Question 1

The consumption component of GDP includes spending on

Accepted Answer

A)  durable goods and nondurable goods, but not spending on services. 
B)  durable goods and services, but not spending on nondurable goods. 
C)  nondurable goods and services, but not spending on durable goods. 
D)  durable goods, nondurable goods, and services. 
A)  durable goods and nondurable goods, but not spending on services. 
B)  durable goods and services, but not spending on nondurable goods. 
C)  nondurable goods and services, but not spending on durable goods. 
D)  durable goods, nondurable goods, and services.

Question 2

Which of the following statements about GDP is correct?

Accepted Answer

A)  Nominal GDP values production at current prices, whereas real GDP values production at constant prices. 
B)  Nominal GDP values production at constant prices, whereas real GDP values production at current prices. 
C)  Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process. 
D)  Nominal GDP values production at the cost of the resources used in the production process, whereas real GDP values production at market prices. 
A)  Nominal GDP values production at current prices, whereas real GDP values production at constant prices. 
B)  Nominal GDP values production at constant prices, whereas real GDP values production at current prices. 
C)  Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process. 
D)  Nominal GDP values production at the cost of the resources used in the production process, whereas real GDP values production at market prices.

Question 3

Household spending on education is included in

Accepted Answer

A)  consumption, although it might be argued that it would fit better in investment. 
B)  investment, although it might be argued that it would fit better in consumption. 
C)  government spending, based on the fact that most higher-education students attend publicly-supported colleges and universities. 
D)  None of the above is correct; in general, household spending on services is not included in any component of GDP. 
A)  consumption, although it might be argued that it would fit better in investment. 
B)  investment, although it might be argued that it would fit better in consumption. 
C)  government spending, based on the fact that most higher-education students attend publicly-supported colleges and universities. 
D)  None of the above is correct; in general, household spending on services is not included in any component of GDP.

Question 4

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 5

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 the inflation rate for 2010? Show your work.

Accepted Answer

2009 is the base year so the GDP Deflato

Question 6

Changes in the GDP deflator reflect

Accepted Answer

A)  only changes in prices. 
B)  only changes in the amounts being produced. 
C)  both changes in prices and changes in the amounts being produced. 
D)  neither changes in prices nor changes in the amounts being produced. 
A)  only changes in prices. 
B)  only changes in the amounts being produced. 
C)  both changes in prices and changes in the amounts being produced. 
D)  neither changes in prices nor changes in the amounts being produced.

Question 7

In the economy of Talikastan in 2015, consumption was 75% of GDP, government purchases were $200, imports were $50 and 125% of the value of exports, investment was one-sixth of the value of consumption. What was Talikastan's GDP in 2015?

Accepted Answer

A)  $218 
B)  $2500 
C)  $1520 
D)  $2100 
A)  $218 
B)  $2500 
C)  $1520 
D)  $2100

Question 8

Suppose that an economy produces 20,000 units of good A which sells at $3 a unit and 40,000 units of good B which sells at $1 per unit. Production of good A contributes

Accepted Answer

A)  1/3 times as much to GDP as the production of good B. 
B)  3/2 times as much to GDP as the production of good B. 
C)  3 times as much to GDP as the production of good B. 
D)  2/3 times as much to GDP as production of good B. 
A)  1/3 times as much to GDP as the production of good B. 
B)  3/2 times as much to GDP as the production of good B. 
C)  3 times as much to GDP as the production of good B. 
D)  2/3 times as much to GDP as production of good B.

Question 9

Which of the following is not a correct statement about the growth of real GDP in the U.S. economy?

Accepted Answer

A)  Real GDP in 2009 was almost four times its 1965 level. 
B)  Growth was steady between 1965 and 2009. 
C)  Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did. 
D)  The output of goods and services produced grew on average about 3 percent per year between 1965 and 2009. 
A)  Real GDP in 2009 was almost four times its 1965 level. 
B)  Growth was steady between 1965 and 2009. 
C)  Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did. 
D)  The output of goods and services produced grew on average about 3 percent per year between 1965 and 2009.

Question 10

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

Accepted Answer

A)  The value of the goods and services produced by the restaurant is included in both French GDP and U.S. GDP. 
B)  The value added by American workers and equipment in France is included in U.S. GDP and the value added by French workers and equipment is added to French GDP. 
C)  The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP. 
D)  The value of the goods and services produced by the restaurant is included in U.S. GDP, but not in French GDP. 
A)  The value of the goods and services produced by the restaurant is included in both French GDP and U.S. GDP. 
B)  The value added by American workers and equipment in France is included in U.S. GDP and the value added by French workers and equipment is added to French GDP. 
C)  The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP. 
D)  The value of the goods and services produced by the restaurant is included in U.S. GDP, but not in French GDP.

Question 11

Nominal GDP will definitely increase when

Accepted Answer

A)  prices increase and output increases. 
B)  prices increase and output decreases. 
C)  prices decrease and output increases. 
D)  All of the above are correct. 
A)  prices increase and output increases. 
B)  prices increase and output decreases. 
C)  prices decrease and output increases. 
D)  All of the above are correct.

Question 12

If in some year real GDP was $5 trillion and the GDP deflator was 200, what was nominal GDP?

Accepted Answer

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

Question 13

If the value of an economy's imports exceeds the value of that economy's exports, then net exports is a negative number.

Accepted Answer

A) True 
 B)False

Question 14

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 the inflation rate for 2011? Show your work.

Accepted Answer

For 2010 the GDP Deflator was 112. Nomin

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 consumption in 2010?

Accepted Answer

A)  $2018 
B)  $3010 
C)  $3311 
D)  $4015 
A)  $2018 
B)  $3010 
C)  $3311 
D)  $4015

Question 16

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $6300, government purchases were $1300, and investment was $1500. What were Talikastan's imports in 2015?

Accepted Answer

A)  $700 
B)  -$700 
C)  $500. 
D)  $500 
A)  $700 
B)  -$700 
C)  $500. 
D)  $500

Question 17

GDP per person tells us the income and expenditure of the

Accepted Answer

A)  richest person in the economy. 
B)  poorest person in the economy. 
C)  average person in the economy. 
D)  entire economy. 
A)  richest person in the economy. 
B)  poorest person in the economy. 
C)  average person in the economy. 
D)  entire economy.

Question 18

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Accepted Answer

A)  GDP would definitely increase, despite the fact that GDP includes environmental quality. 
B)  GDP would definitely decrease because GDP includes environmental quality. 
C)  GDP would definitely increase because GDP excludes environmental quality. 
D)  GDP could either increase or decrease because GDP excludes environmental quality. 
A)  GDP would definitely increase, despite the fact that GDP includes environmental quality. 
B)  GDP would definitely decrease because GDP includes environmental quality. 
C)  GDP would definitely increase because GDP excludes environmental quality. 
D)  GDP could either increase or decrease because GDP excludes environmental quality.

Question 19

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013.  
-Refer to Table 23-6. In 2011, this country's real GDP was

Accepted Answer

A)  $320. 
B)  $440. 
C)  $760. 
D)  $770. 
A)  $320. 
B)  $440. 
C)  $760. 
D)  $770.

Question 20

In the economy of Talikastan in 2015, consumption was $3000, exports were $400, GDP was $5000, imports were $500, and investment was $1400. What were Talikastan's government purchases in 2015?

Accepted Answer

A)  $60 
B)  $500 
C)  $700 
D)  $1500 
A)  $60 
B)  $500 
C)  $700 
D)  $1500

Exam 23: Measuring a Nations Income

The consumption component of GDP includes spending on

Which of the following statements about GDP is correct?

Household spending on education is included in

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GDP.

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 the inflation rate for 2010? Show your work.

Changes in the GDP deflator reflect

In the economy of Talikastan in 2015, consumption was 75% of GDP, government purchases were $200, imports were $50 and 125% of the value of exports, investment was one-sixth of the value of consumption. What was Talikastan's GDP in 2015?

Suppose that an economy produces 20,000 units of good A which sells at $3 a unit and 40,000 units of good B which sells at $1 per unit. Production of good A contributes

Which of the following is not a correct statement about the growth of real GDP in the U.S. economy?

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

Nominal GDP will definitely increase when

If in some year real GDP was $5 trillion and the GDP deflator was 200, what was nominal GDP?

If the value of an economy's imports exceeds the value of that economy's exports, then net exports is a negative number.

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 the inflation rate for 2011? Show your work.

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 consumption in 2010?

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $6300, government purchases were $1300, and investment was $1500. What were Talikastan's imports in 2015?

GDP per person tells us the income and expenditure of the

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2011, this country's real GDP was

In the economy of Talikastan in 2015, consumption was $3000, exports were $400, GDP was $5000, imports were $500, and investment was $1400. What were Talikastan's government purchases in 2015?

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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