Question 1

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 2

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 3

Which of the following is always measured in prices from a base-year?

Accepted Answer

A)  both nominal and real GDP. 
B)  nominal but not real GDP. 
C)  real but not nominal GDP. 
D)  neither nominal nor real GDP. 
A)  both nominal and real GDP. 
B)  nominal but not real GDP. 
C)  real but not nominal GDP. 
D)  neither nominal nor real GDP.

Question 4

Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP, but the value of intermediate goods produced and not sold is included directly as part of GDP.

Accepted Answer

Intermediate goods produced and sold dur

Question 5

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 imports in 2010?

Accepted Answer

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

Question 6

The residents of Ireland earn $200 million of income from abroad. Residents of other countries earn $300 million in Ireland. Therefore, Ireland's

Accepted Answer

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

Question 7

While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services provided by teachers and exterminators.

Accepted Answer

A) True 
 B)False

Question 8

If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?

Accepted Answer

A)  both real GDP and nominal GDP. 
B)  real GDP but not nominal GDP. 
C)  nominal GDP but not real GDP. 
D)  neither nominal GDP nor real GDP. 
A)  both real GDP and nominal GDP. 
B)  real GDP but not nominal GDP. 
C)  nominal GDP but not real GDP. 
D)  neither nominal GDP nor real GDP.

Question 9

Figure 23-2.  
-Refer to Figure 23-2. Identify the location of firms and households.

Accepted Answer

W is firms

Question 10

Suppose that twenty-five years ago a country had nominal GDP of $1,000, a GDP deflator of 200, and a population of 100. Today it has nominal GDP of $3,000, a GDP deflator of 400, and population of 150. What happened to the real GDP per person?

Accepted Answer

A)  It more than doubled. 
B)  It increased, but it less than doubled. 
C)  It was unchanged. 
D)  It decreased. 
A)  It more than doubled. 
B)  It increased, but it less than doubled. 
C)  It was unchanged. 
D)  It decreased.

Question 11

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 12

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

Accepted Answer

A)  spending on new residential construction and spending on stocks and bonds 
B)  spending on new residential construction but not spending on stocks and bonds 
C)  spending on stocks and bonds but not spending on new residential construction 
D)  neither spending on stocks and bonds nor spending on new residential construction 
A)  spending on new residential construction and spending on stocks and bonds 
B)  spending on new residential construction but not spending on stocks and bonds 
C)  spending on stocks and bonds but not spending on new residential construction 
D)  neither spending on stocks and bonds nor spending on new residential construction

Question 13

If the price of a dress is three times the price of a pair of shoes, then a pair of shoes contributes

Accepted Answer

A)  exactly one-third as much to GDP as does a dress. 
B)  more than one-third as much to GDP as does a dress. 
C)  less than one-third as much to GDP as does a dress. 
D)  exactly one-fourth as much to GDP as does a dress. 
A)  exactly one-third as much to GDP as does a dress. 
B)  more than one-third as much to GDP as does a dress. 
C)  less than one-third as much to GDP as does a dress. 
D)  exactly one-fourth as much to GDP as does a dress.

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

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

Accepted Answer

A)  $1178 
B)  $1295 
C)  $1882 
D)  $1999 
A)  $1178 
B)  $1295 
C)  $1882 
D)  $1999

Question 16

Table 23-12
A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year.  
-Refer to Table 23-12. Calculate the rate of inflation for 2012.

Accepted Answer

The answer of Table 23-12
A country produces only ice cream...

Question 17

A stove is produced by a firm in 2014, added to the firm's inventory in 2014, and sold to a household in 2015. It follows that

Accepted Answer

A)  the value of the good is added to the investment category of 2014 GDP, added to the consumption category of 2015 GDP, and subtracted from the investment category of 2015 GDP. 
B)  the value of the good is added to the investment category of 2014 GDP, added to the consumption category of 2015 GDP, and not included in the investment category of 2015 GDP. 
C)  the value of the good is added to the investment category of 2014 GDP, subtracted from the consumption category of 2015 GDP, and not included in the investment category of 2015 GDP. 
D)  the value of the good is added to the investment category of 2014 GDP, subtracted from the consumption category of 2015 GDP, and added to the investment category of 2015 GDP. 
A)  the value of the good is added to the investment category of 2014 GDP, added to the consumption category of 2015 GDP, and subtracted from the investment category of 2015 GDP. 
B)  the value of the good is added to the investment category of 2014 GDP, added to the consumption category of 2015 GDP, and not included in the investment category of 2015 GDP. 
C)  the value of the good is added to the investment category of 2014 GDP, subtracted from the consumption category of 2015 GDP, and not included in the investment category of 2015 GDP. 
D)  the value of the good is added to the investment category of 2014 GDP, subtracted from the consumption category of 2015 GDP, and added to the investment category of 2015 GDP.

Question 18

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Define GDP. Remember to be specific about what it includes.

Accepted Answer

GDP is the market value of all

Exam 23: Measuring a Nations Income

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

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

Which of the following is always measured in prices from a base-year?

Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP, but the value of intermediate goods produced and not sold is included directly as part of GDP.

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 imports in 2010?

The residents of Ireland earn $200 million of income from abroad. Residents of other countries earn $300 million in Ireland. Therefore, Ireland's

While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services provided by teachers and exterminators.

If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?

Figure 23-2. -Refer to Figure 23-2. Identify the location of firms and households.

Suppose that twenty-five years ago a country had nominal GDP of $1,000, a GDP deflator of 200, and a population of 100. Today it has nominal GDP of $3,000, a GDP deflator of 400, and population of 150. What happened to the real GDP per person?

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

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

If the price of a dress is three times the price of a pair of shoes, then a pair of shoes contributes

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

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

Table 23-12 A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year. -Refer to Table 23-12. Calculate the rate of inflation for 2012.

A stove is produced by a firm in 2014, added to the firm's inventory in 2014, and sold to a household in 2015. It follows that

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

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

Define GDP. Remember to be specific about what it includes.

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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