Question 1

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 2

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

Accepted Answer

A)  caused measured GDP to fall. 
B)  not caused any change in measured GDP. 
C)  caused measured GDP to rise. 
D)  probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted. 
A)  caused measured GDP to fall. 
B)  not caused any change in measured GDP. 
C)  caused measured GDP to rise. 
D)  probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.

Question 3

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

Accepted Answer

A)  in both German GDP and U.S. GDP. 
B)  in German GDP, but is not included in U.S. GDP. 
C)  in U.S. GDP, but is not included in German GDP. 
D)  in neither German GDP nor U.S. GDP. 
A)  in both German GDP and U.S. GDP. 
B)  in German GDP, but is not included in U.S. GDP. 
C)  in U.S. GDP, but is not included in German GDP. 
D)  in neither German GDP nor U.S. GDP.

Question 4

Most goods whose purchases are included in the investment component of GDP are used to produce other goods in future periods.

Accepted Answer

A) True 
 B)False

Question 5

If nominal GDP is $10 trillion and real GDP is $12 trillion, then the GDP deflator is

Accepted Answer

A)  83.33, and this indicates that the price level has decreased by 16.67 percent since the base year. 
B)  83.33, and this indicates that the price level has increased by 83.33 percent since the base year. 
C)  120, and this indicates that the price level has increased by 20 percent since the base year. 
D)  120, and this indicates that the price level has increased by 120 percent since the base year. 
A)  83.33, and this indicates that the price level has decreased by 16.67 percent since the base year. 
B)  83.33, and this indicates that the price level has increased by 83.33 percent since the base year. 
C)  120, and this indicates that the price level has increased by 20 percent since the base year. 
D)  120, and this indicates that the price level has increased by 120 percent since the base year.

Question 6

Table 23-1
The table below contains data for Chereaux for the year 2015.
  
-Refer to Table 23-1. Net national product for Chereaux in 2015 is

Accepted Answer

A)  $194. 
B)  $196. 
C)  $198. 
D)  $204. 
A)  $194. 
B)  $196. 
C)  $198. 
D)  $204.

Question 7

Table 23-3
The table below contains data for the country of Crete for the year 2010.
  
-Refer to Table 23-3. What were Crete's net exports in 2010?

Accepted Answer

A)  -$217 
B)  -$88 
C)  $88 
D)  $217 
A)  -$217 
B)  -$88 
C)  $88 
D)  $217

Question 8

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Accepted Answer

A) True 
 B)False

Question 9

The percentage change in the price level from one period to another is called

Accepted Answer

A)  the growth rate. 
B)  the inflation rate. 
C)  the GDP deflator. 
D)  the unemployment rate. 
A)  the growth rate. 
B)  the inflation rate. 
C)  the GDP deflator. 
D)  the unemployment rate.

Question 10

GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included.

Accepted Answer

GDP excludes some products because they

Question 11

In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was $7500, imports were $200, and investment was $1000. What were Talikastan's government purchases in 2015?

Accepted Answer

A)  $1200 
B)  $1900 
C)  $2500 
D)  $4500 
A)  $1200 
B)  $1900 
C)  $2500 
D)  $4500

Question 12

If in some year real GDP was $25 billion and the GDP deflator was 68, what was nominal GDP?

Accepted Answer

A)  $2.72 billion. 
B)  $17 billion. 
C)  $36.8 billion. 
D)  $43 billion. 
A)  $2.72 billion. 
B)  $17 billion. 
C)  $36.8 billion. 
D)  $43 billion.

Question 13

National income differs from net national because

Accepted Answer

A)  it includes profits of corporations. 
B)  of a statistical discrepancy. 
C)  it includes transfer payments. 
D)  it excludes depreciation. 
A)  it includes profits of corporations. 
B)  of a statistical discrepancy. 
C)  it includes transfer payments. 
D)  it excludes depreciation.

Question 14

How does U.S. gross domestic product GDP) differ from U.S. gross national product GNP)?

Accepted Answer

A)  GNP = GDP - losses from depreciation 
B)  GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S. 
C)  GNP = GDP + transfer payments to households + - indirect sales taxes 
D)  GNP = GDP - depreciation - retained earnings 
A)  GNP = GDP - losses from depreciation 
B)  GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S. 
C)  GNP = GDP + transfer payments to households + - indirect sales taxes 
D)  GNP = GDP - depreciation - retained earnings

Question 15

Which of the following items is counted as part of government purchases?

Accepted Answer

A)  The federal government pays $2,000 in Social Security benefits to a retired person. 
B)  The city of Athens, Ohio pays $10,000 to a tree-trimming firm to trim trees along city boulevards. 
C)  The state of Nebraska pays $1,000 to help a low-income family pay its medical bills. 
D)  All of the above are correct. 
A)  The federal government pays $2,000 in Social Security benefits to a retired person. 
B)  The city of Athens, Ohio pays $10,000 to a tree-trimming firm to trim trees along city boulevards. 
C)  The state of Nebraska pays $1,000 to help a low-income family pay its medical bills. 
D)  All of the above are correct.

Question 16

Gross domestic product measures

Accepted Answer

A)  income and expenditures. 
B)  income but not expenditures. 
C)  expenditures but not income. 
D)  neither income nor expenditures. 
A)  income and expenditures. 
B)  income but not expenditures. 
C)  expenditures but not income. 
D)  neither income nor expenditures.

Question 17

If an economy's GDP rises, then it must be the case that the economy's

Accepted Answer

A)  income rises and saving falls. 
B)  income and saving both rise. 
C)  income rises and expenditure falls. 
D)  income and expenditure both rise. 
A)  income rises and saving falls. 
B)  income and saving both rise. 
C)  income rises and expenditure falls. 
D)  income and expenditure both rise.

Question 18

Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture. With each $1,000 worth of leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for $2,600. Neither firm had any inventory at the beginning of 2015. During that year, Cowhide produced enough leather for 25 couches. Couches, Inc. bought 80% of that leather for $20,000 and promised to buy the remaining 20% for $5,000 in 2016. Couches, Inc. produced 20 couches during 2015 and sold each one during that year for $2,600. What was the economy's GDP for 2015?

Accepted Answer

A)  $25,000 
B)  $52,000 
C)  $57,000 
D)  $65,000 
A)  $25,000 
B)  $52,000 
C)  $57,000 
D)  $65,000

Question 19

In the national income accounts, depreciation is called

Accepted Answer

A)  "consumption of fixed capital." 
B)  "negative investment." 
C)  "diminished value." 
D)  "loss due to wear." 
A)  "consumption of fixed capital." 
B)  "negative investment." 
C)  "diminished value." 
D)  "loss due to wear."

Question 20

Periods during which real GDP rises are called recessions.

Accepted Answer

A) True 
 B)False

Exam 10: Measuring a Nations Income

Household spending on education is included in

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

Most goods whose purchases are included in the investment component of GDP are used to produce other goods in future periods.

If nominal GDP is $10 trillion and real GDP is $12 trillion, then the GDP deflator is

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Net national product for Chereaux in 2015 is

Table 23-3 The table below contains data for the country of Crete for the year 2010. -Refer to Table 23-3. What were Crete's net exports in 2010?

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

The percentage change in the price level from one period to another is called

GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included.

In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was $7500, imports were $200, and investment was $1000. What were Talikastan's government purchases in 2015?

If in some year real GDP was $25 billion and the GDP deflator was 68, what was nominal GDP?

National income differs from net national because

How does U.S. gross domestic product GDP) differ from U.S. gross national product GNP)?

Which of the following items is counted as part of government purchases?

Gross domestic product measures

If an economy's GDP rises, then it must be the case that the economy's

In the national income accounts, depreciation is called

Periods during which real GDP rises are called recessions.

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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