Question 1

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

Accepted Answer

A)  spending on education 
B)  the purchase of stocks and bonds 
C)  the purchase of a new house 
D)  the purchase of durable goods such as stoves and washing machines 
A)  spending on education 
B)  the purchase of stocks and bonds 
C)  the purchase of a new house 
D)  the purchase of durable goods such as stoves and washing machines

Question 2

Which of the following is not a correct statement about the growth of real GDP in the U.S. economy?

Accepted Answer

A)  Real GDP in 2009 was almost four times its 1965 level. 
B)  Growth was steady between 1965 and 2009. 
C)  Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did. 
D)  The output of goods and services produced grew on average about 3 percent per year between 1965 and 2009. 
A)  Real GDP in 2009 was almost four times its 1965 level. 
B)  Growth was steady between 1965 and 2009. 
C)  Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did. 
D)  The output of goods and services produced grew on average about 3 percent per year between 1965 and 2009.

Question 3

Table 23-11
The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009.
Prices and Quantities
  
-Refer to Table 23-11.
What was nominal GDP, real GDP, and the GDP deflator for 2011? Show your work.

Accepted Answer

Nominal GDP was $6x80 + $65x12

Question 4

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 2018, this country's

Accepted Answer

A)  real GDP was $1080, and the GDP deflator was 156.3. 
B)  real GDP was $1080, and the GDP deflator was 177.8. 
C)  real GDP was $1920, and the GDP deflator was 177.8. 
D)  real GDP was $1920, and the GDP deflator was 156.3. 
A)  real GDP was $1080, and the GDP deflator was 156.3. 
B)  real GDP was $1080, and the GDP deflator was 177.8. 
C)  real GDP was $1920, and the GDP deflator was 177.8. 
D)  real GDP was $1920, and the GDP deflator was 156.3.

Question 5

A recession is always associated with

Accepted Answer

A)  the end of a war. 
B)  slowly growing real GDP. 
C)  rising inflation. 
D)  declining real GDP. 
A)  the end of a war. 
B)  slowly growing real GDP. 
C)  rising inflation. 
D)  declining real GDP.

Question 6

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

Accepted Answer

A)  U.S. investment and GDP increase, but German GDP is unaffected. 
B)  U.S. investment and German GDP increase, but U.S. GDP is unaffected. 
C)  U.S. investment, U.S. GDP, and German GDP are unaffected because tractors are intermediate goods. 
D)  U.S. investment, U.S. GDP, and German GDP all increase. 
A)  U.S. investment and GDP increase, but German GDP is unaffected. 
B)  U.S. investment and German GDP increase, but U.S. GDP is unaffected. 
C)  U.S. investment, U.S. GDP, and German GDP are unaffected because tractors are intermediate goods. 
D)  U.S. investment, U.S. GDP, and German GDP all increase.

Question 7

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. This country's inflation rate from 2016 to 2017 was

Accepted Answer

A)  25.0%. 
B)  23.1%. 
C)  26.1%. 
D)  18.8%. 
A)  25.0%. 
B)  23.1%. 
C)  26.1%. 
D)  18.8%.

Question 8

Tom and Lilly rented a house for $12,000 last year. At the start of the year they bought the house they had been renting directly from the owner for $250,000. They believe they could rent it for $12,000 this year, but stay in the house. How much does Tom and Lilly's decision to buy the house change GDP?

Accepted Answer

A)  it reduces GDP by $12,000 
B)  it does not change GDP 
C)  it raises GDP by $238,000 
D)  it raises GDP by $250,000 
A)  it reduces GDP by $12,000 
B)  it does not change GDP 
C)  it raises GDP by $238,000 
D)  it raises GDP by $250,000

Question 9

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

Accepted Answer

A)  The market value of an oil change that Ben performs on his own car. 
B)  The market value of an oil change at Speedy Lube. 
C)  The market value of oil purchased by Ben. 
D)  Production of foreign citizens living in the United States that work in an oil packaging facility. 
A)  The market value of an oil change that Ben performs on his own car. 
B)  The market value of an oil change at Speedy Lube. 
C)  The market value of oil purchased by Ben. 
D)  Production of foreign citizens living in the United States that work in an oil packaging facility.

Question 10

A recession has traditionally been defined as a period during which

Accepted Answer

A)  nominal GDP declines for two consecutive quarters. 
B)  nominal GDP declines for four consecutive quarters. 
C)  real GDP declines for two consecutive quarters. 
D)  real GDP declines for four consecutive quarters. 
A)  nominal GDP declines for two consecutive quarters. 
B)  nominal GDP declines for four consecutive quarters. 
C)  real GDP declines for two consecutive quarters. 
D)  real GDP declines for four consecutive quarters.

Question 11

GDP is a good measure of economic well-being for all purposes.

Accepted Answer

A) True 
 B)False

Question 12

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 13

For the economy as a whole, how does income compare to expenditures? Explain.

Accepted Answer

For the economy as a whole inc

Question 14

Which of the following is the correct formula for the GDP deflator?

Accepted Answer

A)   . 
B)   . 
C)   
D)    
A)   . 
B)   . 
C)   
D)

Question 15

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

Accepted Answer

A)  spending to build new houses 
B)  spending to build new factories 
C)  spending on business equipment such as welding equipment 
D)  All of the above are included in the investment component of GDP. 
A)  spending to build new houses 
B)  spending to build new factories 
C)  spending on business equipment such as welding equipment 
D)  All of the above are included in the investment component of GDP.

Question 16

Grapes are considered intermediate goods

Accepted Answer

A)  whether the purchaser uses them to make wine to sell or eats them. 
B)  if the purchaser uses them to make wine to sell others but not if the purchaser eats them. 
C)  if the purchaser eats them, but not if the purchaser uses to them to make wine to sell. 
D)  None of the above is correct. 
A)  whether the purchaser uses them to make wine to sell or eats them. 
B)  if the purchaser uses them to make wine to sell others but not if the purchaser eats them. 
C)  if the purchaser eats them, but not if the purchaser uses to them to make wine to sell. 
D)  None of the above is correct.

Question 17

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

Accepted Answer

A)  capital 
B)  consumption 
C)  investment 
D)  costs 
A)  capital 
B)  consumption 
C)  investment 
D)  costs

Question 18

Expenditures by households on education are included in the consumption component of GDP.

Accepted Answer

A) True 
 B)False

Question 19

After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are

Accepted Answer

A)  not included in GDP since they do not represent production. 
B)  not included in GDP since the government collects taxes to pay for them. 
C)  included in GDP since government expenditures on goods and services are included in GDP. 
D)  included in GDP only to the extent that the federal government, rather than state or local governments, paid for them. 
A)  not included in GDP since they do not represent production. 
B)  not included in GDP since the government collects taxes to pay for them. 
C)  included in GDP since government expenditures on goods and services are included in GDP. 
D)  included in GDP only to the extent that the federal government, rather than state or local governments, paid for them.

Question 20

Which of the following items is included in U.S. GDP?

Accepted Answer

A)  goods produced by foreign citizens working in the United States 
B)  the difference in the price of the sale of an existing home and its original purchase price 
C)  known illegal activities 
D)  None of the above is included in U.S. GDP. 
A)  goods produced by foreign citizens working in the United States 
B)  the difference in the price of the sale of an existing home and its original purchase price 
C)  known illegal activities 
D)  None of the above is included in U.S. GDP.

Exam 10: Measuring a Nations Income

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

Which of the following is not a correct statement about the growth of real GDP in the U.S. economy?

Table 23-11 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. Prices and Quantities -Refer to Table 23-11. What was nominal GDP, real GDP, and the GDP deflator for 2011? Show your work.

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 2018, this country's

A recession is always associated with

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

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. This country's inflation rate from 2016 to 2017 was

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

A recession has traditionally been defined as a period during which

GDP is a good measure of economic well-being for all purposes.

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

For the economy as a whole, how does income compare to expenditures? Explain.

Which of the following is the correct formula for the GDP deflator?

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

Grapes are considered intermediate goods

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

Expenditures by households on education are included in the consumption component of GDP.

After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are

Which of the following items is 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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