Question 1

In a simple circular-flow diagram, firms use the money they get from a sale to

Accepted Answer

A)  pay wages to workers. 
B)  pay rent to landlords. 
C)  pay profit to the firms' owners. 
D)  All of the above are correct. 
A)  pay wages to workers. 
B)  pay rent to landlords. 
C)  pay profit to the firms' owners. 
D)  All of the above are correct.

Question 2

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) does(do) these transactions raise investment?

Accepted Answer

A)  the first and the second 
B)  the first but not the second 
C)  the second but not the first 
D)  neither the first nor the second 
A)  the first and the second 
B)  the first but not the second 
C)  the second but not the first 
D)  neither the first nor the second

Question 3

Most goods and services produced at home

Accepted Answer

A)  and most goods and services produced illegally are included in GDP. 
B)  are included in GDP while most goods and services produced illegally are excluded from GDP. 
C)  are excluded from GDP while most goods and services produced illegally are included in GDP 
D)  and most goods and services produced illegally are excluded from GDP. 
A)  and most goods and services produced illegally are included in GDP. 
B)  are included in GDP while most goods and services produced illegally are excluded from GDP. 
C)  are excluded from GDP while most goods and services produced illegally are included in GDP 
D)  and most goods and services produced illegally are excluded from GDP.

Question 4

In the United States in 2012, consumption represented approximately

Accepted Answer

A)  60 percent of GDP. 
B)  70 percent of GDP. 
C)  80 percent of GDP. 
D)  90 percent of GDP. 
A)  60 percent of GDP. 
B)  70 percent of GDP. 
C)  80 percent of GDP. 
D)  90 percent of GDP.

Question 5

GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because

Accepted Answer

A)  the quality of these items is not high enough to contribute value to GDP. 
B)  measuring them is so difficult. 
C)  the government wants to discourage the production and consumption of these items. 
D)  these items are not reported on income tax forms. 
A)  the quality of these items is not high enough to contribute value to GDP. 
B)  measuring them is so difficult. 
C)  the government wants to discourage the production and consumption of these items. 
D)  these items are not reported on income tax forms.

Question 6

In the economy of Talikastan in 2015, consumption was $600, exports were $300, GDP was $1300, government purchases were $250, and investment was $300. What were Talikastan's imports in 2015?

Accepted Answer

A)  -$150 
B)  -$200 
C)  $200 
D)  $150 
A)  -$150 
B)  -$200 
C)  $200 
D)  $150

Question 7

Table 23-9
A country produces only ice cream and pie. Quantities and prices of these goods for the last several years are shown below. The base year is 2008.
Prices and Quantities  
-Refer to Table 23-9. This country's inflation rate from 2009 to 2010 to the nearest tenth was

Accepted Answer

A)  2.9% 
B)  8.8% 
C)  13.3% 
D)  None of the above is correct. 
A)  2.9% 
B)  8.8% 
C)  13.3% 
D)  None of the above is correct.

Question 8

Which of the following is not included in GDP?

Accepted Answer

A)  a can of bug spray 
B)  the services of an exterminator 
C)  the honey produced and sold by a beekeeper 
D)  All of the above are included in GDP. 
A)  a can of bug spray 
B)  the services of an exterminator 
C)  the honey produced and sold by a beekeeper 
D)  All of the above are included in GDP.

Question 9

Which of the following is not included in U.S. GDP?

Accepted Answer

A)  additions of newly produced output to inventory 
B)  production of U.S citizens working in foreign countries. 
C)  the estimated rental value of owner-occupied housing 
D)  the value of food purchased from a grocery store to make meals at home without pay 
A)  additions of newly produced output to inventory 
B)  production of U.S citizens working in foreign countries. 
C)  the estimated rental value of owner-occupied housing 
D)  the value of food purchased from a grocery store to make meals at home without pay

Question 10

If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?

Accepted Answer

A)  $2.5 billion. 
B)  $10 billion. 
C)  $40 billion. 
D)  $100 billion. 
A)  $2.5 billion. 
B)  $10 billion. 
C)  $40 billion. 
D)  $100 billion.

Question 11

What are transfer payments, and how do they affect the calculation of GDP?

Accepted Answer

Transfer payments are income b

Question 12

Recently, the U.S. national income accounts have switched to calling government purchases

Accepted Answer

A)  government spending and transfer payments. 
B)  transfer payments and gross investment by government. 
C)  government consumption expenditure and gross investment. 
D)  government wages, salaries, and investment expenditure. 
A)  government spending and transfer payments. 
B)  transfer payments and gross investment by government. 
C)  government consumption expenditure and gross investment. 
D)  government wages, salaries, and investment expenditure.

Question 13

Net exports equal

Accepted Answer

A)  exports plus imports. 
B)  exports minus imports. 
C)  imports minus exports. 
D)  GDP minus imports. 
A)  exports plus imports. 
B)  exports minus imports. 
C)  imports minus exports. 
D)  GDP minus imports.

Question 14

Figure 23-2.  
-Refer to Figure 23-2. List the locations associated with the flow of inputs and outputs.

Accepted Answer

The answer of Figure 23-2.  
-Refer to Figure 23-2....

Question 15

A transfer payment is

Accepted Answer

A)  a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location. 
B)  a payment that is automatically transferred from your bank account to pay a bill or some other obligation. 
C)  a form of government spending that is not made in exchange for a currently produced good or service. 
D)  the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure. 
A)  a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location. 
B)  a payment that is automatically transferred from your bank account to pay a bill or some other obligation. 
C)  a form of government spending that is not made in exchange for a currently produced good or service. 
D)  the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure.

Question 16

Figure 23-1.  
-Refer to Figure 23-1. Which of the following correctly identifies the flow of dollars?

Accepted Answer

A)  W, X, Y and Z 
B)  K, M, L and N 
C)  C, K, M and D 
D)  A, L, N and B 
A)  W, X, Y and Z 
B)  K, M, L and N 
C)  C, K, M and D 
D)  A, L, N and B

Question 17

Macroeconomists study

Accepted Answer

A)  the decisions of individual households and firms. 
B)  the interaction between households and firms. 
C)  economy-wide phenomena. 
D)  regulations imposed on firms and unions. 
A)  the decisions of individual households and firms. 
B)  the interaction between households and firms. 
C)  economy-wide phenomena. 
D)  regulations imposed on firms and unions.

Question 18

Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the economy's overall production of goods and services changes over time.

Accepted Answer

A) True 
 B)False

Question 19

A U.S.-owned car factory in Mexico produces $5 million of cars. $2.5 million of these cars are sold in Mexico and the other $2.5 million are sold in the U.S. In both cases $1 million of the value of the cars was due to U.S-owned equipment located in Mexico and U.S. managers working in Mexico. How much did this production contribute to U.S. GDP?

Accepted Answer

A)  $0 
B)  $1 million 
C)  $2 million 
D)  None of the above are correct 
A)  $0 
B)  $1 million 
C)  $2 million 
D)  None of the above are correct

Question 20

Table 23-8
A country produces only meat and potatoes in the quantities and prices listed below. Use 2011 as the base year.  
-Refer to Table 23-8. In 2012, GDP deflator is

Accepted Answer

A)  122. 
B)  134. 
C)  92. 
D)  113. 
A)  122. 
B)  134. 
C)  92. 
D)  113.

Exam 23: Measuring a Nations Income

In a simple circular-flow diagram, firms use the money they get from a sale to

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) does(do) these transactions raise investment?

Most goods and services produced at home

In the United States in 2012, consumption represented approximately

GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because

In the economy of Talikastan in 2015, consumption was $600, exports were $300, GDP was $1300, government purchases were $250, and investment was $300. What were Talikastan's imports in 2015?

Table 23-9 A country produces only ice cream and pie. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Prices and Quantities -Refer to Table 23-9. This country's inflation rate from 2009 to 2010 to the nearest tenth was

Which of the following is not included in GDP?

Which of the following is not included in U.S. GDP?

If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?

What are transfer payments, and how do they affect the calculation of GDP?

Recently, the U.S. national income accounts have switched to calling government purchases

Net exports equal

Figure 23-2. -Refer to Figure 23-2. List the locations associated with the flow of inputs and outputs.

A transfer payment is

Figure 23-1. -Refer to Figure 23-1. Which of the following correctly identifies the flow of dollars?

Macroeconomists study

Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the economy's overall production of goods and services changes over time.

Table 23-8 A country produces only meat and potatoes in the quantities and prices listed below. Use 2011 as the base year. -Refer to Table 23-8. In 2012, GDP deflator is

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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