Question 1

In a simple circular-flow diagram, firms use the money they get from a sale to

Accepted Answer

A)  pay wages to workers. 
B)  pay rent to landlords. 
C)  pay profit to the firms' owners. 
D)  All of the above are correct. 
A)  pay wages to workers. 
B)  pay rent to landlords. 
C)  pay profit to the firms' owners. 
D)  All of the above are correct.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

U.S. GDP was almost $14 billion in 2009.

Accepted Answer

A) True 
 B)False

Question 4

Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2010 Quality Motors produced $30 million worth of automobiles, with $17 million in sales to Americans, $9 million in sales to Canadians, and $4 million worth of automobiles added to Quality Motors' inventory. The transactions just described contribute how much to U.S. GDP for 2010?

Accepted Answer

A)  $17 million 
B)  $21 million 
C)  $26 million 
D)  $30 million 
A)  $17 million 
B)  $21 million 
C)  $26 million 
D)  $30 million

Question 5

A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S. GDP

Accepted Answer

A)  increases by $40. 
B)  increases by $220. 
C)  increases by $280. 
D)  increases by $1500. 
A)  increases by $40. 
B)  increases by $220. 
C)  increases by $280. 
D)  increases by $1500.

Question 6

An economy's income is the same as its expenditure because every transaction has a buyer and a seller.

Accepted Answer

A) True 
 B)False

Question 7

In the actual economy, households

Accepted Answer

A)  spend all of their income. 
B)  divide their income among spending, taxes, and saving. 
C)  buy all goods and services produced in the economy. 
D)  Both a) and c) are correct. 
A)  spend all of their income. 
B)  divide their income among spending, taxes, and saving. 
C)  buy all goods and services produced in the economy. 
D)  Both a) and c) are correct.

Question 8

The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions.

Accepted Answer

A) True 
 B)False

Question 9

Table 23-2
The table below contains data for country A for the year 2010.
  
-Refer to Table 23-2. What were country A's net exports in 2010?

Accepted Answer

A)  -$32 
B)  $32 
C)  $88 
D)  $120 
A)  -$32 
B)  $32 
C)  $88 
D)  $120

Question 10

The purchase of rice produced this period is included in GDP if the rice is

Accepted Answer

A)  used in a meal a restaurant sells during the same period they buy the rice. 
B)  purchased by a family who uses it to make tuna casserole for its supper. 
C)  purchased by a frozen food company to increase its inventory. 
D)  B and C are correct. 
A)  used in a meal a restaurant sells during the same period they buy the rice. 
B)  purchased by a family who uses it to make tuna casserole for its supper. 
C)  purchased by a frozen food company to increase its inventory. 
D)  B and C are correct.

Question 11

Additions to inventory subtract from GDP, and when the goods in inventory are sold, the reductions in inventory add to GDP.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Table 23-5
The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015.
Prices and Quantities
  
-Refer to Table 23-5. In 2016, this country's

Accepted Answer

A)  real GDP was $880, and the GDP deflator was 111.4. 
B)  real GDP was $780, and the GDP deflator was 88.6. 
C)  real GDP was $880, and the GDP deflator was 112.8. 
D)  real GDP was $780, and the GDP deflator was 112.8. 
A)  real GDP was $880, and the GDP deflator was 111.4. 
B)  real GDP was $780, and the GDP deflator was 88.6. 
C)  real GDP was $880, and the GDP deflator was 112.8. 
D)  real GDP was $780, and the GDP deflator was 112.8.

Question 14

If foreign citizens earn less income in the U.S. than U.S. citizens earn in foreign countries,

Accepted Answer

A)  U.S. net factor payments from abroad are positive, and its GDP is larger than its GNP. 
B)  U.S. net factor payments from abroad are positive, and its GNP is larger than its GDP. 
C)  U.S. net factor payments from abroad are negative, and its GDP is larger than its GNP. 
D)  U.S. net factor payments from abroad are negative, and its GNP is larger than its GDP. 
A)  U.S. net factor payments from abroad are positive, and its GDP is larger than its GNP. 
B)  U.S. net factor payments from abroad are positive, and its GNP is larger than its GDP. 
C)  U.S. net factor payments from abroad are negative, and its GDP is larger than its GNP. 
D)  U.S. net factor payments from abroad are negative, and its GNP is larger than its GDP.

Question 15

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

Accepted Answer

A)  $500 
B)  $700 
C)  $1200 
D)  $1700 
A)  $500 
B)  $700 
C)  $1200 
D)  $1700

Question 16

Which of the following is not an example of a durable good?

Accepted Answer

A)  a refrigerator. 
B)  an automobile. 
C)  a business suit. 
D)  a furnace. 
A)  a refrigerator. 
B)  an automobile. 
C)  a business suit. 
D)  a furnace.

Question 17

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Accepted Answer

A) True 
 B)False

Question 18

In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200. What was Talikastan's GDP in 2015?

Accepted Answer

A)  $6200 
B)  $6400 
C)  $7000 
D)  $8200 
A)  $6200 
B)  $6400 
C)  $7000 
D)  $8200

Question 19

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 20

In a simple circular-flow diagram, firms

Accepted Answer

A)  purchase resources from households. 
B)  purchase the output produced by households. 
C)  receive income by selling resources to households. 
D)  All of the above are correct. 
A)  purchase resources from households. 
B)  purchase the output produced by households. 
C)  receive income by selling resources to households. 
D)  All of the above are correct.

Exam 10: Measuring a Nations Income

In a simple circular-flow diagram, firms use the money they get from a sale to

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

U.S. GDP was almost $14 billion in 2009.

A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S. GDP

An economy's income is the same as its expenditure because every transaction has a buyer and a seller.

In the actual economy, households

The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions.

Table 23-2 The table below contains data for country A for the year 2010. -Refer to Table 23-2. What were country A's net exports in 2010?

The purchase of rice produced this period is included in GDP if the rice is

Additions to inventory subtract from GDP, and when the goods in inventory are sold, the reductions in inventory add to GDP.

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

Table 23-5 The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015. Prices and Quantities -Refer to Table 23-5. In 2016, this country's

If foreign citizens earn less income in the U.S. than U.S. citizens earn in foreign countries,

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

Which of the following is not an example of a durable good?

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200. What was Talikastan's GDP in 2015?

Unlike national income, personal income

In a simple circular-flow diagram, firms

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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