Question 1

The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions.

Accepted Answer

A) True 
 B)False

Question 2

Government purchases include spending on goods and services by

Accepted Answer

A)  the federal government, but not by state or local governments. 
B)  federal and state governments, but not by local governments. 
C)  federal, state, and local governments. 
D)  federal, state, and local governments, as well as household spending by employees of those governments. 
A)  the federal government, but not by state or local governments. 
B)  federal and state governments, but not by local governments. 
C)  federal, state, and local governments. 
D)  federal, state, and local governments, as well as household spending by employees of those governments.

Question 3

Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard?

Accepted Answer

A)  $1 
B)  $19 
C)  $20 
D)  $21 
A)  $1 
B)  $19 
C)  $20 
D)  $21

Question 4

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

Accepted Answer

A)  Elaine pays her college tuition bill. 
B)  John's law firm buys him a new computer. 
C)  Laura buys a bond that McDonald's sells to raise funds. 
D)  All of the above are correct. 
A)  Elaine pays her college tuition bill. 
B)  John's law firm buys him a new computer. 
C)  Laura buys a bond that McDonald's sells to raise funds. 
D)  All of the above are correct.

Question 5

When economists refer to intangible items, they are referring to such things as

Accepted Answer

A)  illegal goods, and the value of such items is included in GDP. 
B)  illegal goods, and the value of such items is excluded from GDP. 
C)  hair styling and dental care, and the value of such items is included in GDP. 
D)  hair styling and dental care, and the value of such items is excluded from GDP. 
A)  illegal goods, and the value of such items is included in GDP. 
B)  illegal goods, and the value of such items is excluded from GDP. 
C)  hair styling and dental care, and the value of such items is included in GDP. 
D)  hair styling and dental care, and the value of such items is excluded from GDP.

Question 6

Which of the following correctly orders U.S. income measures from largest to smallest?

Accepted Answer

A)  disposable personal income, gross national product, national income, net national product, personal income 
B)  personal income, net national product, national income, gross national product, disposable personal income 
C)  gross national product, net national product, national income, personal income, disposable personal income 
D)  disposable personal income, personal income, national income, net national product, gross national product 
A)  disposable personal income, gross national product, national income, net national product, personal income 
B)  personal income, net national product, national income, gross national product, disposable personal income 
C)  gross national product, net national product, national income, personal income, disposable personal income 
D)  disposable personal income, personal income, national income, net national product, gross national product

Question 7

Microeconomics and macroeconomics are closely linked.

Accepted Answer

A) True 
 B)False

Question 8

Consider two cars manufactured by Chevrolet in 2014. During 2014, Chevrolet sells one of the two cars to Emily for $20,000. Later in the same year, Emily sells the car to Jim for $18,000. The second automobile, with a market value of $19,000, is unsold at the end of 2014 and it remains in Chevrolet's inventory. The transactions just described contribute how much to GDP for 2014?

Accepted Answer

A)  $20,000 
B)  $37,000 
C)  $38,000 
D)  $39,000 
A)  $20,000 
B)  $37,000 
C)  $38,000 
D)  $39,000

Question 9

Suppose an apartment complex converts to a condominium, so that the former renters are now owners of their housing units. Suppose further that a current estimate of the value of the condominium owners' housing services is the same as the rent they previously paid. What happens to GDP as a result of this conversion?

Accepted Answer

A)  GDP necessarily increases. 
B)  GDP necessarily decreases. 
C)  GDP is unaffected because neither the rent nor the estimate of the value owner-occupied housing services is included in GDP. 
D)  GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services. 
A)  GDP necessarily increases. 
B)  GDP necessarily decreases. 
C)  GDP is unaffected because neither the rent nor the estimate of the value owner-occupied housing services is included in GDP. 
D)  GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services.

Question 10

GDP does not directly measure those things that make life worthwhile, but it does measure our ability to obtain many of the inputs into a worthwhile life.

Accepted Answer

A) True 
 B)False

Question 11

The U.S. buys $500 billion of goods and $250 billion of services from foreign countries. Foreign countries buy $250 billion of goods and $300 billion of services from the U.S. What is net exports?

Accepted Answer

The answer of The U.S. buys $500 billion of goods...

Question 12

An American retailer purchased 500 pairs of shoes from a company in Thailand in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016. Which of the following components of U.S. GDP is affected by this transaction in the third quarter of 2016?

Accepted Answer

A)  consumption, investment and imports 
B)  only consumption and investment 
C)  only consumption and imports 
D)  only investment and imports 
A)  consumption, investment and imports 
B)  only consumption and investment 
C)  only consumption and imports 
D)  only investment and imports

Question 13

A U.S. publisher purchases new computers that were manufactured in the U.S. This purchase by itself makes

Accepted Answer

A)  a positive contribution both to investment and to GDP. 
B)  a positive contribution both to consumption and to GDP. 
C)  a positive contribution to GDP, but it does not affect investment or consumption. 
D)  a positive contribution to investment, but it does not affect GDP. 
A)  a positive contribution both to investment and to GDP. 
B)  a positive contribution both to consumption and to GDP. 
C)  a positive contribution to GDP, but it does not affect investment or consumption. 
D)  a positive contribution to investment, but it does not affect GDP.

Question 14

Which of the following is an example of a durable good?

Accepted Answer

A)  a hair dryer. 
B)  a suit. 
C)  a pair of shoes. 
D)  All of the above are correct. 
A)  a hair dryer. 
B)  a suit. 
C)  a pair of shoes. 
D)  All of the above are correct.

Question 15

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 16

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

Accepted Answer

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

Question 17

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.

Question 18

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

Accepted Answer

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

Question 19

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

Accepted Answer

A)  values of goods and services based on surveys of consumers. 
B)  market prices. 
C)  quantities purchased by a typical urban household. 
D)  profits from producing goods and services. 
A)  values of goods and services based on surveys of consumers. 
B)  market prices. 
C)  quantities purchased by a typical urban household. 
D)  profits from producing goods and services.

Question 20

In a simple circular-flow diagram,

Accepted Answer

A)  households spend all of their income. 
B)  all goods and services are bought by households. 
C)  expenditures flow through the markets for goods and services, while income flows through the markets for the factors of production. 
D)  All of the above are correct. 
A)  households spend all of their income. 
B)  all goods and services are bought by households. 
C)  expenditures flow through the markets for goods and services, while income flows through the markets for the factors of production. 
D)  All of the above are correct.

Exam 23: Measuring a Nations Income

The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions.

Government purchases include spending on goods and services by

Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard?

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

When economists refer to intangible items, they are referring to such things as

Which of the following correctly orders U.S. income measures from largest to smallest?

Microeconomics and macroeconomics are closely linked.

GDP does not directly measure those things that make life worthwhile, but it does measure our ability to obtain many of the inputs into a worthwhile life.

The U.S. buys $500 billion of goods and $250 billion of services from foreign countries. Foreign countries buy $250 billion of goods and $300 billion of services from the U.S. What is net exports?

An American retailer purchased 500 pairs of shoes from a company in Thailand in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016. Which of the following components of U.S. GDP is affected by this transaction in the third quarter of 2016?

A U.S. publisher purchases new computers that were manufactured in the U.S. This purchase by itself makes

Which of the following is an example of a durable good?

Which of the following is a way to compute GDP?

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

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

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

In a simple circular-flow diagram,

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

Filters