Question 1

Consumption consists of spending by households on goods and services, with the exception of

Accepted Answer

A)  purchases of intangible services. 
B)  purchases of durable goods. 
C)  purchases of new houses. 
D)  spending on education. 
A)  purchases of intangible services. 
B)  purchases of durable goods. 
C)  purchases of new houses. 
D)  spending on education.

Question 2

In the economy of Talikastan in 2015, consumption was $700, exports were $200, government purchases were $300, imports were $150, and investment was $400. What was Talikastan's GDP in 2015?

Accepted Answer

A)  $1350 
B)  $1450 
C)  $1050 
D)  $1750 
A)  $1350 
B)  $1450 
C)  $1050 
D)  $1750

Question 3

Which of the following is a way to compute GDP?

Accepted Answer

A)  add up the wages paid to all workers 
B)  add up the quantities of all final goods and services 
C)  add up the market values of all final goods and services 
D)  add up the difference between the market values of all final goods and services and then subtract the costs of producing those goods and services 
A)  add up the wages paid to all workers 
B)  add up the quantities of all final goods and services 
C)  add up the market values of all final goods and services 
D)  add up the difference between the market values of all final goods and services and then subtract the costs of producing those goods and services

Question 4

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

Accepted Answer

A) True 
 B)False

Question 5

The value of goods added to a firm's inventory in a certain year is treated as

Accepted Answer

A)  consumption, since the goods will be sold to consumers in another period. 
B)  intermediate goods, and so is not included in that year's GDP. 
C)  investment, since GDP aims to measure the value of the economy's production that year. 
D)  spending on durable goods, since the goods could not be inventoried unless they were durable. 
A)  consumption, since the goods will be sold to consumers in another period. 
B)  intermediate goods, and so is not included in that year's GDP. 
C)  investment, since GDP aims to measure the value of the economy's production that year. 
D)  spending on durable goods, since the goods could not be inventoried unless they were durable.

Question 6

Typically in countries with lower levels of real GDP person, a smaller percentage of the population is literate.

Accepted Answer

A) True 
 B)False

Question 7

Table 23-1
The table below contains data for Chereaux for the year 2015.
  
-Refer to Table 23-1. Personal income for Chereaux in 2015 is

Accepted Answer

A)  $178. 
B)  $201. 
C)  $259. 
D)  $196. 
A)  $178. 
B)  $201. 
C)  $259. 
D)  $196.

Question 8

What are transfer payments, and how do they affect the calculation of GDP?

Accepted Answer

Transfer payments are income b

Question 9

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 10

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

Accepted Answer

A)  nominal GDP. 
B)  real GDP. 
C)  the GDP deflator. 
D)  GNP. 
A)  nominal GDP. 
B)  real GDP. 
C)  the GDP deflator. 
D)  GNP.

Question 11

According to the circular-flow diagram GDP

Accepted Answer

A)  can be computed as the total income paid by firms or as expenditures on final goods and services. 
B)  can be computed as the total income paid by firms, but not as expenditures on final goods and services. 
C)  can be computed as expenditures on final goods and services, but not as the total income paid by firms. 
D)  cannot be computed as either total income paid by firms or expenditures on final goods and services. 
A)  can be computed as the total income paid by firms or as expenditures on final goods and services. 
B)  can be computed as the total income paid by firms, but not as expenditures on final goods and services. 
C)  can be computed as expenditures on final goods and services, but not as the total income paid by firms. 
D)  cannot be computed as either total income paid by firms or expenditures on final goods and services.

Question 12

Since it is counted as investment, why doesn't the purchase of earthmoving equipment from China by a U.S. corporation increase U.S. GDP?

Accepted Answer

The purchase of foreign equipment is cou

Question 13

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Accepted Answer

A)  the effect of taxes on the prices of airline tickets, and the profitability of automobile-manufacturing firms 
B)  the price of beef, and wage differences between genders 
C)  how consumers maximize utility, and how prices are established in markets for agricultural products 
D)  the percentage of the labor force that is out of work, and differences in average income from country to country 
A)  the effect of taxes on the prices of airline tickets, and the profitability of automobile-manufacturing firms 
B)  the price of beef, and wage differences between genders 
C)  how consumers maximize utility, and how prices are established in markets for agricultural products 
D)  the percentage of the labor force that is out of work, and differences in average income from country to country

Question 14

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 15

Which of the following statements about nominal GDP and real GDP is correct?

Accepted Answer

A)  Nominal GDP is a better gauge of economic well-being than real GDP. 
B)  Real GDP is a better gauge of economic well-being than nominal GDP. 
C)  Real GDP and nominal GDP are equally good measures of economic well-being. 
D)  Neither nominal nor real GDP provide a measure of economic well-being. 
A)  Nominal GDP is a better gauge of economic well-being than real GDP. 
B)  Real GDP is a better gauge of economic well-being than nominal GDP. 
C)  Real GDP and nominal GDP are equally good measures of economic well-being. 
D)  Neither nominal nor real GDP provide a measure of economic well-being.

Question 16

The inflation rate is the

Accepted Answer

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

Question 17

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 18

GDP does not reflect

Accepted Answer

A)  the value of leisure. 
B)  the value of goods and services produced at home. 
C)  the quality of the environment. 
D)  All of the above are correct. 
A)  the value of leisure. 
B)  the value of goods and services produced at home. 
C)  the quality of the environment. 
D)  All of the above are correct.

Question 19

Which government entity computes U.S. GDP every three months?

Accepted Answer

A)  the Council of Economic Advisers 
B)  the Department of Commerce 
C)  the Department of Treasury 
D)  the Federal Reserve 
A)  the Council of Economic Advisers 
B)  the Department of Commerce 
C)  the Department of Treasury 
D)  the Federal Reserve

Question 20

Which of the following is not included in U.S. GDP?

Accepted Answer

A)  additions of newly produced output to inventory 
B)  production of U.S citizens working in foreign countries. 
C)  the estimated rental value of owner-occupied housing 
D)  the value of food purchased from a grocery store to make meals at home without pay 
A)  additions of newly produced output to inventory 
B)  production of U.S citizens working in foreign countries. 
C)  the estimated rental value of owner-occupied housing 
D)  the value of food purchased from a grocery store to make meals at home without pay

Exam 10: Measuring a Nations Income

Consumption consists of spending by households on goods and services, with the exception of

In the economy of Talikastan in 2015, consumption was $700, exports were $200, government purchases were $300, imports were $150, and investment was $400. What was Talikastan's GDP in 2015?

Which of the following is a way to compute GDP?

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

The value of goods added to a firm's inventory in a certain year is treated as

Typically in countries with lower levels of real GDP person, a smaller percentage of the population is literate.

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Personal income for Chereaux in 2015 is

What are transfer payments, and how do they affect the calculation of GDP?

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

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

According to the circular-flow diagram GDP

Since it is counted as investment, why doesn't the purchase of earthmoving equipment from China by a U.S. corporation increase U.S. GDP?

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

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

Which of the following statements about nominal GDP and real GDP is correct?

The inflation rate is the

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.

GDP does not reflect

Which government entity computes U.S. GDP every three months?

Which of the following is not included in U.S. 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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