Question 1

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

Accepted Answer

A) Why do prices in general rise by more in some countries than in others? 
B) Why do wages differ across industries? 
C) Why do production and income increase in some periods and not in others? 
D) How rapidly is GDP currently increasing?

Question 2

Which of the following examples of production of goods and services would count as part of U.S.GDP?

Accepted Answer

A) Samantha, a Canadian citizen, grows sweet corn in Minnesota and sells it to a grocery store in Canada. 
B) Ian, an American citizen, grows peaches for his family in the back yard of their Atlanta home. 
C) Brian, an American citizen, grows marijuana in his Seattle home and sells it to his friends and neighbors. 
D) None of the above examples of production would count as part of U.S.GDP.

Question 3

Suppose an apartment complex converts to a condominium,so that the former renters are now owners of their housing units.

Accepted Answer

A) The rent was included in GDP; the purchases of the condominiums are not included in GDP. 
B) The rent was included in GDP, and so are the purchases of the condominiums. 
C) The rent was not included in GDP; the purchases of the condominiums are included in GDP. 
D) The rent was not included in GDP, and neither are the purchases of the condominiums.

Question 4

U.S.GDP and U.S.GNP are related as follows:

Accepted Answer

A) GNP = GDP - Income earned by foreigners in the U.S.+ Income earned by U.S.citizens abroad. 
B) GNP = GDP + Income earned by foreigners in the U.S.- Income earned by U.S.citizens abroad. 
C) GNP = GDP + Value of exported goods - Value of imported goods. 
D) GNP = GDP - Value of exported goods + Value of imported goods.

Question 5

Gross domestic product is defined as

Accepted Answer

A) the market value of all final goods and services produced within a country in a given period of time. 
B) the market value of all tangible goods produced within a country in a given period of time. 
C) the quantity of all final goods and services supplied within a country in a given period of time. 
D) the quantity of all final goods and services demanded within a country in a given period of time.

Question 6

Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP,but the value of intermediate goods produced and not sold is included directly as part of GDP.

Accepted Answer

The answer of Explain why it is the case that...

Question 7

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.

Question 8

Which of the following is a correct statement about the growth of real GDP in the U.S.economy?

Accepted Answer

A) Real GDP in 2004 was almost four times its 1965 level. 
B) The output of goods and services grew on average about 3.2 percent per year between 1965 and 2004. 
C) Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than did his or her parents and grandparents. 
D) All of the above are correct.

Question 9

In a certain small country,the unit of currency is the huck.That country's government recently announced that "GDP amounted to 400 million hucks in the quarter that just ended." Assuming this country has adopted American GDP accounting conventions,this statement means that GDP,after seasonal adjustment,actually amounted to

Accepted Answer

A) 100 million hucks in the quarter that just ended. 
B) 100 million hucks over the last four quarters, including the one that just ended. 
C) 400 million hucks in the quarter that just ended. 
D) 400 million hucks over the last four quarters, including the one that just ended.

Question 10

Which of the following transactions adds to U.S.GDP for 2006?

Accepted Answer

A) In 2006, Ashley sells a car that she bought in 2002 to William for $5,000. 
B) An American management consultant works in Mexico during the summer of 2006 and earns the equivalent of $30,000 during that time. 
C) When John and Jennifer were both single, they lived in separate apartments and each paid $750 in rent.John and Jennifer got married in 2006 and they bought a house that, according to reliable estimates, could be rented for $1,600 per month. 
D) None of the above transactions adds to GDP for 2006.

Question 11

An identity is an equation that

Accepted Answer

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

Question 12

Which of the following examples of household spending are categorized as investment rather than consumption?

Accepted Answer

A) expenditures on new housing 
B) expenditures on intangibles items such as medical care 
C) expenditures on durable goods such as automobiles and refrigerators 
D) All of the above are correct.

Question 13

In the nation of Paolaland,quarterly GDP is always higher in the second quarter than in other quarters.In order to account systematically for this predictable second-quarter jump in GDP,Paolaland's government statisticians will

Accepted Answer

A) employ a statistical procedure called seasonal adjustment. 
B) report a four-quarter moving average of GDP rather than the one-quarter figure. 
C) report GNP rather than GDP. 
D) report personal income rather than GDP.

Question 14

Which of the following is not included in GDP?

Accepted Answer

A) unpaid cleaning and maintenance of houses 
B) services such as those provided by lawyers and hair stylists 
C) the estimated rental value of owner-occupied housing 
D) production of foreign citizens living in the United States

Question 15

Which of the following represents a transfer payment?

Accepted Answer

A) You transfer $1,000 from your bank account to a mutual fund. 
B) The government sends your grandfather his Social Security check. 
C) The bank transfers $10 in quarterly interest to your savings account. 
D) Your employer automatically transfers $100 each month from your wages to a non-taxable medical spending account.

Question 16

Table 23-3
 
-Refer to Table 23-3.Nominal GDP for 2007 is

Accepted Answer

A) $900. 
B) $1,100. 
C) $1,250. 
D) $1,350.

Question 17

Recessions are associated with which of the following?

Accepted Answer

A) increased bankruptcies 
B) falling profits 
C) falling output 
D) All of the above are correct.

Question 18

In 2004,U.S.government purchases of goods and services amounted to about

Accepted Answer

A) 19 percent of GDP. 
B) 23 percent of GDP. 
C) 27 percent of GDP. 
D) 33 percent of GDP.

Question 19

Suppose an apartment complex converts to a condominium,so that the former renters are now owners of their housing units.Suppose further that a current estimate of the value of the condominium owners' housing services is the same as the rent they previously paid.What happens to GDP as a result of this conversion?

Accepted Answer

A) GDP necessarily increases. 
B) GDP necessarily decreases. 
C) GDP is unaffected because neither the rent nor the estimate of the value of housing services is included in GDP. 
D) GDP is unaffected because previously the rent payments were included in GDP, and now the rent payments are replaced in GDP by the estimate of the value of housing services.

Question 20

The government computes measures of income other than GDP,but they almost always all tell the same story about the economy.

Accepted Answer

A) True 
 B)False

Exam 23: Measuring a Nations Income