Question 1

Social Security payments are

Accepted Answer

A) included in GDP because they represent current income. 
B) included in GDP because they represent potential consumption. 
C) excluded from GDP because they are not private pensions. 
D) excluded from GDP because they do not reflect the economy's production. 
A) included in GDP because they represent current income. 
B) included in GDP because they represent potential consumption. 
C) excluded from GDP because they are not private pensions. 
D) excluded from GDP because they do not reflect the economy's production.

Question 2

Which of the following correctly orders U.S. income measures from largest to smallest?

Accepted Answer

A) disposable personal income, gross national product, national income, net national product, personal income 
B) personal income, net national product, national income, gross national product, disposable personal income 
C) gross national product, net national product, national income, personal income, disposable personal income 
D) disposable personal income, personal income, national income, net national product, gross national product 
A) disposable personal income, gross national product, national income, net national product, personal income 
B) personal income, net national product, national income, gross national product, disposable personal income 
C) gross national product, net national product, national income, personal income, disposable personal income 
D) disposable personal income, personal income, national income, net national product, gross national product

Question 3

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

Accepted Answer

A) nominal GDP. 
B) real GDP. 
C) the GDP deflator. 
D) GNP. 
A) nominal GDP. 
B) real GDP. 
C) the GDP deflator. 
D) GNP.

Question 4

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 5

Table 23-2
The table below contains data for country A for the year 2010.  
-Refer to Table 23-2. What was country A's consumption in 2010?

Accepted Answer

A) $2018 
B) $3010 
C) $3311 
D) $4015 
A) $2018 
B) $3010 
C) $3311 
D) $4015

Question 6

​When you purchase a run-down 1965 Ford Mustang to restore and resell, the purchase of the vehicle and all restoration expenditures are included in current GDP.

Accepted Answer

A) True 
 B)False

Question 7

If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then

Accepted Answer

A) U.S. consumption increases, U.S. net exports decrease, and U.S. GDP decreases. 
B) U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected. 
C) U.S. consumption decreases, U.S. net exports increase, and U.S. GDP increases. 
D) U.S. consumption decreases, U.S. net exports increase, and U.S. GDP is unaffected. 
A) U.S. consumption increases, U.S. net exports decrease, and U.S. GDP decreases. 
B) U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected. 
C) U.S. consumption decreases, U.S. net exports increase, and U.S. GDP increases. 
D) U.S. consumption decreases, U.S. net exports increase, and U.S. GDP is unaffected.

Question 8

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s) does(do) these transactions raise consumption?

Accepted Answer

A) the first and the second 
B) the first but not the second 
C) the second but not the first 
D) neither the first nor the second 
A) the first and the second 
B) the first but not the second 
C) the second but not the first 
D) neither the first nor the second

Question 9

Countries with low GDP per person tend to have

Accepted Answer

A) lower rates of child malnutrition. 
B) fewer infants with low birth weight. 
C) higher rates of infant mortality. 
D) more access to safe drinking water. 
A) lower rates of child malnutrition. 
B) fewer infants with low birth weight. 
C) higher rates of infant mortality. 
D) more access to safe drinking water.

Question 10

Table 23-2
The table below contains data for country A for the year 2010.  
-Refer to Table 23-2. What were country A's exports in 2010?

Accepted Answer

A) -$32 
B) $32 
C) $88 
D) $120 
A) -$32 
B) $32 
C) $88 
D) $120

Question 11

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

Accepted Answer

A) goods produced by foreign citizens working in the United States 
B) the difference in the price of the sale of an existing home and its original purchase price 
C) known illegal activities 
D) None of the above is included in U.S. GDP. 
A) goods produced by foreign citizens working in the United States 
B) the difference in the price of the sale of an existing home and its original purchase price 
C) known illegal activities 
D) None of the above is included in U.S. GDP.

Question 12

A consumer buys toys made in China. The value of the toys is included only in the net exports component of GDP.

Accepted Answer

A) True 
 B)False

Question 13

Retained earnings is income that

Accepted Answer

A) households retain after paying taxes. 
B) businesses retain after paying taxes. 
C) corporations have earned but have not used to invest in plant, equipment, and inventories. 
D) corporations have earned but have not paid out to their owners. 
A) households retain after paying taxes. 
B) businesses retain after paying taxes. 
C) corporations have earned but have not used to invest in plant, equipment, and inventories. 
D) corporations have earned but have not paid out to their owners.

Question 14

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. 
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 15

During the current quarter, a firm produces consumer goods and adds some of those goods to its inventory rather than selling them. The value of the goods added to inventory is

Accepted Answer

A) not included in the current quarter GDP. 
B) included in the current quarter GDP as investment. 
C) included in the current quarter GDP as consumption. 
D) included in the current quarter GDP as a statistical discrepancy. 
A) not included in the current quarter GDP. 
B) included in the current quarter GDP as investment. 
C) included in the current quarter GDP as consumption. 
D) included in the current quarter GDP as a statistical discrepancy.

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

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 18

Figure 23-1.
​  
-Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?

Accepted Answer

A) markets for factors of production and markets for goods and services 
B) firms and households 
C) expenditures and income 
D) consumption and investment 
A) markets for factors of production and markets for goods and services 
B) firms and households 
C) expenditures and income 
D) consumption and investment

Question 19

Table 23-8
A country produces only meat and potatoes in the quantities and prices listed below. Use 2011 as the base year.  
-Refer to Table 23-8. In 2012, GDP deflator is

Accepted Answer

A) 122. 
B) 134. 
C) 92. 
D) 113. 
A) 122. 
B) 134. 
C) 92. 
D) 113.

Question 20

GDP

Accepted Answer

A) is used to monitor the performance of the overall economy but is not the single best measure of a society's economic well-being. 
B) is used to monitor the performance of the overall economy and is the single best measure of a society's economic well-being. 
C) is not used to monitor the performance of the overall economy but is the single best measure of a society's economic well-being. 
D) is not used to monitor the performance of the overall economy and is not the single best measure of a society's economic well-being. 
A) is used to monitor the performance of the overall economy but is not the single best measure of a society's economic well-being. 
B) is used to monitor the performance of the overall economy and is the single best measure of a society's economic well-being. 
C) is not used to monitor the performance of the overall economy but is the single best measure of a society's economic well-being. 
D) is not used to monitor the performance of the overall economy and is not the single best measure of a society's economic well-being.

Exam 23: Measuring a Nation S Income

Social Security payments are

Which of the following correctly orders U.S. income measures from largest to smallest?

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

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.

Table 23-2 The table below contains data for country A for the year 2010. -Refer to Table 23-2. What was country A's consumption in 2010?

​When you purchase a run-down 1965 Ford Mustang to restore and resell, the purchase of the vehicle and all restoration expenditures are included in current GDP.

If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s) does(do) these transactions raise consumption?

Countries with low GDP per person tend to have

Table 23-2 The table below contains data for country A for the year 2010. -Refer to Table 23-2. What were country A's exports in 2010?

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

A consumer buys toys made in China. The value of the toys is included only in the net exports component of GDP.

Retained earnings is income that

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

During the current quarter, a firm produces consumer goods and adds some of those goods to its inventory rather than selling them. The value of the goods added to inventory is

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

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

Figure 23-1. ​ -Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?

Table 23-8 A country produces only meat and potatoes in the quantities and prices listed below. Use 2011 as the base year. -Refer to Table 23-8. In 2012, GDP deflator is

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

Filters

When you purchase a run-down 1965 Ford Mustang to restore and resell, the purchase of the vehicle and all restoration expenditures are included in current GDP.

Figure 23-1. -Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?