Question 1

The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

Accepted Answer

A) True 
 B)False

Question 2

Changes in inventory are included in the investment component of GDP.

Accepted Answer

A) True 
 B)False

Question 3

One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP?

Accepted Answer

A)  GDP increases by $3.00. 
B)  GDP increases by $5.00. 
C)  GDP increases by $6.00. 
D)  GDP increases by $7.00. 
A)  GDP increases by $3.00. 
B)  GDP increases by $5.00. 
C)  GDP increases by $6.00. 
D)  GDP increases by $7.00.

Question 4

Figure 23-1.  
-Refer to Figure 23-1. Which of the following pairs correctly identify X and Z?

Accepted Answer

A)  markets for factors of production and markets for goods and services 
B)  firms and households 
C)  GDP deflator and CPI 
D)  flow of dollars and flow of inputs and outputs 
A)  markets for factors of production and markets for goods and services 
B)  firms and households 
C)  GDP deflator and CPI 
D)  flow of dollars and flow of inputs and outputs

Question 5

Which of the following statements about recessions is true?

Accepted Answer

A)  An old rule of thumb defining recession is two consecutive quarters of falling nominal GDP. 
B)  Recessions occur at regular intervals and last standard amounts of time. 
C)  There is no ironclad rule for the declaration of recessions. 
D)  Recessions are associated with low unemployment and high income. 
A)  An old rule of thumb defining recession is two consecutive quarters of falling nominal GDP. 
B)  Recessions occur at regular intervals and last standard amounts of time. 
C)  There is no ironclad rule for the declaration of recessions. 
D)  Recessions are associated with low unemployment and high income.

Question 6

If total spending rises from one year to the next, then which of the following could not be true?

Accepted Answer

A)  the economy is producing a smaller output of goods and services, and goods and services are selling at higher prices. 
B)  the economy is producing a larger output of goods and services, and goods and services are selling at lower prices. 
C)  the economy is producing a larger output of goods and services, and goods and services are selling at higher prices. 
D)  the economy is producing a smaller output of goods and services, and goods and services are selling at lower prices. 
A)  the economy is producing a smaller output of goods and services, and goods and services are selling at higher prices. 
B)  the economy is producing a larger output of goods and services, and goods and services are selling at lower prices. 
C)  the economy is producing a larger output of goods and services, and goods and services are selling at higher prices. 
D)  the economy is producing a smaller output of goods and services, and goods and services are selling at lower prices.

Question 7

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 net exports in 2010?

Accepted Answer

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

Question 8

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 government purchases in 2010?

Accepted Answer

A)  $553 
B)  $1198 
C)  $1975 
D)  $2752 
A)  $553 
B)  $1198 
C)  $1975 
D)  $2752

Question 9

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

Accepted Answer

A)  households' purchases of newly constructed homes 
B)  net additions to firms' inventories 
C)  firms' purchases of capital equipment 
D)  All of the above are correct. 
A)  households' purchases of newly constructed homes 
B)  net additions to firms' inventories 
C)  firms' purchases of capital equipment 
D)  All of the above are correct.

Question 10

In 2011 a country had a real GDP of $13.89 trillion and GDP deflator of 110. In 2012 it had a nominal GDP of $17.8 trillion and real GDP of 14.24 trillion. What is the rate of inflation in 2012?

Accepted Answer

The answer of In 2011 a country had a real...

Question 11

For an economy as a whole,

Accepted Answer

A)  wages must equal profit. 
B)  consumption must equal income. 
C)  income must equal expenditure. 
D)  consumption must equal saving. 
A)  wages must equal profit. 
B)  consumption must equal income. 
C)  income must equal expenditure. 
D)  consumption must equal saving.

Question 12

Which of the following is an example of depreciation?

Accepted Answer

A)  falling stock prices 
B)  the retirement of several employees 
C)  computers becoming obsolete 
D)  All of the above are examples of depreciation. 
A)  falling stock prices 
B)  the retirement of several employees 
C)  computers becoming obsolete 
D)  All of the above are examples of depreciation.

Question 13

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

Accepted Answer

A)  income and saving fall. 
B)  income and market value of all production both fall. 
C)  income falls and market value of all production rises. 
D)  income rises and market value of all production falls. 
A)  income and saving fall. 
B)  income and market value of all production both fall. 
C)  income falls and market value of all production rises. 
D)  income rises and market value of all production falls.

Question 14

In 2012, GDP per person in the United States was almost

Accepted Answer

A)  $14,000. 
B)  $36,000. 
C)  $46,000 
D)  $50,000 
A)  $14,000. 
B)  $36,000. 
C)  $46,000 
D)  $50,000

Question 15

In early 2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Accepted Answer

A)  the price of the house, the cost of remodeling materials, the increase in rental value 
B)  the price of the house and the cost of remodeling materials, but not the increase in rental value 
C)  the costs of the remodeling materials and the increase in rent, but not the price of the house 
D)  None of the above are correct. 
A)  the price of the house, the cost of remodeling materials, the increase in rental value 
B)  the price of the house and the cost of remodeling materials, but not the increase in rental value 
C)  the costs of the remodeling materials and the increase in rent, but not the price of the house 
D)  None of the above are correct.

Question 16

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

Accepted Answer

A)  caused measured GDP to fall. 
B)  not caused any change in measured GDP. 
C)  caused measured GDP to rise. 
D)  probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted. 
A)  caused measured GDP to fall. 
B)  not caused any change in measured GDP. 
C)  caused measured GDP to rise. 
D)  probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.

Question 17

Figure 23-1.  
-Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?

Accepted Answer

A)  markets for factors of production and markets for goods and services 
B)  firms and households 
C)  expenditures and income 
D)  consumption and investment 
A)  markets for factors of production and markets for goods and services 
B)  firms and households 
C)  expenditures and income 
D)  consumption and investment

Question 18

Table 23-7
The table below contains data for the country of Togogo. The base year is 1974.  
-Refer to Table 23-7. Which of the following is not correct?

Accepted Answer

A)  This economy experienced growth from 1974 to 1975. 
B)  This economy experienced growth from 1975 to 1976. 
C)  This economy experienced growth from 1976 to 1977. 
D)  This economy experienced inflation from 1974 to 1975, from 1975 to 1976, and from 1976 to 1977. 
A)  This economy experienced growth from 1974 to 1975. 
B)  This economy experienced growth from 1975 to 1976. 
C)  This economy experienced growth from 1976 to 1977. 
D)  This economy experienced inflation from 1974 to 1975, from 1975 to 1976, and from 1976 to 1977.

Question 19

Table 23-11
The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009.
Prices and Quantities  
-Refer to Table 23-11.
What was nominal GDP, real GDP, and the GDP deflator for 2011? Show your work.

Accepted Answer

Nominal GDP was $6x80 + $65x12

Question 20

For an economy as a whole,

Accepted Answer

A)  the market value of production must equal expenditure. 
B)  investment must equal the value of stocks and bonds purchased. 
C)  wages must equal income. 
D)  consumption must equal saving. 
A)  the market value of production must equal expenditure. 
B)  investment must equal the value of stocks and bonds purchased. 
C)  wages must equal income. 
D)  consumption must equal saving.

Exam 23: Measuring a Nations Income

The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

Changes in inventory are included in the investment component of GDP.

One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP?

Figure 23-1. -Refer to Figure 23-1. Which of the following pairs correctly identify X and Z?

Which of the following statements about recessions is true?

If total spending rises from one year to the next, then which of the following could not be true?

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 net exports in 2010?

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 government purchases in 2010?

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

In 2011 a country had a real GDP of $13.89 trillion and GDP deflator of 110. In 2012 it had a nominal GDP of $17.8 trillion and real GDP of 14.24 trillion. What is the rate of inflation in 2012?

For an economy as a whole,

Which of the following is an example of depreciation?

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

In 2012, GDP per person in the United States was almost

In early 2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

Figure 23-1. -Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?

Table 23-7 The table below contains data for the country of Togogo. The base year is 1974. -Refer to Table 23-7. Which of the following is not correct?

Table 23-11 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. Prices and Quantities -Refer to Table 23-11. What was nominal GDP, real GDP, and the GDP deflator for 2011? Show your work.

For an economy as a whole,

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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