Question 1

Define gross domestic product.

Accepted Answer

The market value of all final

Question 2

If nominal GDP is $12,000 and the GDP deflator is 80, then real GDP is $15,000.

Accepted Answer

A) True 
 B)False

Question 3

When economists talk about growth in the economy, they measure that growth as the

Accepted Answer

A) absolute change in nominal GDP from one period to another. 
B) percentage change in nominal GDP from one period to another. 
C) absolute change in real GDP from one period to another. 
D) percentage change in real GDP from one period to another. 
A) absolute change in nominal GDP from one period to another. 
B) percentage change in nominal GDP from one period to another. 
C) absolute change in real GDP from one period to another. 
D) percentage change in real GDP from one period to another.

Question 4

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Accepted Answer

A) True 
 B)False

Question 5

Changes in inventory are included in the investment component of GDP.

Accepted Answer

A) True 
 B)False

Question 6

Table 23-1
The following table contains data for Mindalion for the year 2019.
​
 $$\begin{array} { | l | l | } 
\hline \text { GDP } & \$ 700 \
\hline \text { Income earned by citizens abroad } & \$ 13 \
\hline \text { Income foreigners earn here } & \$ 12 \
\hline \text { Losses from depreciation } & \$ 5 \
\hline \text { Indirect business taxes } & \$ 10 \
\hline \text { Statistical discrepancy } & \$ 0 \
\hline \text { Retained earnings } & \$ 8 \
\hline \text { Corporate income taxes } & \$ 12 \
\hline \text { Social insurance contributions } & \$ 30 \
\hline \text { Interest paid to households by government } & \$ 8 \
\hline \text { Transfer payments to households from government } & \$ 55 \
\hline \text { Personal taxes } & \$ 60 \
\hline \text { Nontax payments to government } & \$ 11 \
\hline
\end{array}$$
-Refer to Table 23-1. Net national product for Mindalion in 2019 is

Accepted Answer

A) $696. 
B) $700. 
C) $701. 
D) $699. 
A) $696. 
B) $700. 
C) $701. 
D) $699.

Question 7

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

Accepted Answer

A) True 
 B)False

Question 8

Table 23-2
The following table contains data for country Mindalion for the year 2019.
​
 $$\begin{array} { | l | l | } 
\hline \text { Household purchases of durable goods } & \$ 1,695 \
\hline \text { Household purchases of nondurable goods } & \$ 1,717 \
\hline \text { Household purchases of services } & \$ 400 \
\hline \text { Household purchases of new housing } & \$ 704 \
\hline \text { Purchases of capital equipment } & \$ 310 \
\hline \text { Inventory changes } & \$ 399 \
\hline \text { Purchases of new structures } & \$ 611 \
\hline \text { Depreciati on } & \$ 117 \
\hline \text { Salaries of government workers } & \$ 1,422 \
\hline \text { Government expenditures on public works } & \$ 589 \
\hline \text { Transfer payments } & \$ 777 \
\hline \text { Foreign purchases of domestically produced goods } & \$ 88 \
\hline \text { Domestic purchases of foreign goods } & \$ 140 \
\hline
\end{array}$$
-Refer to Table 23-2. What were country Mindalion's government purchases in 2019?

Accepted Answer

A) $2,011 
B) $2,024 
C) $3,812 
D) $7,795 
A) $2,011 
B) $2,024 
C) $3,812 
D) $7,795

Question 9

Government purchases include spending on goods and services by

Accepted Answer

A) the federal government, but not by state or local governments. 
B) federal and state governments, but not by local governments. 
C) federal, state, and local governments. 
D) federal, state, and local governments, as well as household spending by employees of those governments. 
A) the federal government, but not by state or local governments. 
B) federal and state governments, but not by local governments. 
C) federal, state, and local governments. 
D) federal, state, and local governments, as well as household spending by employees of those governments.

Question 10

Foreign countries buy $1.2 trillion of U.S. goods and services. U.S. residents purchase $1.8 trillion of foreign goods and services. What is net exports?

Accepted Answer

The answer of Foreign countries buy $1.2 trillion of U.S....

Question 11

A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S. GDP

Accepted Answer

A) increases by $40. 
B) increases by $220. 
C) increases by $280. 
D) increases by $1500. 
A) increases by $40. 
B) increases by $220. 
C) increases by $280. 
D) increases by $1500.

Question 12

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

Accepted Answer

A) True 
 B)False

Question 13

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 14

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

Accepted Answer

A) True 
 B)False

Question 15

Table 23-7
A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year.
 $$\begin{array} { | l | l | l | l | l | } 
\hline \text { Year } & \begin{array} { l } 
\text { Price of Ice } \
\text { Cream }
\end{array} & \begin{array} { l } 
\text { Quantity of Ice } \
\text { Cream }
\end{array} & \text { Price of Cake } & \begin{array} { l } 
\text { Quantity of } \
\text { Cake }
\end{array} \
\hline 2011 & \$ 2.00 & 200 & \$ 10 & 40 \
\hline 2012 & \$ 2.30 & 250 & \$ 14 & 50 \
\hline 2013 & \$ 2.75 & 280 & \$ 18 & 80 \
\hline
\end{array}$$
-Refer to Table 23-7. Calculate real and nominal GDP for the year 2012.

Accepted Answer

Nominal GD

Question 16

Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person.

Accepted Answer

A) True 
 B)False

Question 17

During a presidential campaign, the incumbent argues that he should be reelected because nominal GDP grew by 12 percent during his 4-year term in office. You know that population grew by 4 percent over the period and that the GDP deflator increased by 6 percent during the past 4 years. You should conclude that real GDP per person

Accepted Answer

A) grew by more than 12 percent. 
B) grew, but by less than 12 percent. 
C) was unchanged. 
D) decreased. 
A) grew by more than 12 percent. 
B) grew, but by less than 12 percent. 
C) was unchanged. 
D) decreased.

Question 18

Figure 23-2
​  
-Refer to Figure 23-2. List the locations associated with the flow of inputs and outputs.

Accepted Answer

The answer of Figure 23-2
​  
-Refer to Figure 23-2....

Question 19

U.S. GDP and U.S. GNP are related as follows:

Accepted Answer

A) GNP = GDP + Value of exported goods − Value of imported goods. 
B) GNP = GDP − Value of exported goods + Value of imported goods. 
C) GNP = GDP + Income earned by foreigners in the U.S.− Income earned by U.S.citizens abroad. 
D) GNP = GDP − Income earned by foreigners in the U.S.+ Income earned by U.S.citizens abroad. 
A) GNP = GDP + Value of exported goods − Value of imported goods. 
B) GNP = GDP − Value of exported goods + Value of imported goods. 
C) GNP = GDP + Income earned by foreigners in the U.S.− Income earned by U.S.citizens abroad. 
D) GNP = GDP − Income earned by foreigners in the U.S.+ Income earned by U.S.citizens abroad.

Question 20

U.S. GDP was almost $12 trillion in 2015.

Accepted Answer

A) True 
 B)False

Exam 23: Measuring a Nations Income

Define gross domestic product.

If nominal GDP is $12,000 and the GDP deflator is 80, then real GDP is $15,000.

When economists talk about growth in the economy, they measure that growth as the

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Changes in inventory are included in the investment component of GDP.

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

Government purchases include spending on goods and services by

Foreign countries buy $1.2 trillion of U.S. goods and services. U.S. residents purchase $1.8 trillion of foreign goods and services. What is net exports?

A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S. GDP

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

For the purpose of calculating GDP, investment is spending on

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person.

Figure 23-2 ​ -Refer to Figure 23-2. List the locations associated with the flow of inputs and outputs.

U.S. GDP and U.S. GNP are related as follows:

U.S. GDP was almost $12 trillion in 2015.

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

Figure 23-2 -Refer to Figure 23-2. List the locations associated with the flow of inputs and outputs.