Question 1

In years of economic contraction, firms throughout the economy increase their production of goods and services, employment rises, and jobs are easy to find.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

The U.S. government pays an economist at the U.S. Department of Commerce $100,000 in salary in 2013. The economist then retires. In 2014, the government pays him $60,000 in Social Security benefits. Which of the following is correct?

Accepted Answer

A)  The 2013 payment is included in 2013 GDP as government purchases, and the 2014 payment is included in 2014 GDP as government purchases. 
B)  The 2013 payment is included in 2013 GDP as government purchases, but the 2014 payment is not included in 2014 GDP. 
C)  The 2013 payment is included in 2013 GDP as government purchases, and the 2014 payment is included in 2014 GDP as government transfer payments. 
D)  The 2013 payment is included in 2013 GDP as government purchases, and the 2014 payment is allocated to previous years' GDP according to the amount of work performed by the economist each year. 
A)  The 2013 payment is included in 2013 GDP as government purchases, and the 2014 payment is included in 2014 GDP as government purchases. 
B)  The 2013 payment is included in 2013 GDP as government purchases, but the 2014 payment is not included in 2014 GDP. 
C)  The 2013 payment is included in 2013 GDP as government purchases, and the 2014 payment is included in 2014 GDP as government transfer payments. 
D)  The 2013 payment is included in 2013 GDP as government purchases, and the 2014 payment is allocated to previous years' GDP according to the amount of work performed by the economist each year.

Question 4

Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself. Which of the following is correct? The value of changing the oil is

Accepted Answer

A)  included in GDP whether Susan pays Speedy Lube to change it or changes it herself. 
B)  included in GDP if Susan pays Speedy Lube to change it but not if she changes it herself. 
C)  included in GDP if Susan changes it herself, but not if she pays Speedy Lube to change it. 
D)  not included in GDP whether Susan pays Speedy lube to change it or she changes it herself. 
A)  included in GDP whether Susan pays Speedy Lube to change it or changes it herself. 
B)  included in GDP if Susan pays Speedy Lube to change it but not if she changes it herself. 
C)  included in GDP if Susan changes it herself, but not if she pays Speedy Lube to change it. 
D)  not included in GDP whether Susan pays Speedy lube to change it or she changes it herself.

Question 5

A statistical discrepancy

Accepted Answer

A)  exists because data sources are not perfect, so measures of expenditures and income are not equal. 
B)  insures that GDP will approximately equal GNP. 
C)  explains the close association between GDP and quality of life measures such as literacy and life expectancy. 
D)  explains the inadequacy of GDP in capturing the value of leisure and the value of a clean environment. 
A)  exists because data sources are not perfect, so measures of expenditures and income are not equal. 
B)  insures that GDP will approximately equal GNP. 
C)  explains the close association between GDP and quality of life measures such as literacy and life expectancy. 
D)  explains the inadequacy of GDP in capturing the value of leisure and the value of a clean environment.

Question 6

Table 23-1
The table below contains data for Chereaux for the year 2015.  
-Refer to Table 23-1. Disposable personal income for Chereaux in 2015 is

Accepted Answer

A)  $190. 
B)  $211. 
C)  $130. 
D)  $141. 
A)  $190. 
B)  $211. 
C)  $130. 
D)  $141.

Question 7

Darin grows and sells marijuana to Jennifer. Thomas is an organic farmer who sells broccoli to Jennifer. Marijuana is an illegal good and broccoli is a legal good. Assume that if Jennifer marries either, they give her what they use to sell her. Which of the following statements is consistent with the way GDP is computed?

Accepted Answer

A)  GDP will fall if Jennifer marries either Darin or Thomas. 
B)  GDP will fall if Jennifer marries Darin but not if she marries Thomas. 
C)  GDP will fall if Jennifer marries Thomas but not if she marries Darin. 
D)  GDP remains the same whether Jennifer marries Darin or Thomas. 
A)  GDP will fall if Jennifer marries either Darin or Thomas. 
B)  GDP will fall if Jennifer marries Darin but not if she marries Thomas. 
C)  GDP will fall if Jennifer marries Thomas but not if she marries Darin. 
D)  GDP remains the same whether Jennifer marries Darin or Thomas.

Question 8

The Patersons bought a home that was newly constructed in 2007 for $275,000. They sold the home in 2015 for $255,000. Which of the following statements is correct regarding the sale of the house?

Accepted Answer

A)  The 2015 sale increased 2015 GDP by $255,000 and had no effect on 2007 GDP. 
B)  The 2015 sale reduced 2015 GDP by $20,000 and had no effect on 2007 GDP. 
C)  The 2015 sale increased 2015 GDP by $255,000; and caused 2007 GDP to be revised downward by $20,000. 
D)  The 2015 sale affected neither 2007 GDP nor 2015 GDP. 
A)  The 2015 sale increased 2015 GDP by $255,000 and had no effect on 2007 GDP. 
B)  The 2015 sale reduced 2015 GDP by $20,000 and had no effect on 2007 GDP. 
C)  The 2015 sale increased 2015 GDP by $255,000; and caused 2007 GDP to be revised downward by $20,000. 
D)  The 2015 sale affected neither 2007 GDP nor 2015 GDP.

Question 9

Real GDP is a better gauge of economic well-being than is nominal GDP.

Accepted Answer

A) True 
 B)False

Question 10

On the basis of the information presented in the table below, which presents the correct ordering of real GDP per person from highest to lowest?

Accepted Answer

A)  Atlantis, Merpois, Bensalem 
B)  Bensalem, Atlantis, Merpois 
C)  Atlantis, Bensalem, Merpois 
D)  Bensalem, Merpois, Atlantis 
A)  Atlantis, Merpois, Bensalem 
B)  Bensalem, Atlantis, Merpois 
C)  Atlantis, Bensalem, Merpois 
D)  Bensalem, Merpois, Atlantis

Question 11

Disposable personal income is the income that

Accepted Answer

A)  households have left after paying taxes and non-tax payments to the government. 
B)  businesses have left after paying taxes and non-tax payments to the government. 
C)  households and noncorporate businesses have left after paying taxes and non-tax payments to the government. 
D)  households and businesses have left after paying taxes and non-tax payments to the government. 
A)  households have left after paying taxes and non-tax payments to the government. 
B)  businesses have left after paying taxes and non-tax payments to the government. 
C)  households and noncorporate businesses have left after paying taxes and non-tax payments to the government. 
D)  households and businesses have left after paying taxes and non-tax payments to the government.

Question 12

In the United States in 2012, purchases of capital equipment, inventories, and structures represented approximately

Accepted Answer

A)  3 percent of GDP. 
B)  7 percent of GDP. 
C)  13 percent of GDP. 
D)  15 percent of GDP. 
A)  3 percent of GDP. 
B)  7 percent of GDP. 
C)  13 percent of GDP. 
D)  15 percent of GDP.

Question 13

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 GDP deflator for 2012 and 2013.

Accepted Answer

GDP deflator is 127.

Question 14

Calculate GDP for an economy with exports of $5 trillion, investment of $1.5 trillion, consumption spending of $11 trillion, imports of $6 trillion, and government purchases of $3 trillion.

Accepted Answer

The answer of Calculate GDP for an economy with exports...

Question 15

The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest?

Accepted Answer

A)  Ghana, Kenya, Tanzania 
B)  Ghana, Tanzania, Kenya 
C)  Kenya, Tanzania, Ghana 
D)  Kenya, Ghana, Tanzania 
A)  Ghana, Kenya, Tanzania 
B)  Ghana, Tanzania, Kenya 
C)  Kenya, Tanzania, Ghana 
D)  Kenya, Ghana, Tanzania

Question 16

Thomas, a U.S. citizen, works only in Canada. The value of the output he 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 headlines is more closely related to what microeconomists study than to what macroeconomists study?

Accepted Answer

A)  Unemployment rate falls from 7.5 percent to 7.3 percent. 
B)  Real GDP falls by 0.4 percent in the third quarter. 
C)  Inflation was 2.4 percent last year. 
D)  The price of gasoline rises due to rising oil prices. 
A)  Unemployment rate falls from 7.5 percent to 7.3 percent. 
B)  Real GDP falls by 0.4 percent in the third quarter. 
C)  Inflation was 2.4 percent last year. 
D)  The price of gasoline rises due to rising oil prices.

Question 18

A U.S. grocery chain purchases olive oil from Tunisia and sells it to U.S. consumers. In which of the following is this transaction included?

Accepted Answer

A)  U.S. consumption and U.S. imports 
B)  U.S. consumption but not U.S. imports 
C)  U.S. imports but not U.S. consumption 
D)  neither U.S. consumption nor U.S. imports 
A)  U.S. consumption and U.S. imports 
B)  U.S. consumption but not U.S. imports 
C)  U.S. imports but not U.S. consumption 
D)  neither U.S. consumption nor U.S. imports

Question 19

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 20

Which of the following is not a question that macroeconomists address?

Accepted Answer

A)  Why is average income high in some countries while it is low in others? 
B)  Why does the price of oil rise when war erupts in the Middle East? 
C)  Why do production and employment expand in some years and contract in others? 
D)  Why do prices rise rapidly in some periods of time while they are more stable in other periods? 
A)  Why is average income high in some countries while it is low in others? 
B)  Why does the price of oil rise when war erupts in the Middle East? 
C)  Why do production and employment expand in some years and contract in others? 
D)  Why do prices rise rapidly in some periods of time while they are more stable in other periods?

Exam 23: Measuring a Nations Income

In years of economic contraction, firms throughout the economy increase their production of goods and services, employment rises, and jobs are easy to find.

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

The U.S. government pays an economist at the U.S. Department of Commerce $100,000 in salary in 2013. The economist then retires. In 2014, the government pays him $60,000 in Social Security benefits. Which of the following is correct?

Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself. Which of the following is correct? The value of changing the oil is

A statistical discrepancy

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Disposable personal income for Chereaux in 2015 is

The Patersons bought a home that was newly constructed in 2007 for $275,000. They sold the home in 2015 for $255,000. Which of the following statements is correct regarding the sale of the house?

Real GDP is a better gauge of economic well-being than is nominal GDP.

On the basis of the information presented in the table below, which presents the correct ordering of real GDP per person from highest to lowest?

Disposable personal income is the income that

In the United States in 2012, purchases of capital equipment, inventories, and structures represented approximately

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 GDP deflator for 2012 and 2013.

Calculate GDP for an economy with exports of $5 trillion, investment of $1.5 trillion, consumption spending of $11 trillion, imports of $6 trillion, and government purchases of $3 trillion.

The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest?

Thomas, a U.S. citizen, works only in Canada. The value of the output he produces is

Which of the following headlines is more closely related to what microeconomists study than to what macroeconomists study?

A U.S. grocery chain purchases olive oil from Tunisia and sells it to U.S. consumers. In which of the following is this transaction included?

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

Which of the following is not a question that macroeconomists address?

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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