Question 1

Recessions are associated with lower incomes, rising unemployment, and falling profits.

Accepted Answer

A) True 
 B)False

Question 2

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 nominal GDP, real GDP, and the GDP deflator for 2011? Show your work.

Accepted Answer

Nominal GDP was $6x80 + $65x12

Question 3

National income differs from net national product because

Accepted Answer

A) it includes profits of corporations. 
B) of a statistical discrepancy. 
C) it includes transfer payments. 
D) it excludes depreciation. 
A) it includes profits of corporations. 
B) of a statistical discrepancy. 
C) it includes transfer payments. 
D) it excludes depreciation.

Question 4

Expenditures by households on education are included in the consumption component of GDP.

Accepted Answer

A) True 
 B)False

Question 5

The residents of country A earn $500 million of income from abroad. Residents of other countries earn $200 million in country A. These earnings are accounted for in country A's

Accepted Answer

A) GNP which is larger than GDP in country A. 
B) GNP which is smaller than GDP in country A. 
C) GDP which is larger than GNP in country A. 
D) GDP which is smaller than GNP in country A. 
A) GNP which is larger than GDP in country A. 
B) GNP which is smaller than GDP in country A. 
C) GDP which is larger than GNP in country A. 
D) GDP which is smaller than GNP in country A.

Question 6

The purchase of rice produced this period is included in GDP if the rice is

Accepted Answer

A) used in a meal a restaurant sells during the same period they buy the rice. 
B) purchased by a family who uses it to make tuna casserole for its supper. 
C) purchased by a frozen food company to increase its inventory. 
D) B and C are correct. 
A) used in a meal a restaurant sells during the same period they buy the rice. 
B) purchased by a family who uses it to make tuna casserole for its supper. 
C) purchased by a frozen food company to increase its inventory. 
D) B and C are correct.

Question 7

In the economy of Talikastan in 2015, consumption was $800, GDP was $2000, government purchases were $400, and investment was $600. What were Talikastan's net exports in 2015?

Accepted Answer

A) -$200 
B) $200 
C) $1800 
D) Net exports cannot be calculated from the information given. 
A) -$200 
B) $200 
C) $1800 
D) Net exports cannot be calculated from the information given.

Question 8

Table 23-7
The table below contains data for the country of Togogo. The base year is 1974.  
-Refer to Table 23-7. From 1975 to 1976,

Accepted Answer

A) inflation was 25% and output did not grow. 
B) inflation was 25% and output grew. 
C) inflation was 50% and output did not grow. 
D) inflation was 50% and output grew. 
A) inflation was 25% and output did not grow. 
B) inflation was 25% and output grew. 
C) inflation was 50% and output did not grow. 
D) inflation was 50% and output grew.

Question 9

U.S. GDP includes estimates of the value of items that are produced and consumed at home, such as housework and car maintenance.

Accepted Answer

A) True 
 B)False

Question 10

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 total expenditure on the economy's output of goods and services. 
B) Money continuously flows from households to firms and then back to households, and GDP measures this flow of money. 
C) GDP is generally regarded as the best single measure of a society's economic well-being. 
D) All of the above are correct. 
A) GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services. 
B) Money continuously flows from households to firms and then back to households, and GDP measures this flow of money. 
C) GDP is generally regarded as the best single measure of a society's economic well-being. 
D) All of the above are correct.

Question 11

​GDP can be measured in terms of expenditures but not income, since income is subject to taxation.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 2017, this country's

Accepted Answer

A) real GDP was $900, and the GDP deflator was 138.9. 
B) real GDP was $1250, and the GDP deflator was 128.0. 
C) real GDP was $900, and the GDP deflator was 128.0. 
D) real GDP was $1250, and the GDP deflator was 138.9. 
A) real GDP was $900, and the GDP deflator was 138.9. 
B) real GDP was $1250, and the GDP deflator was 128.0. 
C) real GDP was $900, and the GDP deflator was 128.0. 
D) real GDP was $1250, and the GDP deflator was 138.9.

Question 14

Table 23-3
The table below contains data for the country of Crete for the year 2010.  
-Refer to Table 23-3. What was Crete's GDP in 2010?

Accepted Answer

A) $4623 
B) $5731 
C) $6037 
D) $6839 
A) $4623 
B) $5731 
C) $6037 
D) $6839

Question 15

In the United States in 2015, purchases of capital equipment, inventories, and structures represented approximately

Accepted Answer

A) 3 percent of GDP. 
B) 7 percent of GDP. 
C) 15 percent of GDP. 
D) 17 percent of GDP. 
A) 3 percent of GDP. 
B) 7 percent of GDP. 
C) 15 percent of GDP. 
D) 17 percent of GDP.

Question 16

Suppose an economy's production consists only of corn and soybeans. In 2010, 20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel. In 2009, the price of corn was $2 per bushel and the price of soybeans was $1 per bushel. Using 2009 as the base year, it follows that, for 2010,

Accepted Answer

A) nominal GDP is $50, real GDP is $100, and the GDP deflator is 50. 
B) nominal GDP is $50, real GDP is $100, and the GDP deflator is 200. 
C) nominal GDP is $100, real GDP is $50, and the GDP deflator is 50. 
D) nominal GDP is $100, real GDP is $50, and the GDP deflator is 200. 
A) nominal GDP is $50, real GDP is $100, and the GDP deflator is 50. 
B) nominal GDP is $50, real GDP is $100, and the GDP deflator is 200. 
C) nominal GDP is $100, real GDP is $50, and the GDP deflator is 50. 
D) nominal GDP is $100, real GDP is $50, and the GDP deflator is 200.

Question 17

Expenditures by households on education are included in the investment component of GDP.

Accepted Answer

A) True 
 B)False

Question 18

Micah buys a used car for $10,000 and spends $200 on a new radio that is made in the U.S. The end result of these two transactions is

Accepted Answer

A) U.S. consumption purchases increase by $200 and U.S. GDP increases by $200. 
B) U.S. consumption purchases increase by $200 and U.S. GDP increases by $10,000. 
C) U.S. consumption purchases increase by $10,000 and U.S. GDP increases by $10,200. 
D) U.S. consumption purchases increase by $10,200 and U.S. GDP increases by $10,200. 
A) U.S. consumption purchases increase by $200 and U.S. GDP increases by $200. 
B) U.S. consumption purchases increase by $200 and U.S. GDP increases by $10,000. 
C) U.S. consumption purchases increase by $10,000 and U.S. GDP increases by $10,200. 
D) U.S. consumption purchases increase by $10,200 and U.S. GDP increases by $10,200.

Question 19

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) is (are) GDP higher?

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 20

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

Accepted Answer

A) both Mexican GDP and U.S. GDP. 
B) Mexican GDP, but it is not included in U.S. GDP. 
C) U.S. GDP, but it is not included in Mexican GDP. 
D) neither Mexican GDP nor U.S. GDP. 
A) both Mexican GDP and U.S. GDP. 
B) Mexican GDP, but it is not included in U.S. GDP. 
C) U.S. GDP, but it is not included in Mexican GDP. 
D) neither Mexican GDP nor U.S. GDP.

Exam 23: Measuring a Nation S Income

Recessions are associated with lower incomes, rising unemployment, and falling profits.

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 nominal GDP, real GDP, and the GDP deflator for 2011? Show your work.

National income differs from net national product because

Expenditures by households on education are included in the consumption component of GDP.

The residents of country A earn $500 million of income from abroad. Residents of other countries earn $200 million in country A. These earnings are accounted for in country A's

The purchase of rice produced this period is included in GDP if the rice is

In the economy of Talikastan in 2015, consumption was $800, GDP was $2000, government purchases were $400, and investment was $600. What were Talikastan's net exports in 2015?

Table 23-7 The table below contains data for the country of Togogo. The base year is 1974. -Refer to Table 23-7. From 1975 to 1976,

U.S. GDP includes estimates of the value of items that are produced and consumed at home, such as housework and car maintenance.

Which of the following statements about GDP is correct?

​GDP can be measured in terms of expenditures but not income, since income is subject to taxation.

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

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 2017, this country's

Table 23-3 The table below contains data for the country of Crete for the year 2010. -Refer to Table 23-3. What was Crete's GDP in 2010?

In the United States in 2015, purchases of capital equipment, inventories, and structures represented approximately

Expenditures by households on education are included in the investment component of GDP.

Micah buys a used car for $10,000 and spends $200 on a new radio that is made in the U.S. The end result of these two transactions is

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) is (are) GDP higher?

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

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

GDP can be measured in terms of expenditures but not income, since income is subject to taxation.