Question 1

If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

Accepted Answer

A) True 
 B)False

Question 2

A manufacturer produces 1 million televisions in the first quarter of the year. It sells 900,000 of them before the end of the first quarter, and holds the others in its warehouse. How will the 100,000 unsold televisions be treated in the GDP statistics?

Accepted Answer

A)  Since the televisions eventually will be bought by consumers, they will be included as consumption in the first quarter. 
B)  Since the televisions were not purchased in the first quarter, they will be counted as an increase in second- quarter GDP. 
C)  The televisions will be counted as a change in inventory in the first quarter and so will be included in first- quarter GDP. 
D)  The televisions will be counted as a change in inventory in the first quarter, and when sold in the second quarter will raise second-quarter GDP.

Question 3

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.

Question 4

Consumption is $7 trillion, investment is $1.5 trillion, government expenditures are $2 trillion, government transfer payments are $1 trillion, exports are $1.50 trillion and imports are $1.25 trillion. What is GDP?

Accepted Answer

The answer of Consumption is $7 trillion, investment is $1.5...

Question 5

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.

Question 6

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.

Question 7

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 8

Which of the following is included in the investment component of GDP?

Accepted Answer

A)  spending on new residential construction and spending on stocks and bonds 
B)  spending on new residential construction but not spending on stocks and bonds 
C)  spending on stocks and bonds but not spending on new residential construction 
D)  neither spending on stocks and bonds nor spending on new residential construction

Question 9

Suppose that over the last twenty-five years a country's nominal GDP grew to three times its former size. In the meantime, population grew by 40 percent and prices rose by 100 percent. What happened to real GDP per person?

Accepted Answer

A)  It more than doubled. 
B)  It increased, but it less than doubled. 
C)  It was unchanged. 
D)  It decreased.

Question 10

For an economy as a whole,

Accepted Answer

A)  the market value of production must equal expenditure. 
B)  investment must equal the value of stocks and bonds purchased. 
C)  wages must equal income. 
D)  consumption must equal saving.

Question 11

Which of the following is included in GDP?

Accepted Answer

A)  medical marijuana purchased from a government-run pharmacy by a glaucoma patient 
B)  recreational marijuana purchased from a drug dealer by a college student 
C)  recreational marijuana produced and consumed by a man in his attic 
D)  All of the above are included in GDP.

Question 12

Transactions involving items produced in the past, such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale, are

Accepted Answer

A)  included in current GDP because GDP measures the value of all goods and services sold in the current year. 
B)  included in current GDP but valued at their original prices. 
C)  not included in current GDP because it is difficult to determine their value. 
D)  not included in current GDP because GDP only measures the value of goods and services produced in the current year.

Question 13

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

Accepted Answer

A)  purchases of staplers, paper clips, and pens by U.S. business firms 
B)  purchases of natural gas by U.S. households 
C)  purchases of newly constructed homes by U.S. households 
D)  All of the above are correct.

Question 14

Define GDP. Remember to be specific about what it includes.

Accepted Answer

The answer of Define GDP. Remember to be specific about...

Question 15

If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?

Accepted Answer

A)  both real GDP and nominal GDP. 
B)  real GDP but not nominal GDP. 
C)  nominal GDP but not real GDP. 
D)  neither nominal GDP nor real GDP.

Question 16

Disposable personal income is the income that

Accepted Answer

A)  households have left after paying taxes and non-tax payments to the government. 
B)  businesses have left after paying taxes and non-tax payments to the government. 
C)  households and noncorporate businesses have left after paying taxes and non-tax payments to the government. 
D)  households and businesses have left after paying taxes and non-tax payments to the government.

Question 17

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

Accepted Answer

A)  values of goods and services based on surveys of consumers. 
B)  market prices. 
C)  quantities purchased by a typical urban household. 
D)  profits from producing goods and services.

Question 18

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 2013.

Accepted Answer

The answer of Table 23-12
A country produces only ice cream...

Question 19

Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the economy's overall production of goods and services changes over time.

Accepted Answer