Question 1

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 2

Microeconomics and macroeconomics are closely linked.

Accepted Answer

A) True 
 B)False

Question 3

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 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 2011, this country's real GDP was

Accepted Answer

A)  $320. 
B)  $440. 
C)  $760. 
D)  $770. 
A)  $320. 
B)  $440. 
C)  $760. 
D)  $770.

Question 5

For an economy as a whole, income must equal expenditure because

Accepted Answer

A)  the number of firms is equal to the number of households in an economy. 
B)  individuals can only spend what they earn each period. 
C)  every dollar of spending by some buyer is a dollar of income for some seller. 
D)  every dollar of saving by some consumer is a dollar of spending by some other consumer. 
A)  the number of firms is equal to the number of households in an economy. 
B)  individuals can only spend what they earn each period. 
C)  every dollar of spending by some buyer is a dollar of income for some seller. 
D)  every dollar of saving by some consumer is a dollar of spending by some other consumer.

Question 6

Social Security payments are

Accepted Answer

A)  included in GDP because they represent current income. 
B)  included in GDP because they represent potential consumption. 
C)  excluded from GDP because they are not private pensions. 
D)  excluded from GDP because they do not reflect the economy's production. 
A)  included in GDP because they represent current income. 
B)  included in GDP because they represent potential consumption. 
C)  excluded from GDP because they are not private pensions. 
D)  excluded from GDP because they do not reflect the economy's production.

Question 7

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 8

When economists talk about growth in the economy, they measure that growth as the

Accepted Answer

A)  absolute change in nominal GDP from one period to another. 
B)  percentage change in nominal GDP from one period to another. 
C)  absolute change in real GDP from one period to another. 
D)  percentage change in real GDP from one period to another. 
A)  absolute change in nominal GDP from one period to another. 
B)  percentage change in nominal GDP from one period to another. 
C)  absolute change in real GDP from one period to another. 
D)  percentage change in real GDP from one period to another.

Question 9

Table 23-10
A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 .
  
-Refer to Table 23-10. What was this country's real GDP in 2016?

Accepted Answer

A)  $10,575 
B)  $11,250 
C)  $10,950 
D)  $12,550 
A)  $10,575 
B)  $11,250 
C)  $10,950 
D)  $12,550

Question 10

In the actual economy, goods and services are purchased by

Accepted Answer

A)  households, but not firms or the government. 
B)  households and firms, but not the government. 
C)  households and the government, but not firms. 
D)  households, firms, and the government. 
A)  households, but not firms or the government. 
B)  households and firms, but not the government. 
C)  households and the government, but not firms. 
D)  households, firms, and the government.

Question 11

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Accepted Answer

A)  Country A because it had the higher nominal GDP per person. 
B)  Country B because it had the higher nominal GDP per person. 
C)  Country A because it had the higher real GDP per person. 
D)  Country B because it had the higher real GDP per person. 
A)  Country A because it had the higher nominal GDP per person. 
B)  Country B because it had the higher nominal GDP per person. 
C)  Country A because it had the higher real GDP per person. 
D)  Country B because it had the higher real GDP per person.

Question 12

Changes in inventory are included in the investment component of GDP.

Accepted Answer

A) True 
 B)False

Question 13

If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then

Accepted Answer

A)  U.S. consumption increases, U.S. net exports decrease, and U.S. GDP decreases. 
B)  U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected. 
C)  U.S. consumption decreases, U.S. net exports increase, and U.S. GDP increases. 
D)  U.S. consumption decreases, U.S. net exports increase, and U.S. GDP is unaffected. 
A)  U.S. consumption increases, U.S. net exports decrease, and U.S. GDP decreases. 
B)  U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected. 
C)  U.S. consumption decreases, U.S. net exports increase, and U.S. GDP increases. 
D)  U.S. consumption decreases, U.S. net exports increase, and U.S. GDP is unaffected.

Question 14

GDP includes the value of all

Accepted Answer

A)  final goods and services produced within a country using primarily market prices to measure the value of goods and services. 
B)  final goods and services produced within a country using primarily a survey of consumers to measure the value of goods and services. 
C)  goods and services produced within a country using primarily market prices to measure the value of goods and services. 
D)  goods and services produced within a country using primarily a survey of consumers to measure the value of goods and services. 
A)  final goods and services produced within a country using primarily market prices to measure the value of goods and services. 
B)  final goods and services produced within a country using primarily a survey of consumers to measure the value of goods and services. 
C)  goods and services produced within a country using primarily market prices to measure the value of goods and services. 
D)  goods and services produced within a country using primarily a survey of consumers to measure the value of goods and services.

Question 15

Which of the following values would be included in U.S. GDP for 2015?

Accepted Answer

A)  the rent that Sam, an American citizen, would have paid on his home in Houston in 2015 had he not owned that home. 
B)  the rent that Jim, an American citizen, paid on his apartment in San Francisco in 2015. 
C)  the value of the legal services provided by Juan, an attorney and a Mexican citizen, who lived in San Antonio and practiced law there in 2015 
D)  All of the above would be included in U.S. GDP for 2015. 
A)  the rent that Sam, an American citizen, would have paid on his home in Houston in 2015 had he not owned that home. 
B)  the rent that Jim, an American citizen, paid on his apartment in San Francisco in 2015. 
C)  the value of the legal services provided by Juan, an attorney and a Mexican citizen, who lived in San Antonio and practiced law there in 2015 
D)  All of the above would be included in U.S. GDP for 2015.

Question 16

Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the economy's overall production of goods and services changes over time.

Accepted Answer

A) True 
 B)False

Question 17

Gross domestic product includes all

Accepted Answer

A)  legal and illegal final goods, but it excludes all legal and illegal final services. 
B)  legal and illegal final goods and all legal and illegal final services. 
C)  legal final goods and services, but it excludes illegal final goods and services. 
D)  legal and illegal final goods and legal final services, but it excludes illegal final services. 
A)  legal and illegal final goods, but it excludes all legal and illegal final services. 
B)  legal and illegal final goods and all legal and illegal final services. 
C)  legal final goods and services, but it excludes illegal final goods and services. 
D)  legal and illegal final goods and legal final services, but it excludes illegal final services.

Question 18

During a presidential campaign, the incumbent argues that he should be reelected because nominal GDP grew by 12 percent during his 4-year term in office. You know that population grew by 4 percent over the period and that the GDP deflator increased by 6 percent during the past 4 years. You should conclude that real GDP per person

Accepted Answer

A)  grew by more than 12 percent. 
B)  grew, but by less than 12 percent. 
C)  was unchanged. 
D)  decreased. 
A)  grew by more than 12 percent. 
B)  grew, but by less than 12 percent. 
C)  was unchanged. 
D)  decreased.

Question 19

Which of the following is not a question addressed by macroeconomists?

Accepted Answer

A)  Why is average income high in some nations but low in others? 
B)  What, if anything, can the government do to promote growth in incomes, low inflation, and stable employment? 
C)  What is the impact of foreign competition on the U.S. auto industry? 
D)  Why do production and employment expand in some years and contract in others? 
A)  Why is average income high in some nations but low in others? 
B)  What, if anything, can the government do to promote growth in incomes, low inflation, and stable employment? 
C)  What is the impact of foreign competition on the U.S. auto industry? 
D)  Why do production and employment expand in some years and contract in others?

Question 20

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

Exam 10: Measuring a Nations Income

GDP is defined as the

Microeconomics and macroeconomics are closely linked.

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 2011, this country's real GDP was

For an economy as a whole, income must equal expenditure because

Social Security payments are

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

When economists talk about growth in the economy, they measure that growth as the

Table 23-10 A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 . -Refer to Table 23-10. What was this country's real GDP in 2016?

In the actual economy, goods and services are purchased by

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Changes in inventory are included in the investment component of GDP.

If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then

GDP includes the value of all

Which of the following values would be included in U.S. GDP for 2015?

Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the economy's overall production of goods and services changes over time.

Gross domestic product includes all

Which of the following is not a question addressed by macroeconomists?

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?

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

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

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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