Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

Gross domestic product serves as a measure of two things:

Accepted Answer

A) the total spending of everyone in the economy and the total saving of everyone in the economy. 
B) the total income of everyone in the economy and the total expenditure on the nation's output of goods and services. 
C) the value of the nation's output of goods and services for domestic citizens and the value of the nation's output of goods and services for the rest of the world. 
D) the nation's saving and the nation's investment. 
A) the total spending of everyone in the economy and the total saving of everyone in the economy. 
B) the total income of everyone in the economy and the total expenditure on the nation's output of goods and services. 
C) the value of the nation's output of goods and services for domestic citizens and the value of the nation's output of goods and services for the rest of the world. 
D) the nation's saving and the nation's investment. B

Question 3

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. D

Question 4

A U.S.publisher purchases new computers that were manufactured in the U.S.This purchase by itself makes

Accepted Answer

A) a positive contribution both to investment and to GDP. 
B) a positive contribution both to consumption and to GDP. 
C) a positive contribution to GDP, but it does not affect investment or consumption. 
D) a positive contribution to investment, but it does not affect GDP. 
A) a positive contribution both to investment and to GDP. 
B) a positive contribution both to consumption and to GDP. 
C) a positive contribution to GDP, but it does not affect investment or consumption. 
D) a positive contribution to investment, but it does not affect GDP.

Question 5

Statistics that are of particular interest to macroeconomists

Accepted Answer

A) are widely reported by the media. 
B) are largely ignored by the media. 
C) include the equilibrium prices of individual goods and services. 
D) do not include statistics for countries outside of North America. 
A) are widely reported by the media. 
B) are largely ignored by the media. 
C) include the equilibrium prices of individual goods and services. 
D) do not include statistics for countries outside of North America.

Question 6

Table 23-2. The information in the table pertains to the country of Ophir.
  
-Refer to Table 23-2.The inflation rate in Ophir was

Accepted Answer

A) 5 percent between 2004 and 2005, and 4.76 percent between 2005 and 2006. 
B) 5 percent between 2004 and 2005, and 5 percent between 2005 and 2006. 
C) 50 percent between 2004 and 2005, and 50 percent between 2005 and 2006. 
D) 100 percent between 2004 and 2005, and 105 percent between 2005 and 2006. 
A) 5 percent between 2004 and 2005, and 4.76 percent between 2005 and 2006. 
B) 5 percent between 2004 and 2005, and 5 percent between 2005 and 2006. 
C) 50 percent between 2004 and 2005, and 50 percent between 2005 and 2006. 
D) 100 percent between 2004 and 2005, and 105 percent between 2005 and 2006.

Question 7

In 2004,the level of U.S.real GDP was close to four times its 1965 level.

Accepted Answer

A) True 
 B)False

Question 8

An American company operates a fast food restaurant in Romania.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 Romanian GDP and U.S.GDP. 
B) One-half of the value of the goods and services produced by the restaurant is included in Romanian GDP, and the other one-half of the value is included in U.S.GDP. 
C) The value of the goods and services produced by the restaurant is included in Romanian 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 Romanian GDP. 
A) The value of the goods and services produced by the restaurant is included in both Romanian GDP and U.S.GDP. 
B) One-half of the value of the goods and services produced by the restaurant is included in Romanian GDP, and the other one-half of the value is included in U.S.GDP. 
C) The value of the goods and services produced by the restaurant is included in Romanian 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 Romanian GDP.

Question 9

To compute GDP,we

Accepted Answer

A) add up the wages paid to all workers. 
B) add up the costs of producing all final goods and services. 
C) add up the market values of all final goods and services. 
D) take the difference between the market value of all final goods and services and the cost of producing those final goods and services. 
A) add up the wages paid to all workers. 
B) add up the costs of producing all final goods and services. 
C) add up the market values of all final goods and services. 
D) take the difference between the market value of all final goods and services and the cost of producing those final goods and services.

Question 10

For monitoring fluctuations in the national economy,which measure of income is best?

Accepted Answer

A) GDP 
B) NNP 
C) national income 
D) It does not matter very much which measure we use. 
A) GDP 
B) NNP 
C) national income 
D) It does not matter very much which measure we use.

Question 11

Which government entity prepares the U.S.national income accounts?

Accepted Answer

A) the Federal Reserve System 
B) the Department of Treasury 
C) the Department of Commerce 
D) the Council of Economic Advisers 
A) the Federal Reserve System 
B) the Department of Treasury 
C) the Department of Commerce 
D) the Council of Economic Advisers

Question 12

Which of the following statements is accurate?

Accepted Answer

A) In rich countries, people typically live into their late seventies, while in poor countries, people typically live only until their fifties or early sixties. 
B) In rich countries, almost all citizens can read, while in poor countries, about half the population is illiterate. 
C) Poor countries tend to have higher infant mortality rates, higher maternal mortality, and higher rates of child malnutrition than do rich countries. 
D) All of the above are correct. 
A) In rich countries, people typically live into their late seventies, while in poor countries, people typically live only until their fifties or early sixties. 
B) In rich countries, almost all citizens can read, while in poor countries, about half the population is illiterate. 
C) Poor countries tend to have higher infant mortality rates, higher maternal mortality, and higher rates of child malnutrition than do rich countries. 
D) All of the above are correct.

Question 13

U.S.GDP excludes the production of illegal goods.

Accepted Answer

A) True 
 B)False

Question 14

National income differs from net national product in that it includes business subsidies and excludes

Accepted Answer

A) profits of corporations. 
B) indirect business taxes. 
C) retained earnings of corporations. 
D) depreciation. 
A) profits of corporations. 
B) indirect business taxes. 
C) retained earnings of corporations. 
D) depreciation.

Question 15

ABC Company produces ink and sells it to XYZ Company,which makes pens.The ink produced by ABC Company is called

Accepted Answer

A) an inventory good. 
B) a transitory good. 
C) a preliminary good. 
D) an intermediate good. 
A) an inventory good. 
B) a transitory good. 
C) a preliminary good. 
D) an intermediate good.

Question 16

Which statement represents most correctly the relationship between nominal GDP and real GDP?

Accepted Answer

A) Nominal GDP measures base-year production using base-year prices, whereas real GDP measures current production using current prices. 
B) Nominal GDP measures current production using base-year prices, whereas real GDP measures current production using current prices. 
C) Nominal GDP measures current production using current prices, whereas real GDP measures current production using base-year prices. 
D) Nominal GDP measures current production using current prices, whereas real GDP measures base-year production using base-year prices. 
A) Nominal GDP measures base-year production using base-year prices, whereas real GDP measures current production using current prices. 
B) Nominal GDP measures current production using base-year prices, whereas real GDP measures current production using current prices. 
C) Nominal GDP measures current production using current prices, whereas real GDP measures current production using base-year prices. 
D) Nominal GDP measures current production using current prices, whereas real GDP measures base-year production using base-year prices.

Question 17

During the current quarter,a firm produces consumer goods and adds some of those goods to the firm's 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 18

For an economy,expenditure is equal to income because

Accepted Answer

A) by law firms must pay out all their revenue as income to someone. 
B) for every sale there is a buyer and a seller. 
C) prices of individual goods and services change, but the average price level stays the same. 
D) None of the above is correct; expenditure is not always equal to income for an economy. 
A) by law firms must pay out all their revenue as income to someone. 
B) for every sale there is a buyer and a seller. 
C) prices of individual goods and services change, but the average price level stays the same. 
D) None of the above is correct; expenditure is not always equal to income for an economy.

Question 19

Firms use the money they get from a sale to

Accepted Answer

A) pay wages to workers. 
B) pay rent to landlords. 
C) pay profit to the firms' owners. 
D) All of the above are correct. 
A) pay wages to workers. 
B) pay rent to landlords. 
C) pay profit to the firms' owners. 
D) All of the above are correct.

Question 20

A recession is a period during which

Accepted Answer

A) nominal GDP declines for about two consecutive quarters. 
B) nominal GDP declines for about four consecutive quarters. 
C) real GDP declines for about two consecutive quarters. 
D) the GDP deflator declines for about four consecutive quarters. 
A) nominal GDP declines for about two consecutive quarters. 
B) nominal GDP declines for about four consecutive quarters. 
C) real GDP declines for about two consecutive quarters. 
D) the GDP deflator declines for about four consecutive quarters.

Exam 23: Measuring a Nations Income

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

Gross domestic product serves as a measure of two things:

Which of the following statements about GDP is correct?

A U.S.publisher purchases new computers that were manufactured in the U.S.This purchase by itself makes

Statistics that are of particular interest to macroeconomists

Table 23-2. The information in the table pertains to the country of Ophir. -Refer to Table 23-2.The inflation rate in Ophir was

In 2004,the level of U.S.real GDP was close to four times its 1965 level.

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

To compute GDP,we

For monitoring fluctuations in the national economy,which measure of income is best?

Which government entity prepares the U.S.national income accounts?

Which of the following statements is accurate?

U.S.GDP excludes the production of illegal goods.

National income differs from net national product in that it includes business subsidies and excludes

ABC Company produces ink and sells it to XYZ Company,which makes pens.The ink produced by ABC Company is called

Which statement represents most correctly the relationship between nominal GDP and real GDP?

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

For an economy,expenditure is equal to income because

Firms use the money they get from a sale to

A recession is a period during which

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Supply, demand, and Government Policies

Consumers, producers, and the Efficiency of Markets

Application: 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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters