Question 1

If a U.S. company buys an electrical generator made in Japan by a Japanese firm, and the Japanese firm uses the payment to buy stocks issued by a U.S. company then

Accepted Answer

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

Question 2

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

Accepted Answer

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

Question 3

Darin grows and sells marijuana to Jennifer. Thomas is an organic farmer who sells broccoli to Jennifer. Marijuana is an illegal good and broccoli is a legal good. Assume that if Jennifer marries either, they give her what they used to sell her. Which of the following statements is consistent with the way GDP is computed?

Accepted Answer

A) GDP will fall if Jennifer marries either Darin or Thomas. 
B) GDP will fall if Jennifer marries Darin but not if she marries Thomas. 
C) GDP will fall if Jennifer marries Thomas but not if she marries Darin. 
D) GDP remains the same whether Jennifer marries Darin or Thomas. 
A) GDP will fall if Jennifer marries either Darin or Thomas. 
B) GDP will fall if Jennifer marries Darin but not if she marries Thomas. 
C) GDP will fall if Jennifer marries Thomas but not if she marries Darin. 
D) GDP remains the same whether Jennifer marries Darin or Thomas. C

Question 4

Table 23-1
The table below contains data for Chereaux for the year 2015.  
-Refer to Table 23-1. The market value of all final goods and services produced within Chereaux in 2015 is

Accepted Answer

A) $214. 
B) $200. 
C) $204. 
D) $230. 
A) $214. 
B) $200. 
C) $204. 
D) $230.

Question 5

Most goods and services produced at home

Accepted Answer

A) and most goods and services produced illegally are included in GDP. 
B) are included in GDP while most goods and services produced illegally are excluded from GDP. 
C) are excluded from GDP while most goods and services produced illegally are included in GDP 
D) and most goods and services produced illegally are excluded from GDP. 
A) and most goods and services produced illegally are included in GDP. 
B) are included in GDP while most goods and services produced illegally are excluded from GDP. 
C) are excluded from GDP while most goods and services produced illegally are included in GDP 
D) and most goods and services produced illegally are excluded from GDP.

Question 6

Table 23-11
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 2012.

Accepted Answer

Nominal GD

Question 7

In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?

Accepted Answer

A) -$75 
B) -$225 
C) $225 
D) $75 
A) -$75 
B) -$225 
C) $225 
D) $75

Question 8

Which of the following domestically produced items is not included in GDP?

Accepted Answer

A) a bottle of shampoo 
B) a hairdryer 
C) a haircut 
D) All of the above are included in GDP. 
A) a bottle of shampoo 
B) a hairdryer 
C) a haircut 
D) All of the above are included in GDP.

Question 9

Since it is counted as investment, why doesn't the purchase of earthmoving equipment from China by a U.S. corporation increase U.S. GDP?

Accepted Answer

The purchase of foreign equipment is cou

Question 10

Fine Edge manufactures lawn mowers. In 2014 it had $2 million worth of lawn mowers in inventory. In 2015 it sold $10 million worth of lawn mowers to consumers and had $1 million worth of lawn mowers in inventory. How much did the lawn mowers produced by Fine Edge add to GDP in 2015?

Accepted Answer

A) $11 million 
B) $10 million 
C) $7 million 
D) $9 million 
A) $11 million 
B) $10 million 
C) $7 million 
D) $9 million

Question 11

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

Accepted Answer

The GDP Deflator = 1

Question 12

Suppose an economy produces only iPhones and bananas. In 2010, 1000 iPhones are sold at $300 each and 5000 pounds of bananas are sold at $3 per pound. In 2009, the base year, iPhones sold at $400 each and bananas sold at $2 per pound. For 2010,

Accepted Answer

A) nominal GDP is $315,000, real GDP is $410,000, and the GDP deflator is 76.83. 
B) nominal GDP is $410,000, real GDP is $315,000, and the GDP deflator is 130.16. 
C) nominal GDP is $315,000, real GDP is $410,000, and the GDP deflator is 130.16. 
D) nominal GDP is $410,000, real GDP is $315,000, and the GDP deflator is 76.83. 
A) nominal GDP is $315,000, real GDP is $410,000, and the GDP deflator is 76.83. 
B) nominal GDP is $410,000, real GDP is $315,000, and the GDP deflator is 130.16. 
C) nominal GDP is $315,000, real GDP is $410,000, and the GDP deflator is 130.16. 
D) nominal GDP is $410,000, real GDP is $315,000, and the GDP deflator is 76.83.

Question 13

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 14

Which of the following statements regarding GDP is correct?

Accepted Answer

A) GDP includes factory production, but not any harm that may be inflicted on the environment. 
B) GDP accounts for all activities taking place outside markets. 
C) GDP provides detailed information about the distribution of income. 
D) GDP is a good measure of economic well-being for all purposes. 
A) GDP includes factory production, but not any harm that may be inflicted on the environment. 
B) GDP accounts for all activities taking place outside markets. 
C) GDP provides detailed information about the distribution of income. 
D) GDP is a good measure of economic well-being for all purposes.

Question 15

Table 23-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.  
-Refer to Table 23-4. What was the growth rate of real GDP for 1931?

Accepted Answer

A) -6.93%. Real GDP is a better gauge of economic well-being than nominal GDP. 
B) -6.93%. Nominal GDP is a better gauge of economic well-being than real GDP. 
C) -6.49%. Real GDP is a better gauge of economic well-being than nominal GDP. 
D) -6.49%. Nominal GDP is a better gauge of economic well-being than real GDP. 
A) -6.93%. Real GDP is a better gauge of economic well-being than nominal GDP. 
B) -6.93%. Nominal GDP is a better gauge of economic well-being than real GDP. 
C) -6.49%. Real GDP is a better gauge of economic well-being than nominal GDP. 
D) -6.49%. Nominal GDP is a better gauge of economic well-being than real GDP.

Question 16

Explain how real GDP differs from nominal GDP.

Accepted Answer

Real GDP reflects on

Question 17

An identity is an equation that

Accepted Answer

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

Question 18

When economists refer to intangible items, they are referring to such things as

Accepted Answer

A) illegal goods, and the value of such items is included in GDP. 
B) illegal goods, and the value of such items is excluded from GDP. 
C) hair styling and dental care, and the value of such items is included in GDP. 
D) hair styling and dental care, and the value of such items is excluded from GDP. 
A) illegal goods, and the value of such items is included in GDP. 
B) illegal goods, and the value of such items is excluded from GDP. 
C) hair styling and dental care, and the value of such items is included in GDP. 
D) hair styling and dental care, and the value of such items is excluded from GDP.

Question 19

In the economy of Talikastan in 2015, consumption was $700, exports were $200, government purchases were $300, imports were $150, and investment was $400. What was Talikastan's GDP in 2015?

Accepted Answer

A) $1350 
B) $1450 
C) $1050 
D) $1750 
A) $1350 
B) $1450 
C) $1050 
D) $1750

Question 20

An American retailer purchased 100 pairs of shoes from a company in Mexico in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016. In which quarter(s) does(do) the value of the shoes add to U.S. GDP?

Accepted Answer

A) the second and third quarters 
B) the second quarter but not the third quarter 
C) the third but not the second quarter 
D) neither the second nor the third quarter 
A) the second and third quarters 
B) the second quarter but not the third quarter 
C) the third but not the second quarter 
D) neither the second nor the third quarter

Exam 23: Measuring a Nation S Income

If a U.S. company buys an electrical generator made in Japan by a Japanese firm, and the Japanese firm uses the payment to buy stocks issued by a U.S. company then

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

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. The market value of all final goods and services produced within Chereaux in 2015 is

Most goods and services produced at home

Table 23-11 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 2012.

In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?

Which of the following domestically produced items is not included in GDP?

Since it is counted as investment, why doesn't the purchase of earthmoving equipment from China by a U.S. corporation increase U.S. GDP?

Fine Edge manufactures lawn mowers. In 2014 it had $2 million worth of lawn mowers in inventory. In 2015 it sold $10 million worth of lawn mowers to consumers and had $1 million worth of lawn mowers in inventory. How much did the lawn mowers produced by Fine Edge add to GDP in 2015?

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

Suppose an economy produces only iPhones and bananas. In 2010, 1000 iPhones are sold at $300 each and 5000 pounds of bananas are sold at $3 per pound. In 2009, the base year, iPhones sold at $400 each and bananas sold at $2 per pound. For 2010,

GDP includes the value of all

Which of the following statements regarding GDP is correct?

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. What was the growth rate of real GDP for 1931?

Explain how real GDP differs from nominal GDP.

An identity is an equation that

When economists refer to intangible items, they are referring to such things as

In the economy of Talikastan in 2015, consumption was $700, exports were $200, government purchases were $300, imports were $150, and investment was $400. What was Talikastan's GDP in 2015?

An American retailer purchased 100 pairs of shoes from a company in Mexico in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016. In which quarter(s) does(do) the value of the shoes add to U.S. GDP?

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

Applications: 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 in Microeconomics

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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