Question 1

Gross domestic product measures

Accepted Answer

A)  income and expenditures. 
B)  income but not expenditures. 
C)  expenditures but not income. 
D)  neither income nor expenditures. 
A)  income and expenditures. 
B)  income but not expenditures. 
C)  expenditures but not income. 
D)  neither income nor expenditures.

Question 2

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely

Accepted Answer

A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  may have increased, decreased, or stayed the same. 
A)  increased. 
B)  decreased. 
C)  stayed the same. 
D)  may have increased, decreased, or stayed the same.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  the estimated value of production accomplished at home, such as backyard production of fruits and vegetables 
B)  the value of illegally-produced goods and services 
C)  the value of cars and trucks produced in foreign countries and sold in the U.S. 
D)  None of the above is included in U.S. GDP. 
A)  the estimated value of production accomplished at home, such as backyard production of fruits and vegetables 
B)  the value of illegally-produced goods and services 
C)  the value of cars and trucks produced in foreign countries and sold in the U.S. 
D)  None of the above is included in U.S. GDP.

Question 5

Which of the following items is counted as part of government purchases?

Accepted Answer

A)  The federal government pays the salary of a Navy officer. 
B)  The state of Nevada pays a private firm to repair a Nevada state highway. 
C)  The city of Las Vegas, Nevada pays a private firm to collect garbage in that city. 
D)  All of the above are correct. 
A)  The federal government pays the salary of a Navy officer. 
B)  The state of Nevada pays a private firm to repair a Nevada state highway. 
C)  The city of Las Vegas, Nevada pays a private firm to collect garbage in that city. 
D)  All of the above are correct.

Question 6

The income that households and noncorporate businesses receive is called

Accepted Answer

A)  personal income. 
B)  net national product. 
C)  disposable personal income. 
D)  national income. 
A)  personal income. 
B)  net national product. 
C)  disposable personal income. 
D)  national income.

Question 7

In the actual economy, households

Accepted Answer

A)  spend all of their income. 
B)  divide their income among spending, taxes, and saving. 
C)  buy all goods and services produced in the economy. 
D)  Both (a) and (c) are correct. 
A)  spend all of their income. 
B)  divide their income among spending, taxes, and saving. 
C)  buy all goods and services produced in the economy. 
D)  Both (a) and (c) are correct.

Question 8

Macroeconomic statistics tell us about a particular household, firm, or market.

Accepted Answer

A) True 
 B)False

Question 9

Rachel babysits for her sister for no pay. When she babysits for someone else she charges $8 an hour. When is Rachel's babysitting included in GDP?

Accepted Answer

A)  When she babysits for her sister and when she babysits for someone else. 
B)  When she babysits for her sister, but not when she babysits for someone else. 
C)  When she babysits for someone else, but not when she babysits for her sister. 
D)  Neither when she babysits for her sister nor for someone else. 
A)  When she babysits for her sister and when she babysits for someone else. 
B)  When she babysits for her sister, but not when she babysits for someone else. 
C)  When she babysits for someone else, but not when she babysits for her sister. 
D)  Neither when she babysits for her sister nor for someone else.

Question 10

Are sales of used goods included in GDP? Explain why or why not. Hint: Remember how GDP is defined.

Accepted Answer

Sales of used goods

Question 11

GDP is the market value of all final goods and services produced within a country in a given period of time.

Accepted Answer

A) True 
 B)False

Question 12

Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2010 Quality Motors produced $30 million worth of automobiles, with $17 million in sales to Americans, $9 million in sales to Canadians, and $4 million worth of automobiles added to Quality Motors' inventory. The transactions just described contribute how much to U.S. GDP for 2010?

Accepted Answer

A)  $17 million 
B)  $21 million 
C)  $26 million 
D)  $30 million 
A)  $17 million 
B)  $21 million 
C)  $26 million 
D)  $30 million

Question 13

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP?

Accepted Answer

A)  $55,000 
B)  $65,000 
C)  $120,000 
D)  None of the above are correct. 
A)  $55,000 
B)  $65,000 
C)  $120,000 
D)  None of the above are correct.

Question 14

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Accepted Answer

A)  Country A because it had the higher nominal GDP per person. 
B)  Country B because it had the higher nominal GDP per person. 
C)  Country A because it had the higher real GDP per person. 
D)  Country B because it had the higher real GDP per person. 
A)  Country A because it had the higher nominal GDP per person. 
B)  Country B because it had the higher nominal GDP per person. 
C)  Country A because it had the higher real GDP per person. 
D)  Country B because it had the higher real GDP per person.

Question 15

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 real and nominal GDP for the year 2012.

Accepted Answer

Nominal GD

Question 16

The U.S. Air Force pays a Turkish citizen $30,000 to work on a U.S. base in Turkey. As a result,

Accepted Answer

A)  U.S. government purchases increase by $30,000; U.S. net exports decrease by $30,000; and U.S. GDP is unaffected. 
B)  U.S. government purchases increase by $30,000; U.S. net exports are unaffected; and U.S. GDP increases by $30,000. 
C)  U.S. government purchases, net exports, and GDP are unaffected. 
D)  U.S. government purchases are unaffected; U.S. net exports decrease by $30,000; and U.S. GDP decreases by $30,000. 
A)  U.S. government purchases increase by $30,000; U.S. net exports decrease by $30,000; and U.S. GDP is unaffected. 
B)  U.S. government purchases increase by $30,000; U.S. net exports are unaffected; and U.S. GDP increases by $30,000. 
C)  U.S. government purchases, net exports, and GDP are unaffected. 
D)  U.S. government purchases are unaffected; U.S. net exports decrease by $30,000; and U.S. GDP decreases by $30,000.

Question 17

Changes in real GDP reflect only changes in the amounts being produced.

Accepted Answer

A) True 
 B)False

Question 18

Table 23-1
The table below contains data for Chereaux for the year 2015.  
-Refer to Table 23-1. Gross national product for Chereaux in 2015 is

Accepted Answer

A)  $186. 
B)  $214. 
C)  $200. 
D)  $204. 
A)  $186. 
B)  $214. 
C)  $200. 
D)  $204.

Question 19

All of the following are examples of a nondurable good except

Accepted Answer

A)  a pencil. 
B)  one gallon of gasoline. 
C)  a queen-size bed. 
D)  a pair of shoes. 
A)  a pencil. 
B)  one gallon of gasoline. 
C)  a queen-size bed. 
D)  a pair of shoes.

Question 20

If net exports is a negative number for a particular year, then

Accepted Answer

A)  the value of firms' inventories declined over the course of the year. 
B)  consumption exceeded the sum of investment and government purchases during the year. 
C)  the value of goods sold to foreigners exceeded the value of foreign goods purchased during the year. 
D)  the value of foreign goods purchased exceeded the value of goods sold to foreigners during the year. 
A)  the value of firms' inventories declined over the course of the year. 
B)  consumption exceeded the sum of investment and government purchases during the year. 
C)  the value of goods sold to foreigners exceeded the value of foreign goods purchased during the year. 
D)  the value of foreign goods purchased exceeded the value of goods sold to foreigners during the year.

Exam 23: Measuring a Nations Income

Gross domestic product measures

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely

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

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

Which of the following items is counted as part of government purchases?

The income that households and noncorporate businesses receive is called

In the actual economy, households

Macroeconomic statistics tell us about a particular household, firm, or market.

Rachel babysits for her sister for no pay. When she babysits for someone else she charges $8 an hour. When is Rachel's babysitting included in GDP?

Are sales of used goods included in GDP? Explain why or why not. Hint: Remember how GDP is defined.

GDP is the market value of all final goods and services produced within a country in a given period of time.

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP?

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

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 real and nominal GDP for the year 2012.

The U.S. Air Force pays a Turkish citizen $30,000 to work on a U.S. base in Turkey. As a result,

Changes in real GDP reflect only changes in the amounts being produced.

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Gross national product for Chereaux in 2015 is

All of the following are examples of a nondurable good except

If net exports is a negative number for a particular year, then

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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