Question 1

How is net national product (NNP)calculated?

Accepted Answer

A)  Saving is added to the total income of a nation's citizens. 
B)  Saving is added to the total income earned within a nation. 
C)  Depreciation losses are subtracted from the total income of a nation's citizens. 
D)  Depreciation losses are subtracted from the total income earned within a nation. 
A)  Saving is added to the total income of a nation's citizens. 
B)  Saving is added to the total income earned within a nation. 
C)  Depreciation losses are subtracted from the total income of a nation's citizens. 
D)  Depreciation losses are subtracted from the total income earned within a nation.

Question 2

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 owner-occupied 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 owner occupied housing services. 
A)  GDP necessarily increases. 
B)  GDP necessarily decreases. 
C)  GDP is unaffected because neither the rent nor the estimate of the value owner-occupied 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 owner occupied housing services.

Question 3

If nominal GDP is $8 trillion and real GDP is $10 trillion,then the GDP deflator is

Accepted Answer

A)  80,and this indicates that the price level has decreased by 20 percent since the base year. 
B)  80,and this indicates that the price level has increased by 80 percent since the base year. 
C)  125,and this indicates that the price level has increased by 25 percent since the base year. 
D)  125,and this indicates that the price level has increased by 125 percent since the base year. 
A)  80,and this indicates that the price level has decreased by 20 percent since the base year. 
B)  80,and this indicates that the price level has increased by 80 percent since the base year. 
C)  125,and this indicates that the price level has increased by 25 percent since the base year. 
D)  125,and this indicates that the price level has increased by 125 percent since the base year.

Question 4

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

Accepted Answer

A)  households' purchases of newly constructed homes 
B)  net additions to firms' inventories 
C)  firms' purchases of capital equipment 
D)  All of the above are correct. 
A)  households' purchases of newly constructed homes 
B)  net additions to firms' inventories 
C)  firms' purchases of capital equipment 
D)  All of the above are correct.

Question 5

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 6

The residents of country A earn $500 million of income from abroad.Residents of other countries earn $200 million in country A.These earnings are accounted for in country A's

Accepted Answer

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

Question 7

Table 10-4
The country of Caspir produces only cereal and milk.Quantities and prices of these goods for the last several years are shown below.The base year is 2008.
Prices and Quantities
  
-Refer to Table 10-4.This country's inflation rate from 2009 to 2010 was

Accepted Answer

A)  16.4%. 
B)  24.3%. 
C)  41.0%. 
D)  44.7%. 
A)  16.4%. 
B)  24.3%. 
C)  41.0%. 
D)  44.7%.

Question 8

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

Question 9

Table 23-1
The country of Batavia produces only chocolates and watches.Below is a table with recent information on Batavia production and prices.The base year is 2009.
Prices and Quantities
  
-Refer to Table 23-1.
What was nominal GDP,real GDP,and the GDP deflator for 2009? Show your work.

Accepted Answer

Nominal GDP was $5x90 + $50x15

Question 10

U.S.GDP

Accepted Answer

A)  includes production of foreigners working in the U.S.and production by U.S.residents working in foreign countries. 
B)  includes production of foreigners working in the U.S.but excludes production by U.S.residents working in foreign countries. 
C)  excludes production of foreigners working in the U.S.but includes production by U.S.residents working in foreign countries. 
D)  excludes production of foreigners working in the U.S.and production by U.S.residents working in foreign countries. 
A)  includes production of foreigners working in the U.S.and production by U.S.residents working in foreign countries. 
B)  includes production of foreigners working in the U.S.but excludes production by U.S.residents working in foreign countries. 
C)  excludes production of foreigners working in the U.S.but includes production by U.S.residents working in foreign countries. 
D)  excludes production of foreigners working in the U.S.and production by U.S.residents working in foreign countries.

Question 11

The percentage change in the price level from one period to another is called

Accepted Answer

A)  the growth rate. 
B)  the inflation rate. 
C)  the GDP deflator. 
D)  the unemployment rate. 
A)  the growth rate. 
B)  the inflation rate. 
C)  the GDP deflator. 
D)  the unemployment rate.

Question 12

A good is produced by a firm in 2009,added to the firm's inventory in 2010,and sold to a household in 2010.As a result,on net,

Accepted Answer

A)  2009 GDP increased and 2010 GDP decreased. 
B)  2009 GDP decreased and 2010 GDP increased. 
C)  2009 GDP did not change and 2010 GDP increased. 
D)  2009 GDP increased and 2010 GDP did not change. 
A)  2009 GDP increased and 2010 GDP decreased. 
B)  2009 GDP decreased and 2010 GDP increased. 
C)  2009 GDP did not change and 2010 GDP increased. 
D)  2009 GDP increased and 2010 GDP did not change.

Question 13

U.S.GDP includes estimates of the value of items that are produced and consumed at home,such as housework and car maintenance.

Accepted Answer

A) True 
 B)False

Question 14

Whip-It manufactures blenders.In 2009 it had $50,000 of blenders in inventory.In 2010 it sold $300,000 of blenders to consumers and had $40,000 of blenders in inventory.How much did blenders produced by Whip-it add to GDP in 2010?

Accepted Answer

A)  $340,000 
B)  $310,000 
C)  $300,000 
D)  $290,000 
A)  $340,000 
B)  $310,000 
C)  $300,000 
D)  $290,000

Question 15

Gina,a U.S.citizen,works only in Bermuda.The value of Gina's production is included in

Accepted Answer

A)  U.S.GDP and Bermudan GDP. 
B)  U.S.GDP and Bermudan GNP. 
C)  U.S.GNP and Bermudan GDP. 
D)  U.S.GNP and Bermudan GNP. 
A)  U.S.GDP and Bermudan GDP. 
B)  U.S.GDP and Bermudan GNP. 
C)  U.S.GNP and Bermudan GDP. 
D)  U.S.GNP and Bermudan GNP.

Question 16

Gasoline is considered a final good if it is sold by a

Accepted Answer

A)  gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. 
B)  pipeline operator to a gasoline station in San Francisco. 
C)  gasoline station to a motorist in Los Angeles. 
D)  All of the above are correct. 
A)  gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. 
B)  pipeline operator to a gasoline station in San Francisco. 
C)  gasoline station to a motorist in Los Angeles. 
D)  All of the above are correct.

Question 17

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 18

Identify which of the following are included in the government purchases component of GDP.
the salary paid to a state court judge
unemployment insurance benefits
the payment made by the federal government for a jet fighter
social security payments
a county builds a jail building

Accepted Answer

The following are included in

Question 19

To encourage formation of small businesses,the government could provide subsidies;these subsidies

Accepted Answer

A)  would be included in GDP because they are part of government purchases. 
B)  would be included in GDP because they are part of investment expenditures. 
C)  would not be included in GDP because they are transfer payments. 
D)  would not be included in GDP because the government raises taxes to pay for them. 
A)  would be included in GDP because they are part of government purchases. 
B)  would be included in GDP because they are part of investment expenditures. 
C)  would not be included in GDP because they are transfer payments. 
D)  would not be included in GDP because the government raises taxes to pay for them.

Question 20

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.

Exam 23: Measuring a Nations Income

How is net national product (NNP)calculated?

If nominal GDP is $8 trillion and real GDP is $10 trillion,then the GDP deflator is

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

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.

The residents of country A earn $500 million of income from abroad.Residents of other countries earn $200 million in country A.These earnings are accounted for in country A's

Table 10-4 The country of Caspir produces only cereal and milk.Quantities and prices of these goods for the last several years are shown below.The base year is 2008. Prices and Quantities -Refer to Table 10-4.This country's inflation rate from 2009 to 2010 was

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?

Table 23-1 The country of Batavia produces only chocolates and watches.Below is a table with recent information on Batavia production and prices.The base year is 2009. Prices and Quantities -Refer to Table 23-1. What was nominal GDP,real GDP,and the GDP deflator for 2009? Show your work.

U.S.GDP

The percentage change in the price level from one period to another is called

A good is produced by a firm in 2009,added to the firm's inventory in 2010,and sold to a household in 2010.As a result,on net,

U.S.GDP includes estimates of the value of items that are produced and consumed at home,such as housework and car maintenance.

Whip-It manufactures blenders.In 2009 it had $50,000 of blenders in inventory.In 2010 it sold $300,000 of blenders to consumers and had $40,000 of blenders in inventory.How much did blenders produced by Whip-it add to GDP in 2010?

Gina,a U.S.citizen,works only in Bermuda.The value of Gina's production is included in

Gasoline is considered a final good if it is sold by a

GDP includes the value of all

Identify which of the following are included in the government purchases component of GDP. the salary paid to a state court judge unemployment insurance benefits the payment made by the federal government for a jet fighter social security payments a county builds a jail building

To encourage formation of small businesses,the government could provide subsidies;these subsidies

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

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 Market 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 Macroeconomic Models

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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