Question 1

When an American household purchases a bottle of Italian wine for $100,

Accepted Answer

A) U.S. consumption does not change, U.S. net exports decrease by $100, and U.S. GDP decreases by $100. 
B) U.S. consumption does not change, U.S. net exports increase by $100, and U.S. GDP increases by $100. 
C) U.S. consumption increases by $100, U.S. net exports decrease by $100, and U.S. GDP does not change. 
D) U.S. consumption increases by $100, U.S. net exports do not change, and U.S. GDP increases by $100. 
A) U.S. consumption does not change, U.S. net exports decrease by $100, and U.S. GDP decreases by $100. 
B) U.S. consumption does not change, U.S. net exports increase by $100, and U.S. GDP increases by $100. 
C) U.S. consumption increases by $100, U.S. net exports decrease by $100, and U.S. GDP does not change. 
D) U.S. consumption increases by $100, U.S. net exports do not change, and U.S. GDP increases by $100.

Question 2

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

Accepted Answer

A) GDP would definitely increase, despite the fact that GDP includes leisure. 
B) GDP would definitely increase because GDP excludes leisure. 
C) GDP could either increase or decrease because GDP includes leisure. 
D) GDP could either increase or decrease because GDP excludes leisure. 
A) GDP would definitely increase, despite the fact that GDP includes leisure. 
B) GDP would definitely increase because GDP excludes leisure. 
C) GDP could either increase or decrease because GDP includes leisure. 
D) GDP could either increase or decrease because GDP excludes leisure.

Question 3

Real GDP is a better gauge of economic well-being than is nominal GDP.

Accepted Answer

A) True 
 B)False

Question 4

In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was $7500, imports were $200, and investment was $1000. What were Talikastan's government purchases in 2015?

Accepted Answer

A) $1200 
B) $1900 
C) $2500 
D) $4500 
A) $1200 
B) $1900 
C) $2500 
D) $4500

Question 5

Which of the following examples of production of goods and services would be included in U.S. GDP?

Accepted Answer

A) Sally, a Canadian citizen, works on a drilling crew in North Dakota for Northland Gas Services, and Northland sells the natural gas to a utility company in Canada. 
B) Jim grows pecans for his family in the yard of their San Antonio home. 
C) Joe grows marijuana in his Kansas City home and sells it to his friends and neighbors. 
D) None of the above examples of production would be included in U.S. GDP. 
A) Sally, a Canadian citizen, works on a drilling crew in North Dakota for Northland Gas Services, and Northland sells the natural gas to a utility company in Canada. 
B) Jim grows pecans for his family in the yard of their San Antonio home. 
C) Joe grows marijuana in his Kansas City home and sells it to his friends and neighbors. 
D) None of the above examples of production would be included in U.S. GDP.

Question 6

Table 23-1
The table below contains data for Chereaux for the year 2015.  
-Refer to Table 23-1. Gross national product for Chereaux in 2015 is

Accepted Answer

A) $186. 
B) $214. 
C) $200. 
D) $204. 
A) $186. 
B) $214. 
C) $200. 
D) $204.

Question 7

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Accepted Answer

A) GDP would definitely increase, despite the fact that GDP includes environmental quality. 
B) GDP would definitely decrease because GDP includes environmental quality. 
C) GDP would definitely increase because GDP excludes environmental quality. 
D) GDP could either increase or decrease because GDP excludes environmental quality. 
A) GDP would definitely increase, despite the fact that GDP includes environmental quality. 
B) GDP would definitely decrease because GDP includes environmental quality. 
C) GDP would definitely increase because GDP excludes environmental quality. 
D) GDP could either increase or decrease because GDP excludes environmental quality.

Question 8

Table 23-11
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 23-11.
What was the inflation rate for 2011? Show your work.

Accepted Answer

For 2010 the GDP Deflator was 112.
Nomin

Question 9

Which of the following is not included in GDP?

Accepted Answer

A) carrots grown in your garden and eaten by your family 
B) carrots purchased at a farmer's market and eaten by your family 
C) carrots purchased at a grocery store and eaten by your family 
D) None of the above are included in GDP. 
A) carrots grown in your garden and eaten by your family 
B) carrots purchased at a farmer's market and eaten by your family 
C) carrots purchased at a grocery store and eaten by your family 
D) None of the above are included in GDP.

Question 10

Table 23-5
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 2015.
Prices and Quantities  
-Refer to Table 23-5. In 2016, this country's

Accepted Answer

A) real GDP was $880, and the GDP deflator was 111.4. 
B) real GDP was $780, and the GDP deflator was 88.6. 
C) real GDP was $880, and the GDP deflator was 112.8. 
D) real GDP was $780, and the GDP deflator was 112.8. 
A) real GDP was $880, and the GDP deflator was 111.4. 
B) real GDP was $780, and the GDP deflator was 88.6. 
C) real GDP was $880, and the GDP deflator was 112.8. 
D) real GDP was $780, and the GDP deflator was 112.8.

Question 11

A recession is always associated with

Accepted Answer

A) the end of a war. 
B) slowly growing real GDP. 
C) rising inflation. 
D) declining real GDP. 
A) the end of a war. 
B) slowly growing real GDP. 
C) rising inflation. 
D) declining real GDP.

Question 12

Table 23-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.  
-Refer to Table 23-4. If prices had remained constant between 1929 and 1930, Nominal GDP would have decreased

Accepted Answer

A) 8.62%. 
B) 9.43%. 
C) 11.97%. 
D) 13.6%. 
A) 8.62%. 
B) 9.43%. 
C) 11.97%. 
D) 13.6%.

Question 13

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 government purchases in 2010?

Accepted Answer

A) $553 
B) $1198 
C) $1975 
D) $2752 
A) $553 
B) $1198 
C) $1975 
D) $2752

Question 14

Which of the following statements about nominal GDP and real GDP is correct?

Accepted Answer

A) Nominal GDP is a better gauge of economic well-being than real GDP. 
B) Real GDP is a better gauge of economic well-being than nominal GDP. 
C) Real GDP and nominal GDP are equally good measures of economic well-being. 
D) Neither nominal nor real GDP provide a measure of economic well-being. 
A) Nominal GDP is a better gauge of economic well-being than real GDP. 
B) Real GDP is a better gauge of economic well-being than nominal GDP. 
C) Real GDP and nominal GDP are equally good measures of economic well-being. 
D) Neither nominal nor real GDP provide a measure of economic well-being.

Question 15

For the purpose of calculating GDP, investment is spending on

Accepted Answer

A) stocks, bonds, and other financial assets. 
B) real estate and financial assets such as stocks and bonds. 
C) capital equipment, inventories, and structures, including household purchases of new housing. 
D) capital equipment, inventories, and structures, excluding household purchases of new housing. 
A) stocks, bonds, and other financial assets. 
B) real estate and financial assets such as stocks and bonds. 
C) capital equipment, inventories, and structures, including household purchases of new housing. 
D) capital equipment, inventories, and structures, excluding household purchases of new housing.

Question 16

Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture. With each $1,000 worth of leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for $2,600. Neither firm had any inventory at the beginning of 2015. During that year, Cowhide produced enough leather for 25 couches. Couches, Inc. bought 80% of that leather for $20,000 and promised to buy the remaining 20% for $5,000 in 2016. Couches, Inc. produced 20 couches during 2015 and sold each one during that year for $2,600. What was the economy's GDP for 2015?

Accepted Answer

A) $25,000 
B) $52,000 
C) $57,000 
D) $65,000 
A) $25,000 
B) $52,000 
C) $57,000 
D) $65,000

Question 17

The GDP deflator can be used to take inflation out of nominal GDP.

Accepted Answer

A) True 
 B)False

Question 18

Consumption expenditures were previously the largest component of GDP, but with the growth of government and government expenditures, this is no longer true.
​

Accepted Answer

A) True 
 B)False

Question 19

Between 1929 and 1933, NNP measured in current prices fell from $96 billion to $48 billion. Over the same period, the relevant price index fell from 100 to 75.
a.What was the percentage decline in nominal NNP from 1929 to1933?
b.What was the percentage decline in real NNP from 1929 to 1933? Show your work.

Accepted Answer

a.NNP measured in current prices is nomi

Question 20

Table 23-5
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 2015.
Prices and Quantities  
-Refer to Table 23-5. This country's output grew

Accepted Answer

A) 31.3% from 2015 to 2016. 
B) 42.0% from 2016 to 2017. 
C) 15.4% from 2016 to 2017. 
D) 53.6% from 2017 to 2018. 
A) 31.3% from 2015 to 2016. 
B) 42.0% from 2016 to 2017. 
C) 15.4% from 2016 to 2017. 
D) 53.6% from 2017 to 2018.

Exam 23: Measuring a Nation S Income

When an American household purchases a bottle of Italian wine for $100,

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

Real GDP is a better gauge of economic well-being than is nominal GDP.

In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was $7500, imports were $200, and investment was $1000. What were Talikastan's government purchases in 2015?

Which of the following examples of production of goods and services would be included in U.S. GDP?

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Gross national product for Chereaux in 2015 is

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Table 23-11 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 23-11. What was the inflation rate for 2011? Show your work.

Which of the following is not included in GDP?

Table 23-5 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 2015. Prices and Quantities -Refer to Table 23-5. In 2016, this country's

A recession is always associated with

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. If prices had remained constant between 1929 and 1930, Nominal GDP would have decreased

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 government purchases in 2010?

Which of the following statements about nominal GDP and real GDP is correct?

For the purpose of calculating GDP, investment is spending on

The GDP deflator can be used to take inflation out of nominal GDP.

Consumption expenditures were previously the largest component of GDP, but with the growth of government and government expenditures, this is no longer true. ​

Table 23-5 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 2015. Prices and Quantities -Refer to Table 23-5. This country's output grew

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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Consumption expenditures were previously the largest component of GDP, but with the growth of government and government expenditures, this is no longer true.