Question 1

If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

Accepted Answer

A)  83.33, and this indicates that the price level has decreased by 16.67 percent since the base year. 
B)  83.33, and this indicates that the price level has increased by 83.33 percent since the base year. 
C)  120, and this indicates that the price level has increased by 20 percent since the base year. 
D)  120, and this indicates that the price level has increased by 120 percent since the base year. 
A)  83.33, and this indicates that the price level has decreased by 16.67 percent since the base year. 
B)  83.33, and this indicates that the price level has increased by 83.33 percent since the base year. 
C)  120, and this indicates that the price level has increased by 20 percent since the base year. 
D)  120, and this indicates that the price level has increased by 120 percent since the base year.

Question 2

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

Accepted Answer

A)  final goods and services that are purchased by the U.S. federal government 
B)  intermediate goods that are produced in the U.S. but that are unsold at the end of the GDP accounting period 
C)  goods and services produced by foreign citizens working in the U.S. 
D)  All of the above are included in U.S. GDP. 
A)  final goods and services that are purchased by the U.S. federal government 
B)  intermediate goods that are produced in the U.S. but that are unsold at the end of the GDP accounting period 
C)  goods and services produced by foreign citizens working in the U.S. 
D)  All of the above are included in U.S. GDP.

Question 3

Income generated by a nation's domestic production

Accepted Answer

A)  is less than its domestic production. 
B)  is equal to its domestic production. 
C)  is greater than its domestic production. 
D)  could be less than, equal to, or greater than its domestic production. 
A)  is less than its domestic production. 
B)  is equal to its domestic production. 
C)  is greater than its domestic production. 
D)  could be less than, equal to, or greater than its domestic production.

Question 4

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s) does(do) these transactions raise consumption?

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 5

GDP includes the value of all

Accepted Answer

A)  final goods and services produced within a country using primarily market prices to measure the value of goods and services. 
B)  final goods and services produced within a country using primarily a survey of consumers to measure the value of goods and services. 
C)  goods and services produced within a country using primarily market prices to measure the value of goods and services. 
D)  goods and services produced within a country using primarily a survey of consumers to measure the value of goods and services. 
A)  final goods and services produced within a country using primarily market prices to measure the value of goods and services. 
B)  final goods and services produced within a country using primarily a survey of consumers to measure the value of goods and services. 
C)  goods and services produced within a country using primarily market prices to measure the value of goods and services. 
D)  goods and services produced within a country using primarily a survey of consumers to measure the value of goods and services.

Question 6

The inflation rate in year 2 equals

Accepted Answer

A)   
B)    
C)   
D)    
A)   
B)    
C)   
D)

Question 7

A recession has traditionally been defined as a period during which

Accepted Answer

A)  nominal GDP declines for two consecutive quarters. 
B)  nominal GDP declines for four consecutive quarters. 
C)  real GDP declines for two consecutive quarters. 
D)  real GDP declines for four consecutive quarters. 
A)  nominal GDP declines for two consecutive quarters. 
B)  nominal GDP declines for four consecutive quarters. 
C)  real GDP declines for two consecutive quarters. 
D)  real GDP declines for four consecutive quarters.

Question 8

In the economy of Talikastan in 2015, consumption was $3000, GDP was $5500, government purchases were $1000, imports were $1000, and investment was $1000. What were Talikastan's exports in 2015?

Accepted Answer

A)  $500 
B) -$500 
C)  $1500 
D)  $-1500 
A)  $500 
B) -$500 
C)  $1500 
D)  $-1500

Question 9

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Accepted Answer

A)  saving per person. 
B)  GDP per person. 
C)  government expenditures per person. 
D)  investment per business firm. 
A)  saving per person. 
B)  GDP per person. 
C)  government expenditures per person. 
D)  investment per business firm.

Question 10

Rocket Energy Drink Company buys sugar to produce energy drinks. At the end of a quarter both its inventory of sugar and its inventory of energy drinks has increased. Investment for the quarter will include

Accepted Answer

A)  both the increased inventory of sugar and the increased inventory of energy drinks. 
B)  the increased inventory of sugar, but not the increased inventory of energy drinks. 
C)  the increased inventory of energy drinks, but not the increased inventory of sugar. 
D)  neither the increased inventory of sugar nor the increased inventory of energy drinks. 
A)  both the increased inventory of sugar and the increased inventory of energy drinks. 
B)  the increased inventory of sugar, but not the increased inventory of energy drinks. 
C)  the increased inventory of energy drinks, but not the increased inventory of sugar. 
D)  neither the increased inventory of sugar nor the increased inventory of energy drinks.

Question 11

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $8000, government purchases were $1200, and imports were $600. What was Talikastan's investment in 2015?

Accepted Answer

A)  $3200 
B)  $5600 
C)  $2000 
D)  $4400 
A)  $3200 
B)  $5600 
C)  $2000 
D)  $4400

Question 12

Changes in nominal GDP 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 13

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 exports in 2010?

Accepted Answer

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

Question 14

A U.S.-owned automobile factory uses $50 million worth of materials produced in the U.S. and $10 million worth of material purchased from foreign countries to produce $100 million of automobiles. $70 million worth of these automobiles are purchased by U.S. consumers, $25 million are sold in foreign countries, and $5 million are added to inventory. How much of this production is included in U.S. GDP? By how much do these transactions alone affect U.S. net exports?

Accepted Answer

$90 million is inclu

Question 15

Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house that could be rented for $21,000 a year. How much do these housing services contribute to GDP?

Accepted Answer

A)  $21,000 
B)  $28,000 
C)  $7,000 
D)  $14,000 
A)  $21,000 
B)  $28,000 
C)  $7,000 
D)  $14,000

Question 16

Table 23-7
The table below contains data for the country of Togogo. The base year is 1974.  
-Refer to Table 23-7. From 1975 to 1976,

Accepted Answer

A)  inflation was 25% and output did not grow. 
B)  inflation was 25% and output grew. 
C)  inflation was 50% and output did not grow. 
D)  inflation was 50% and output grew. 
A)  inflation was 25% and output did not grow. 
B)  inflation was 25% and output grew. 
C)  inflation was 50% and output did not grow. 
D)  inflation was 50% and output grew.

Question 17

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

Accepted Answer

A)  The market value of an oil change that Ben performs on his own car. 
B)  The market value of an oil change at Speedy Lube. 
C)  The market value of oil purchased by Ben. 
D)  Production of foreign citizens living in the United States that work in an oil packaging facility. 
A)  The market value of an oil change that Ben performs on his own car. 
B)  The market value of an oil change at Speedy Lube. 
C)  The market value of oil purchased by Ben. 
D)  Production of foreign citizens living in the United States that work in an oil packaging facility.

Question 18

If foreign citizens earn less income in the U.S. than U.S. citizens earn in foreign countries,

Accepted Answer

A)  U.S. net factor payments from abroad are positive, and its GDP is larger than its GNP. 
B)  U.S. net factor payments from abroad are positive, and its GNP is larger than its GDP. 
C)  U.S. net factor payments from abroad are negative, and its GDP is larger than its GNP. 
D)  U.S. net factor payments from abroad are negative, and its GNP is larger than its GDP. 
A)  U.S. net factor payments from abroad are positive, and its GDP is larger than its GNP. 
B)  U.S. net factor payments from abroad are positive, and its GNP is larger than its GDP. 
C)  U.S. net factor payments from abroad are negative, and its GDP is larger than its GNP. 
D)  U.S. net factor payments from abroad are negative, and its GNP is larger than its GDP.

Question 19

How does U.S. gross domestic product (GDP) differ from U.S. gross national product (GNP)?

Accepted Answer

A)  GNP = GDP - losses from depreciation 
B)  GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S. 
C)  GNP = GDP + transfer payments to households + - indirect sales taxes 
D)  GNP = GDP - depreciation - retained earnings 
A)  GNP = GDP - losses from depreciation 
B)  GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S. 
C)  GNP = GDP + transfer payments to households + - indirect sales taxes 
D)  GNP = GDP - depreciation - retained earnings

Question 20

Suppose a country has government expenditures of $3,500, taxes of $2,200, consumption of $9,000, exports of $2,500, imports of $2,700, transfer payments of $750, capital depreciation of $800, and investment of $3,000. GDP equals

Accepted Answer

A)  $24,450. 
B)  $11,550. 
C)  $15,300. 
D)  $20,700. 
A)  $24,450. 
B)  $11,550. 
C)  $15,300. 
D)  $20,700.

Exam 23: Measuring a Nations Income

If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

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

Income generated by a nation's domestic production

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s) does(do) these transactions raise consumption?

GDP includes the value of all

The inflation rate in year 2 equals

A recession has traditionally been defined as a period during which

In the economy of Talikastan in 2015, consumption was $3000, GDP was $5500, government purchases were $1000, imports were $1000, and investment was $1000. What were Talikastan's exports in 2015?

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Rocket Energy Drink Company buys sugar to produce energy drinks. At the end of a quarter both its inventory of sugar and its inventory of energy drinks has increased. Investment for the quarter will include

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $8000, government purchases were $1200, and imports were $600. What was Talikastan's investment in 2015?

Changes in nominal GDP reflect

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 exports in 2010?

Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house that could be rented for $21,000 a year. How much do these housing services contribute to GDP?

Table 23-7 The table below contains data for the country of Togogo. The base year is 1974. -Refer to Table 23-7. From 1975 to 1976,

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

If foreign citizens earn less income in the U.S. than U.S. citizens earn in foreign countries,

How does U.S. gross domestic product (GDP) differ from U.S. gross national product (GNP)?

Suppose a country has government expenditures of $3,500, taxes of $2,200, consumption of $9,000, exports of $2,500, imports of $2,700, transfer payments of $750, capital depreciation of $800, and investment of $3,000. GDP equals

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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