Question 1

The value of the housing services provided by the economy's owner-occupied houses is

Accepted Answer

A)  included in GDP, and the estimated rental values of the houses are used to place a value on these housing services. 
B)  included in GDP, and the actual mortgage payments made on the houses are used to estimate the value of these rental services. 
C)  excluded from GDP since these services are not sold in any market. 
D)  excluded from GDP since the value of these housing services cannot be estimated with any degree of precision. 
A)  included in GDP, and the estimated rental values of the houses are used to place a value on these housing services. 
B)  included in GDP, and the actual mortgage payments made on the houses are used to estimate the value of these rental services. 
C)  excluded from GDP since these services are not sold in any market. 
D)  excluded from GDP since the value of these housing services cannot be estimated with any degree of precision.

Question 2

Figure 23-2.  
-Refer to Figure 23-2. Identify the location for markets for factors of production and markets for goods and services.

Accepted Answer

X is markets for fac

Question 3

Countries with low GDP per person tend to have

Accepted Answer

A)  lower rates of child malnutrition. 
B)  fewer infants with low birth weight. 
C)  higher rates of infant mortality. 
D)  more access to safe drinking water. 
A)  lower rates of child malnutrition. 
B)  fewer infants with low birth weight. 
C)  higher rates of infant mortality. 
D)  more access to safe drinking water.

Question 4

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

Accepted Answer

A)  investment. 
B)  government spending. 
C)  consumption of services. 
D)  consumption of durable goods. 
A)  investment. 
B)  government spending. 
C)  consumption of services. 
D)  consumption of durable goods.

Question 5

A consumer buys toys made in China. The value of the toys is included only in the net exports component of GDP.

Accepted Answer

A) True 
 B)False

Question 6

National income differs from net national because

Accepted Answer

A)  it includes profits of corporations. 
B)  of a statistical discrepancy. 
C)  it includes transfer payments. 
D)  it excludes depreciation. 
A)  it includes profits of corporations. 
B)  of a statistical discrepancy. 
C)  it includes transfer payments. 
D)  it excludes depreciation.

Question 7

An economy recently reported nominal GDP of 3 trillion euro and a GDP deflator of 200. What was real GDP?

Accepted Answer

A)  1.5 trillion euro, and real GDP is a better gauge of economic activity than nominal GDP. 
B)  1.5 trillion euro, but nominal GDP is a better gauge of economic activity than real GDP. 
C)  6 trillion euro, and real GDP is a better gauge of economic activity than nominal GDP. 
D)  6 trillion euro, but nominal GDP is a better gauge of economic activity than real GDP. 
A)  1.5 trillion euro, and real GDP is a better gauge of economic activity than nominal GDP. 
B)  1.5 trillion euro, but nominal GDP is a better gauge of economic activity than real GDP. 
C)  6 trillion euro, and real GDP is a better gauge of economic activity than nominal GDP. 
D)  6 trillion euro, but nominal GDP is a better gauge of economic activity than real GDP.

Question 8

Table 23-10
A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 .  
-Refer to Table 23-10. What was this country's GDP deflator in 2017?

Accepted Answer

A)  123.4 
B)  116.7 
C)  120.0 
D)  None of the above is correct. 
A)  123.4 
B)  116.7 
C)  120.0 
D)  None of the above is correct.

Question 9

In a simple circular-flow diagram, firms

Accepted Answer

A)  purchase resources from households. 
B)  purchase the output produced by households. 
C)  receive income by selling resources to households. 
D)  All of the above are correct. 
A)  purchase resources from households. 
B)  purchase the output produced by households. 
C)  receive income by selling resources to households. 
D)  All of the above are correct.

Question 10

In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200. What was Talikastan's GDP in 2015?

Accepted Answer

A)  $6200 
B)  $6400 
C)  $7000 
D)  $8200 
A)  $6200 
B)  $6400 
C)  $7000 
D)  $8200

Question 11

A country's real GDP rose from $500 to $530 while its nominal GDP rose from $600 to $700. What was this country's inflation rate?

Accepted Answer

A)  16.7%. 
B)  10.0%. 
C)  15.0%. 
D)  -9.1%. 
A)  16.7%. 
B)  10.0%. 
C)  15.0%. 
D)  -9.1%.

Question 12

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

Accepted Answer

A)  decreases. 
B)  increases. 
C)  doesn't change because both legal and illegal production are included in GDP. 
D)  doesn't change because these activities are never included in GDP. 
A)  decreases. 
B)  increases. 
C)  doesn't change because both legal and illegal production are included in GDP. 
D)  doesn't change because these activities are never included in GDP.

Question 13

A farmer sells $25,000 worth of apples to individuals who take them home to eat, $50,000 worth of apples to a company that uses them all to produce cider, and $75,000 worth of apples to a grocery store that will sell them to households. How much of the farmer's sales will be included as apples in GDP?

Accepted Answer

A)  $25,000 
B)  $150,000 
C)  $100,000 
D)  $125,000 
A)  $25,000 
B)  $150,000 
C)  $100,000 
D)  $125,000

Question 14

Table 23-3
The table below contains data for the country of Crete for the year 2010.  
-Refer to Table 23-3. What was Crete's GDP in 2010?

Accepted Answer

A)  $4623 
B)  $5731 
C)  $6037 
D)  $6839 
A)  $4623 
B)  $5731 
C)  $6037 
D)  $6839

Question 15

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

Accepted Answer

A)  personal income and personal disposable income. 
B)  estimates of GDP and actual GDP. 
C)  the income and expenditure approaches to the calculation of GDP. 
D)  the quarterly and annual approaches to the calculation of GDP. 
A)  personal income and personal disposable income. 
B)  estimates of GDP and actual GDP. 
C)  the income and expenditure approaches to the calculation of GDP. 
D)  the quarterly and annual approaches to the calculation of GDP.

Question 16

Which of the following statements regarding GDP is correct?

Accepted Answer

A)  GDP includes factory production, but not any harm that may be inflicted on the environment. 
B)  GDP accounts for all activities taking place outside markets. 
C)  GDP provides detailed information about the distribution of income. 
D)  GDP is a good measure of economic well-being for all purposes. 
A)  GDP includes factory production, but not any harm that may be inflicted on the environment. 
B)  GDP accounts for all activities taking place outside markets. 
C)  GDP provides detailed information about the distribution of income. 
D)  GDP is a good measure of economic well-being for all purposes.

Question 17

Unlike national income, personal income

Accepted Answer

A)  includes retained earnings, indirect business taxes, corporate income taxes and social insurance contributions, and excludes interest and transfer payments received by households from the government. 
B)  excludes retained earnings, indirect business taxes corporate income taxes, social insurance contributions and interest and transfer payments received by households from the government. 
C)  excludes retained earnings, indirect business taxes, corporate income taxes and social insurance contributions, and includes interest and transfer payments received by households from the government. 
D)  includes retained earnings, indirect business taxes, corporate income taxes, social insurance contributions, and interest and transfer payments received by households from the government. 
A)  includes retained earnings, indirect business taxes, corporate income taxes and social insurance contributions, and excludes interest and transfer payments received by households from the government. 
B)  excludes retained earnings, indirect business taxes corporate income taxes, social insurance contributions and interest and transfer payments received by households from the government. 
C)  excludes retained earnings, indirect business taxes, corporate income taxes and social insurance contributions, and includes interest and transfer payments received by households from the government. 
D)  includes retained earnings, indirect business taxes, corporate income taxes, social insurance contributions, and interest and transfer payments received by households from the government.

Question 18

The inflation rate is the

Accepted Answer

A)  absolute change in real GDP from one period to another. 
B)  percentage change in real GDP from one period to another. 
C)  absolute change in the price level from one period to another. 
D)  percentage change in the price level from one period to another. 
A)  absolute change in real GDP from one period to another. 
B)  percentage change in real GDP from one period to another. 
C)  absolute change in the price level from one period to another. 
D)  percentage change in the price level from one period to another.

Question 19

If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the consumption component of U.S. GDP and the net exports component of U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 20

An identity is an equation that

Accepted Answer

A)  describes an equilibrium. 
B)  pertains to macroeconomics, not to microeconomics. 
C)  must be true because of how the variables in the equation are defined. 
D)  involves final goods, not intermediate goods. 
A)  describes an equilibrium. 
B)  pertains to macroeconomics, not to microeconomics. 
C)  must be true because of how the variables in the equation are defined. 
D)  involves final goods, not intermediate goods.

Exam 23: Measuring a Nations Income

The value of the housing services provided by the economy's owner-occupied houses is

Figure 23-2. -Refer to Figure 23-2. Identify the location for markets for factors of production and markets for goods and services.

Countries with low GDP per person tend to have

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

A consumer buys toys made in China. The value of the toys is included only in the net exports component of GDP.

National income differs from net national because

An economy recently reported nominal GDP of 3 trillion euro and a GDP deflator of 200. What was real GDP?

Table 23-10 A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 . -Refer to Table 23-10. What was this country's GDP deflator in 2017?

In a simple circular-flow diagram, firms

In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200. What was Talikastan's GDP in 2015?

A country's real GDP rose from $500 to $530 while its nominal GDP rose from $600 to $700. What was this country's inflation rate?

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

Table 23-3 The table below contains data for the country of Crete for the year 2010. -Refer to Table 23-3. What was Crete's GDP in 2010?

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

Which of the following statements regarding GDP is correct?

Unlike national income, personal income

The inflation rate is the

If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the consumption component of U.S. GDP and the net exports component of U.S. GDP.

An identity is an equation that

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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