Question 1

Household spending on education is counted in which component or subcomponent of GDP?

Accepted Answer

A)  consumption of durable goods 
B)  consumption of nondurable goods 
C)  consumption of services 
D)  investment 
A)  consumption of durable goods 
B)  consumption of nondurable goods 
C)  consumption of services 
D)  investment

Question 2

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 3

Which of the following is included in GDP?

Accepted Answer

A)  medical marijuana purchased from a government-run pharmacy by a glaucoma patient 
B)  recreational marijuana purchased from a drug dealer by a college student 
C)  recreational marijuana produced and consumed by a man in his attic 
D)  All of the above are included in GDP. 
A)  medical marijuana purchased from a government-run pharmacy by a glaucoma patient 
B)  recreational marijuana purchased from a drug dealer by a college student 
C)  recreational marijuana produced and consumed by a man in his attic 
D)  All of the above are included in GDP.

Question 4

Otherwise legal transactions that go unreported or unrecorded are called

Accepted Answer

A)  the underground economy. 
B)  the shadow economy. 
C)  the informal economy. 
D)  All of the above are correct. 
A)  the underground economy. 
B)  the shadow economy. 
C)  the informal economy. 
D)  All of the above are correct.

Question 5

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

Accepted Answer

A)  Why do prices in general rise by more in some countries than in others? 
B)  Why do wages differ across industries? 
C)  Why do national production and income increase in some periods and not in others? 
D)  How rapidly is GDP currently increasing? 
A)  Why do prices in general rise by more in some countries than in others? 
B)  Why do wages differ across industries? 
C)  Why do national production and income increase in some periods and not in others? 
D)  How rapidly is GDP currently increasing?

Question 6

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Accepted Answer

A)  U.S. consumption falls by $500, U.S. net exports decline by $500, and U.S. GDP declines by $1000. 
B)  U.S. consumption does not change, U.S. net exports decline by $500, and U.S. GDP declines by $500. 
C)  U.S. consumption increases by $500, U.S. net exports remain the same, and U.S. GDP increases by $500. 
D)  U.S. consumption increases by $500, U.S. net exports decline by $500, and U.S. GDP remains the same. 
A)  U.S. consumption falls by $500, U.S. net exports decline by $500, and U.S. GDP declines by $1000. 
B)  U.S. consumption does not change, U.S. net exports decline by $500, and U.S. GDP declines by $500. 
C)  U.S. consumption increases by $500, U.S. net exports remain the same, and U.S. GDP increases by $500. 
D)  U.S. consumption increases by $500, U.S. net exports decline by $500, and U.S. GDP remains the same.

Question 7

GDP is not a perfect measure of well-being; for example,

Accepted Answer

A)  GDP excludes the value of volunteer work. 
B)  GDP does not address the distribution of income. 
C)  GDP does not address environmental quality. 
D)  All of the above are correct. 
A)  GDP excludes the value of volunteer work. 
B)  GDP does not address the distribution of income. 
C)  GDP does not address environmental quality. 
D)  All of the above are correct.

Question 8

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 9

Which of the following examples of household spending is categorized as investment rather than consumption?

Accepted Answer

A)  expenditures on durable goods such as automobiles and refrigerators 
B)  expenditures on intangibles items such as medical care 
C)  expenditures on new housing 
D)  All of the above are correct. 
A)  expenditures on durable goods such as automobiles and refrigerators 
B)  expenditures on intangibles items such as medical care 
C)  expenditures on new housing 
D)  All of the above are correct.

Question 10

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 nominal GDP was

Accepted Answer

A)  $260. 
B)  $440. 
C)  $620. 
D)  $760. 
A)  $260. 
B)  $440. 
C)  $620. 
D)  $760.

Question 11

A good is produced by a firm in 2009, added to the firm's inventory in 2010, and sold to a household in 2010. As a result, on net,

Accepted Answer

A)  2009 GDP increased and 2010 GDP decreased. 
B)  2009 GDP decreased and 2010 GDP increased. 
C)  2009 GDP did not change and 2010 GDP increased. 
D)  2009 GDP increased and 2010 GDP did not change. 
A)  2009 GDP increased and 2010 GDP decreased. 
B)  2009 GDP decreased and 2010 GDP increased. 
C)  2009 GDP did not change and 2010 GDP increased. 
D)  2009 GDP increased and 2010 GDP did not change.

Question 12

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Accepted Answer

A) True 
 B)False

Question 13

In the base year, the GDP deflator is always

Accepted Answer

A)  -1. 
B)  0. 
C)  1. 
D)  100. 
A)  -1. 
B)  0. 
C)  1. 
D)  100.

Question 14

Recessions are not associated with which of the following?

Accepted Answer

A)  increased bankruptcies 
B)  falling profits 
C)  falling incomes 
D)  falling unemployment 
A)  increased bankruptcies 
B)  falling profits 
C)  falling incomes 
D)  falling unemployment

Question 15

In 2012 a country had a real GDP $15.4 trillion and GDP deflator of 125. If that country's GDP deflator equals 115 in 2013, what is the rate of inflation in 2013?

Accepted Answer

The answer of In 2012 a country had a real...

Question 16

In the economy of Talikastan in 2015, exports were $200, GDP was $2000, government purchases were $200, imports were $270, and investment was $500. What was Talikastan's consumption in 2015?

Accepted Answer

A)  $830 
B)  $1230 
C)  $1370 
D)  $1770 
A)  $830 
B)  $1230 
C)  $1370 
D)  $1770

Question 17

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

Accepted Answer

For the economy as a whole inc

Question 18

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 19

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 20

If real GDP doubles and the GDP deflator doubles, then nominal GDP

Accepted Answer

A)  remains constant. 
B)  doubles. 
C)  triples. 
D)  quadruples. 
A)  remains constant. 
B)  doubles. 
C)  triples. 
D)  quadruples.

Exam 23: Measuring a Nations Income

Household spending on education is counted in which component or subcomponent of GDP?

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

Which of the following is included in GDP?

Otherwise legal transactions that go unreported or unrecorded are called

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

GDP is not a perfect measure of well-being; for example,

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

Which of the following examples of household spending is categorized as investment rather than consumption?

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 nominal GDP was

A good is produced by a firm in 2009, added to the firm's inventory in 2010, and sold to a household in 2010. As a result, on net,

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

In the base year, the GDP deflator is always

Recessions are not associated with which of the following?

In 2012 a country had a real GDP $15.4 trillion and GDP deflator of 125. If that country's GDP deflator equals 115 in 2013, what is the rate of inflation in 2013?

In the economy of Talikastan in 2015, exports were $200, GDP was $2000, government purchases were $200, imports were $270, and investment was $500. What was Talikastan's consumption in 2015?

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

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

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

If real GDP doubles and the GDP deflator doubles, then nominal 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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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