Question 1

GDP is not a perfect measure of well-being;for example,

Accepted Answer

A)  GDP excludes the value of volunteer work. 
B)  GDP does not address the distribution of income. 
C)  GDP does not address environmental quality. 
D)  All of the above are correct. 
A)  GDP excludes the value of volunteer work. 
B)  GDP does not address the distribution of income. 
C)  GDP does not address environmental quality. 
D)  All of the above are correct.

Question 2

Estimates of the values of which of the following non-market goods or services are included in GDP?

Accepted Answer

A)  the value of unpaid housework 
B)  the value of services provided by major household appliances purchased in a previous period 
C)  the estimated rental value of owner-occupied homes 
D)  All of the above are included in GDP. 
A)  the value of unpaid housework 
B)  the value of services provided by major household appliances purchased in a previous period 
C)  the estimated rental value of owner-occupied homes 
D)  All of the above are included in GDP.

Question 3

In the economy of Ukzten in 2010,consumption was $500,exports were $200,GDP was $1200,government purchases were $250,and investment was $300.What were Ukzten's imports in 2010?

Accepted Answer

A)  -$150 
B)  -$50 
C)  $50 
D)  $150 
A)  -$150 
B)  -$50 
C)  $50 
D)  $150

Question 4

If real GDP is 5,100 and nominal GDP is 4,900,then the GDP deflator is

Accepted Answer

A)  104.1 so prices are higher than in the base year. 
B)  104.1 so prices are lower than in the base year. 
C)  96.1 so prices are higher than in the base year. 
D)  96.1 so prices are lower than in the base year. 
A)  104.1 so prices are higher than in the base year. 
B)  104.1 so prices are lower than in the base year. 
C)  96.1 so prices are higher than in the base year. 
D)  96.1 so prices are lower than in the base year.

Question 5

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.In 2008,this country's

Accepted Answer

A)  nominal GDP was greater than real GDP,and the GDP deflator was greater than 100. 
B)  nominal GDP was equal to real GDP,and the GDP deflator was equal to 1. 
C)  nominal GDP was less than real GDP,and the GDP deflator was less than 100. 
D)  nominal GDP was equal to real GDP,and the GDP deflator was equal to 100. 
A)  nominal GDP was greater than real GDP,and the GDP deflator was greater than 100. 
B)  nominal GDP was equal to real GDP,and the GDP deflator was equal to 1. 
C)  nominal GDP was less than real GDP,and the GDP deflator was less than 100. 
D)  nominal GDP was equal to real GDP,and the GDP deflator was equal to 100.

Question 6

Table 10-5
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 2009.
Prices and Quantities
  
-Refer to Table 10-5 In which year was this country's nominal GDP highest?

Accepted Answer

A)  2008 
B)  2009 
C)  2010 
D)  2011 
A)  2008 
B)  2009 
C)  2010 
D)  2011

Question 7

In the actual economy,households

Accepted Answer

A)  spend all of their income. 
B)  divide their income among spending,taxes,and saving. 
C)  buy all goods and services produced in the economy. 
D)  Both (a)and (c)are correct. 
A)  spend all of their income. 
B)  divide their income among spending,taxes,and saving. 
C)  buy all goods and services produced in the economy. 
D)  Both (a)and (c)are correct.

Question 8

A Minnesota farmer buys a new tractor made in Iowa by a German company.As a result,

Accepted Answer

A)  U.S.investment and GDP increase,but German GDP is unaffected. 
B)  U.S.investment and German GDP increase,but U.S.GDP is unaffected. 
C)  U.S.investment,U.S.GDP,and German GDP are unaffected because tractors are intermediate goods. 
D)  U.S.investment,U.S.GDP,and German GDP all increase. 
A)  U.S.investment and GDP increase,but German GDP is unaffected. 
B)  U.S.investment and German GDP increase,but U.S.GDP is unaffected. 
C)  U.S.investment,U.S.GDP,and German GDP are unaffected because tractors are intermediate goods. 
D)  U.S.investment,U.S.GDP,and German GDP all increase.

Question 9

GDP does not directly measure those things that make life worthwhile,but it does measure our ability to obtain many of the inputs into a worthwhile life.

Accepted Answer

A) True 
 B)False

Question 10

Spots,Inc.produces ink and sells it to Write on Target,which makes pens.The ink produced by Spots,Inc.is called

Accepted Answer

A)  an inventory good. 
B)  a transitory good. 
C)  a final good. 
D)  an intermediate good. 
A)  an inventory good. 
B)  a transitory good. 
C)  a final good. 
D)  an intermediate good.

Question 11

A U.S.grocery chain purchases olive oil from Tunisia and sells it to U.S.consumers.In which of the following is this transaction included?

Accepted Answer

A)  U.S.consumption and U.S.imports 
B)  U.S.consumption but not U.S.imports 
C)  U.S.imports but not U.S.consumption 
D)  neither U.S.consumption nor U.S.imports 
A)  U.S.consumption and U.S.imports 
B)  U.S.consumption but not U.S.imports 
C)  U.S.imports but not U.S.consumption 
D)  neither U.S.consumption nor U.S.imports

Question 12

U.S.GDP excludes the production of most illegal goods.

Accepted Answer

A) True 
 B)False

Question 13

Transfer payments

Accepted Answer

A)  are payments that flow from government to households. 
B)  are not made in exchange for currently produced goods or services. 
C)  alter household income,but they do not reflect the economy's production. 
D)  All of the above are correct. 
A)  are payments that flow from government to households. 
B)  are not made in exchange for currently produced goods or services. 
C)  alter household income,but they do not reflect the economy's production. 
D)  All of the above are correct.

Question 14

A painter pays $500 for paint he uses to repaint a house.He then presents a bill for $1200 that covers his time and expenses to the homeowner.How much do these transactions add to GDP?

Accepted Answer

A)  $500 
B)  $700 
C)  $1200 
D)  $1700 
A)  $500 
B)  $700 
C)  $1200 
D)  $1700

Question 15

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

Accepted Answer

GDP is the market value of all

Question 16

If real GDP and the GDP deflator both rise,then it must be that nominal GDP rose.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

Recently,the U.S.national income accounts have switched to calling government purchases

Accepted Answer

A)  government spending and transfer payments. 
B)  transfer payments and gross investment by government. 
C)  government consumption expenditure and gross investment. 
D)  government wages,salaries,and investment expenditure. 
A)  government spending and transfer payments. 
B)  transfer payments and gross investment by government. 
C)  government consumption expenditure and gross investment. 
D)  government wages,salaries,and investment expenditure.

Question 19

GDP does not make adjustments for leisure time,environmental quality,or volunteer work.

Accepted Answer

A) True 
 B)False

Question 20

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180,then the inflation rate in 2010 was 12.5%.

Accepted Answer

A) True 
 B)False

Exam 23: Measuring a Nations Income

GDP is not a perfect measure of well-being;for example,

Estimates of the values of which of the following non-market goods or services are included in GDP?

In the economy of Ukzten in 2010,consumption was $500,exports were $200,GDP was $1200,government purchases were $250,and investment was $300.What were Ukzten's imports in 2010?

If real GDP is 5,100 and nominal GDP is 4,900,then the GDP deflator is

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.In 2008,this country's

Table 10-5 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 2009. Prices and Quantities -Refer to Table 10-5 In which year was this country's nominal GDP highest?

In the actual economy,households

A Minnesota farmer buys a new tractor made in Iowa by a German company.As a result,

GDP does not directly measure those things that make life worthwhile,but it does measure our ability to obtain many of the inputs into a worthwhile life.

Spots,Inc.produces ink and sells it to Write on Target,which makes pens.The ink produced by Spots,Inc.is called

A U.S.grocery chain purchases olive oil from Tunisia and sells it to U.S.consumers.In which of the following is this transaction included?

U.S.GDP excludes the production of most illegal goods.

Transfer payments

A painter pays $500 for paint he uses to repaint a house.He then presents a bill for $1200 that covers his time and expenses to the homeowner.How much do these transactions add to GDP?

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

If real GDP and the GDP deflator both rise,then it must be that nominal GDP rose.

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

Recently,the U.S.national income accounts have switched to calling government purchases

GDP does not make adjustments for leisure time,environmental quality,or volunteer work.

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180,then the inflation rate in 2010 was 12.5%.

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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