Question 1

Real GDP is the yearly production of final goods and services valued at

Accepted Answer

A) current prices. 
B) constant prices. 
C) expected future prices. 
D) the ratio of current prices to constant prices. 
A) current prices. 
B) constant prices. 
C) expected future prices. 
D) the ratio of current prices to constant prices.

Question 2

In the economy of Talikastan in 2015, consumption was two-thirds of GDP, government purchases were $1000 more than investment, investment was one-ninth of GDP, and the value of exports exceeded the value of imports by $500. What was Talikastan's GDP in 2015?

Accepted Answer

A) $1688 
B) $9000 
C) $13,500 
D) $15,000 
A) $1688 
B) $9000 
C) $13,500 
D) $15,000

Question 3

Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000. In 2014 she sold the house for $260,000. Which of the following statements is correct regarding the sale of the house?

Accepted Answer

A) The 2014 sale increased 2014 GDP by $260,000 and had no effect on 2011 GDP. 
B) The 2014 sale increased 2014 GDP by $20,000 and had no effect on 2011 GDP. 
C) The 2014 sale increased 2014 GDP by $260,000; furthermore, the 2014 sale caused 2011 GDP to be revised upward by $20,000. 
D) The 2014 sale affected neither 2014 GDP nor 2011 GDP. 
A) The 2014 sale increased 2014 GDP by $260,000 and had no effect on 2011 GDP. 
B) The 2014 sale increased 2014 GDP by $20,000 and had no effect on 2011 GDP. 
C) The 2014 sale increased 2014 GDP by $260,000; furthermore, the 2014 sale caused 2011 GDP to be revised upward by $20,000. 
D) The 2014 sale affected neither 2014 GDP nor 2011 GDP.

Question 4

If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements about GDP is correct?

Accepted Answer

A) GDP measures two things at once: the total income of everyone in the economy and the unemployment rate of the economy's labor force. 
B) Money continuously flows from households to government and then back to households, and GDP measures this flow of money. 
C) GDP is to a nation's economy as household income is to a household. 
D) All of the above are correct. 
A) GDP measures two things at once: the total income of everyone in the economy and the unemployment rate of the economy's labor force. 
B) Money continuously flows from households to government and then back to households, and GDP measures this flow of money. 
C) GDP is to a nation's economy as household income is to a household. 
D) All of the above are correct.

Question 6

In 2015, government purchases were the largest component of U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2010 Quality Motors produced $30 million worth of automobiles, with $17 million in sales to Americans, $9 million in sales to Canadians, and $4 million worth of automobiles added to Quality Motors' inventory. The transactions just described contribute how much to U.S. GDP for 2010?

Accepted Answer

A) $17 million 
B) $21 million 
C) $26 million 
D) $30 million 
A) $17 million 
B) $21 million 
C) $26 million 
D) $30 million

Question 9

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP?

Accepted Answer

A) $55,000 
B) $65,000 
C) $120,000 
D) None of the above are correct. 
A) $55,000 
B) $65,000 
C) $120,000 
D) None of the above are correct.

Question 10

Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?

Accepted Answer

A) Both item (1) and item (2) are included in the consumption component of GDP. 
B) Item (1) is included in the consumption component of GDP, while item (2) is included in the investment component of GDP. 
C) Item (1) is included in the investment component of GDP, while item (2) is included in the consumption component of GDP. 
D) Only item (2) is included in GDP, and it is included in the investment component. 
A) Both item (1) and item (2) are included in the consumption component of GDP. 
B) Item (1) is included in the consumption component of GDP, while item (2) is included in the investment component of GDP. 
C) Item (1) is included in the investment component of GDP, while item (2) is included in the consumption component of GDP. 
D) Only item (2) is included in GDP, and it is included in the investment component.

Question 11

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 12

In the economy of Talikastan in 2015, consumption was $5300, GDP was $8800, government purchases were $1800, imports were $600, and investment was $2000. What were Talikastan's exports in 2015?

Accepted Answer

A) -$900 
B) -$600 
C) $200 
D) $300 
A) -$900 
B) -$600 
C) $200 
D) $300

Question 13

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GNP.

Accepted Answer

A) True 
 B)False

Question 14

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

Accepted Answer

A) personal income and personal disposable income. 
B) estimates of GDP and actual GDP. 
C) the income and expenditure approaches to the calculation of GDP. 
D) the quarterly and annual approaches to the calculation of GDP. 
A) personal income and personal disposable income. 
B) estimates of GDP and actual GDP. 
C) the income and expenditure approaches to the calculation of GDP. 
D) the quarterly and annual approaches to the calculation of GDP.

Question 15

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 16

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

Accepted Answer

A) The value of the goods and services produced by the restaurant is included in both French GDP and U.S. GDP. 
B) The value added by American workers and equipment in France is included in U.S. GDP and the value added by French workers and equipment is added to French GDP. 
C) The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP. 
D) The value of the goods and services produced by the restaurant is included in U.S. GDP, but not in French GDP. 
A) The value of the goods and services produced by the restaurant is included in both French GDP and U.S. GDP. 
B) The value added by American workers and equipment in France is included in U.S. GDP and the value added by French workers and equipment is added to French GDP. 
C) The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP. 
D) The value of the goods and services produced by the restaurant is included in U.S. GDP, but not in French GDP.

Question 17

In 2010 a country had nominal GDP of 6 trillion euro and real GDP of 5 trillion euro. In 2011 it had nominal GDP of 6.5 trillion euro and real GDP of 5.2 trillion euro. What was its inflation rate in 2011? Show your work.

Accepted Answer

The GDP deflator for 2010 was

Question 18

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP?

Accepted Answer

A) $8,000 
B) $15,000 
C) $17,000 
D) $13,000 
A) $8,000 
B) $15,000 
C) $17,000 
D) $13,000

Question 19

Which of the following subcomponents of GDP can be either positive or negative?

Accepted Answer

A) inventory investment 
B) exports 
C) government purchases 
D) All of the above are correct. 
A) inventory investment 
B) exports 
C) government purchases 
D) All of the above are correct.

Question 20

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013 .
Prices and Quantities  
-Refer to Table 23-6. In 2012, this country's real GDP was

Accepted Answer

A) $510. 
B) $690. 
C) $930. 
D) $780. 
A) $510. 
B) $690. 
C) $930. 
D) $780.

Exam 23: Measuring a Nation S Income

Real GDP is the yearly production of final goods and services valued at

In the economy of Talikastan in 2015, consumption was two-thirds of GDP, government purchases were $1000 more than investment, investment was one-ninth of GDP, and the value of exports exceeded the value of imports by $500. What was Talikastan's GDP in 2015?

Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000. In 2014 she sold the house for $260,000. Which of the following statements is correct regarding the sale of the house?

If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

Which of the following statements about GDP is correct?

In 2015, government purchases were the largest component of U.S. GDP.

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

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP?

Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?

U.S. GDP

In the economy of Talikastan in 2015, consumption was $5300, GDP was $8800, government purchases were $1800, imports were $600, and investment was $2000. What were Talikastan's exports in 2015?

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GNP.

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

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

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

In 2010 a country had nominal GDP of 6 trillion euro and real GDP of 5 trillion euro. In 2011 it had nominal GDP of 6.5 trillion euro and real GDP of 5.2 trillion euro. What was its inflation rate in 2011? Show your work.

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP?

Which of the following subcomponents of GDP can be either positive or negative?

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013 . Prices and Quantities -Refer to Table 23-6. In 2012, this country's real GDP was

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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