Question 1

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GNP.

Accepted Answer

A) True 
 B)False

Question 2

In the economy of Talikastan in 2015, consumption was $600, exports were $300, GDP was $1300, government purchases were $250, and investment was $300. What were Talikastan's imports in 2015?

Accepted Answer

A)  -$150 
B)  -$200 
C)  $200 
D)  $150 
A)  -$150 
B)  -$200 
C)  $200 
D)  $150

Question 3

Household spending on education is included in

Accepted Answer

A)  consumption, although it might be argued that it would fit better in investment. 
B)  investment, although it might be argued that it would fit better in consumption. 
C)  government spending, based on the fact that most higher-education students attend publicly-supported colleges and universities. 
D)  None of the above is correct; in general, household spending on services is not included in any component of GDP. 
A)  consumption, although it might be argued that it would fit better in investment. 
B)  investment, although it might be argued that it would fit better in consumption. 
C)  government spending, based on the fact that most higher-education students attend publicly-supported colleges and universities. 
D)  None of the above is correct; in general, household spending on services is not included in any component of GDP.

Question 4

Table 23-7
The table below contains data for the country of Togogo. The base year is 1974.
  
-Refer to Table 23-7. From 1975 to 1976,

Accepted Answer

A)  inflation was 25% and output did not grow. 
B)  inflation was 25% and output grew. 
C)  inflation was 50% and output did not grow. 
D)  inflation was 50% and output grew. 
A)  inflation was 25% and output did not grow. 
B)  inflation was 25% and output grew. 
C)  inflation was 50% and output did not grow. 
D)  inflation was 50% and output grew.

Question 5

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 6

Table 23-8
A country produces only meat and potatoes in the quantities and prices listed below. Use 2011 as the base year.
  
-Refer to Table 23-8. In 2012, GDP deflator is

Accepted Answer

A)  122. 
B)  134. 
C)  92. 
D)  113. 
A)  122. 
B)  134. 
C)  92. 
D)  113.

Question 7

If total spending rises from one year to the next, then which of the following could not be true?

Accepted Answer

A)  the economy is producing a smaller output of goods and services, and goods and services are selling at higher prices. 
B)  the economy is producing a larger output of goods and services, and goods and services are selling at lower prices. 
C)  the economy is producing a larger output of goods and services, and goods and services are selling at higher prices. 
D)  the economy is producing a smaller output of goods and services, and goods and services are selling at lower prices. 
A)  the economy is producing a smaller output of goods and services, and goods and services are selling at higher prices. 
B)  the economy is producing a larger output of goods and services, and goods and services are selling at lower prices. 
C)  the economy is producing a larger output of goods and services, and goods and services are selling at higher prices. 
D)  the economy is producing a smaller output of goods and services, and goods and services are selling at lower prices.

Question 8

GDP is equal to

Accepted Answer

A)  the market value of all final goods and services produced within a country in a given period of time. 
B)  Y. 
C)  C + I + G + NX. 
D)  All of the above are correct. 
A)  the market value of all final goods and services produced within a country in a given period of time. 
B)  Y. 
C)  C + I + G + NX. 
D)  All of the above are correct.

Question 9

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarters) doesdo) these transactions raise investment?

Accepted Answer

A)  the first and the second 
B)  the first but not the second 
C)  the second but not the first 
D)  neither the first nor the second 
A)  the first and the second 
B)  the first but not the second 
C)  the second but not the first 
D)  neither the first nor the second

Question 10

If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Last quarter Newton computers produced 3,000 computers. Two thousand of these computers were sold to households, 750 were sold to businesses, and 250 were added to Newton's inventory. How many of the computers should have been included in last quarter's GDP?

Accepted Answer

The answer of Last quarter Newton computers produced 3,000 computers....

Question 13

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 14

If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator?

Accepted Answer

A)  87.5. 
B)  114.3. 
C)  400. 
D)  896. 
A)  87.5. 
B)  114.3. 
C)  400. 
D)  896.

Question 15

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

Accepted Answer

A)  values of goods and services based on surveys of consumers. 
B)  market prices. 
C)  quantities purchased by a typical urban household. 
D)  profits from producing goods and services. 
A)  values of goods and services based on surveys of consumers. 
B)  market prices. 
C)  quantities purchased by a typical urban household. 
D)  profits from producing goods and services.

Question 16

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarters) is are) GDP higher?

Accepted Answer

A)  the first and the second 
B)  the first but not the second 
C)  the second but not the first 
D)  neither the first nor the second 
A)  the first and the second 
B)  the first but not the second 
C)  the second but not the first 
D)  neither the first nor the second

Question 17

If total spending rises from one year to the next, then the economy must be producing a larger output of goods and services.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is included in the investment component of GDP?

Accepted Answer

A)  spending on new residential construction and spending on stocks and bonds 
B)  spending on new residential construction but not spending on stocks and bonds 
C)  spending on stocks and bonds but not spending on new residential construction 
D)  neither spending on stocks and bonds nor spending on new residential construction 
A)  spending on new residential construction and spending on stocks and bonds 
B)  spending on new residential construction but not spending on stocks and bonds 
C)  spending on stocks and bonds but not spending on new residential construction 
D)  neither spending on stocks and bonds nor spending on new residential construction

Question 19

AA Appliances sells refrigerators. In 2015 it added $100,000 to its inventory. $10,000 of this addition was from used refrigerators, and the remaining $90,000 was from their purchases of newly manufactured refrigerators. How much of AA's inventory is included in 2015 GDP?

Accepted Answer

A)  $0 
B)  $10,000 
C)  $90,000 
D)  $100,000 
A)  $0 
B)  $10,000 
C)  $90,000 
D)  $100,000

Question 20

Changes in real GDP reflect only changes in the amounts being produced.

Accepted Answer

A) True 
 B)False

Exam 15: Measuring a Nations Income

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GNP.

In the economy of Talikastan in 2015, consumption was $600, exports were $300, GDP was $1300, government purchases were $250, and investment was $300. What were Talikastan's imports in 2015?

Household spending on education is included in

Table 23-7 The table below contains data for the country of Togogo. The base year is 1974. -Refer to Table 23-7. From 1975 to 1976,

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

Table 23-8 A country produces only meat and potatoes in the quantities and prices listed below. Use 2011 as the base year. -Refer to Table 23-8. In 2012, GDP deflator is

If total spending rises from one year to the next, then which of the following could not be true?

GDP is equal to

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarters) doesdo) these transactions raise investment?

If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200.

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

Last quarter Newton computers produced 3,000 computers. Two thousand of these computers were sold to households, 750 were sold to businesses, and 250 were added to Newton's inventory. How many of the computers should have been included in last quarter's GDP?

Which of the following transactions is not included in GDP?

If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator?

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarters) is are) GDP higher?

If total spending rises from one year to the next, then the economy must be producing a larger output of goods and services.

Which of the following is included in the investment component of GDP?

AA Appliances sells refrigerators. In 2015 it added $100,000 to its inventory. $10,000 of this addition was from used refrigerators, and the remaining $90,000 was from their purchases of newly manufactured refrigerators. How much of AA's inventory is included in 2015 GDP?

Changes in real GDP reflect only changes in the amounts being produced.

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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