus losses from depreciation. 
B)  the income that households and noncorporate businesses receive. 
C)  the total income earned by a nation's permanent residents in the production of goods and services. 
D)  the income that households and noncorporate businesses have left after satisfying all their obligations to the government. 
A)  the total income of a nation's permanent residents minus losses from depreciation. 
B)  the income that households and noncorporate businesses receive. 
C)  the total income earned by a nation's permanent residents in the production of goods and services. 
D)  the income that households and noncorporate businesses have left after satisfying all their obligations to the government.

Question 15

In 2012, GDP per person in the United States was almost

Accepted Answer

A)  $14,000. 
B)  $36,000. 
C)  $46,000 
D)  $50,000 
A)  $14,000. 
B)  $36,000. 
C)  $46,000 
D)  $50,000

Question 16

Which of the following is an example of a durable good?

Accepted Answer

A)  a hair dryer. 
B)  a suit. 
C)  a pair of shoes. 
D)  All of the above are correct. 
A)  a hair dryer. 
B)  a suit. 
C)  a pair of shoes. 
D)  All of the above are correct.

Question 17

Define gross domestic product.

Accepted Answer

The market value of all final

Question 18

GDP is adjusted to reflect changes in the quality of the environment such as changes in air and water quality.

Accepted Answer

A) True 
 B)False

Question 19

A German citizen buys an automobile produced in the United States by a Japanese company. As a result,

Accepted Answer

A)  U.S. net exports increase, U.S. GDP is unaffected, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. 
B)  U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, German GNP is unaffected, and German GDP decreases. 
C)  U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. 
D)  U.S. net exports and GDP are unaffected, Japanese GNP increases, and German net exports, GNP, and GDP decrease. 
A)  U.S. net exports increase, U.S. GDP is unaffected, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. 
B)  U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, German GNP is unaffected, and German GDP decreases. 
C)  U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. 
D)  U.S. net exports and GDP are unaffected, Japanese GNP increases, and German net exports, GNP, and GDP decrease.

Question 20

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.

Exam 15: Measuring a Nations Income

Much of macroeconomics attempts to explain

If the U.S. government reports that GDP in the third quarter was $16 trillion at an annual rate, then the amount of income and expenditure during quarter three was $4 trillion.

Suppose an economy produces only burgers and bags of fries. In 2010, 4000 burgers are sold at $3 each and 6000 bags of fires are sold at $1.50 each. In 2008, the base year, burgers sold for $2.50 each and bags of fries sold for $2 each.

Which of the following always uses prices and quantities from the same period?

The government's purchases of goods but not its purchases of services are included in GDP.

Economists use the term inflation to describe a situation in which the economy's overall production level is rising.

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

The basic tools of supply and demand are

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 2012, this country's real GDP was

GDP is defined as the

Which of the following is a way to compute GDP?

National income is defined as

In 2012, GDP per person in the United States was almost

Which of the following is an example of a durable good?

Define gross domestic product.

GDP is adjusted to reflect changes in the quality of the environment such as changes in air and water quality.

A German citizen buys an automobile produced in the United States by a Japanese company. As a result,

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

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 Costs of Production

Firms in Competitive Markets

Monopoly

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

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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