Question 1

If a U.S.citizen buys a television made in Korea by a Korean firm,

Accepted Answer

A) U.S.net exports decrease and U.S.GDP decreases. 
B) U.S.net exports are unaffected and U.S.GDP decreases. 
C) U.S.net exports are unaffected and U.S.GDP is unaffected. 
D) U.S.net exports decrease and U.S.GDP is unaffected. 
A) U.S.net exports decrease and U.S.GDP decreases. 
B) U.S.net exports are unaffected and U.S.GDP decreases. 
C) U.S.net exports are unaffected and U.S.GDP is unaffected. 
D) U.S.net exports decrease and U.S.GDP is unaffected.

Question 2

GDP is defined as the market value of all final goods and services produced

Accepted Answer

A) by the citizens of a country, regardless of where they live, in a given period of time; this definition focuses on GDP as a measure of total income. 
B) by the citizens of a country, regardless of where they live, in a given period of time; this definition focuses on GDP as a measure of total expenditure. 
C) within a country in a given period of time; this definition focuses on GDP as a measure of total income. 
D) within a country in a given period of time; this definition focuses on GDP as a measure of total expenditure. 
A) by the citizens of a country, regardless of where they live, in a given period of time; this definition focuses on GDP as a measure of total income. 
B) by the citizens of a country, regardless of where they live, in a given period of time; this definition focuses on GDP as a measure of total expenditure. 
C) within a country in a given period of time; this definition focuses on GDP as a measure of total income. 
D) within a country in a given period of time; this definition focuses on GDP as a measure of total expenditure.

Question 3

If a small country has current nominal GDP of $25 billion and the GDP deflator is 125,what is real GDP?

Accepted Answer

A) $312.5 billion 
B) $207.5 billion 
C) $31.25 billion 
D) None of the above is correct. 
A) $312.5 billion 
B) $207.5 billion 
C) $31.25 billion 
D) None of the above is correct.

Question 4

Identify the immediate effect of each of the following events on U.S.GDP and its components.
a.James receives a Social Security check.
b.John buys an Italian sports car.
c.Henry buys domestically produced tools for his construction company.

Accepted Answer

a. Since this is a transfer payment,ther

Question 5

GDP is used as the basic measure of a society's economic well-being.A better measure of the economic well-being of individuals in society is

Accepted Answer

A) GDP per person. 
B) the consumption component of GDP. 
C) government expenditures per person. 
D) investment per business firm. 
A) GDP per person. 
B) the consumption component of GDP. 
C) government expenditures per person. 
D) investment per business firm.

Question 6

In a certain economy in 2005,GDP amounted to $5,000;consumption amounted to $3,000;government purchases were equal to investment;and the value of imports exceeded the value of exports by $200.It follows that government purchases amounted to

Accepted Answer

A) $900. 
B) $1,100. 
C) $1,250. 
D) $1,325. 
A) $900. 
B) $1,100. 
C) $1,250. 
D) $1,325.

Question 7

National income is defined as

Accepted Answer

A) GDP minus losses from depreciation. 
B) GDP plus personal income. 
C) GDP minus taxes paid by U.S.residents. 
D) the total income earned by a nation's residents in the production of goods and services. 
A) GDP minus losses from depreciation. 
B) GDP plus personal income. 
C) GDP minus taxes paid by U.S.residents. 
D) the total income earned by a nation's residents in the production of goods and services.

Question 8

Suppose that twenty-five years ago a country had nominal GDP of $1,000,a GDP deflator of 200,and a population of 100.Today it has nominal GDP of $3,000,a GDP deflator of 400,and population of 150.What happened to the real GDP per person?

Accepted Answer

A) It more than doubled. 
B) It increased, but it less than doubled. 
C) It was unchanged. 
D) It decreased. 
A) It more than doubled. 
B) It increased, but it less than doubled. 
C) It was unchanged. 
D) It decreased.

Question 9

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition,some production is left out of GDP.Explain why some final goods and services are not included.

Accepted Answer

GDP excludes some products because they

Question 10

Table 23-1. The data pertain to the nation of Simplia for the year 2006.
  
-Refer to Table 23-1.Disposable personal income for this economy is

Accepted Answer

A) $61 
B) $56. 
C) $47. 
D) $41. 
A) $61 
B) $56. 
C) $47. 
D) $41.

Question 11

Consumption consists of spending by households on goods and services,with the exception of

Accepted Answer

A) purchase of intangible services. 
B) purchases of durable goods. 
C) purchases of new houses. 
D) All of the above are exceptions. 
A) purchase of intangible services. 
B) purchases of durable goods. 
C) purchases of new houses. 
D) All of the above are exceptions.

Question 12

If a small country has current nominal GDP of $20 billion and a GDP deflator of 50,what is its real GDP?

Accepted Answer

A) $100 billion 
B) $40 billion 
C) $10 billion 
D) $4 billion 
A) $100 billion 
B) $40 billion 
C) $10 billion 
D) $4 billion

Question 13

An increase in nominal U.S.GDP necessarily implies that the United States is producing a larger output of goods and services.

Accepted Answer

A) True 
 B)False

Question 14

A Minnesota farmer buys a new tractor made in Iowa by a German company.As a result,

Accepted Answer

A) U.S.investment and GDP increase, but German GDP is unaffected. 
B) U.S.investment and German GDP increase, but U.S.GDP is unaffected. 
C) U.S.investment, U.S.GDP, and German GDP are unaffected, because tractors are intermediate goods. 
D) U.S.investment, U.S.GDP, and German GDP all increase. 
A) U.S.investment and GDP increase, but German GDP is unaffected. 
B) U.S.investment and German GDP increase, but U.S.GDP is unaffected. 
C) U.S.investment, U.S.GDP, and German GDP are unaffected, because tractors are intermediate goods. 
D) U.S.investment, U.S.GDP, and German GDP all increase.

Question 15

Tyler and Camille both live in Oklahoma.A new-car dealer in Oklahoma bought a new car from the manufacturer for $17,000 and sold it to Tyler for $20,000.Later that year,Tyler sold the car to Camille for $15,000.By how much did these transactions contribute to U.S.GDP for the year?

Accepted Answer

A) $17,000 
B) $20,000 
C) $35,000 
D) $52,000 
A) $17,000 
B) $20,000 
C) $35,000 
D) $52,000

Question 16

If GDP is higher in one country than in another,we can be sure that the standard of living is higher in the country with the higher GDP.

Accepted Answer

A) True 
 B)False

Question 17

The U.S.government pays an economist at the U.S.Department of Commerce $50,000 in salary in 2006.The economist then retires.In 2007,the government pays him $30,000 in retirement benefits.Which of the following is correct?

Accepted Answer

A) Each payment will be included in GDP as government purchases for the respective years. 
B) The 2006 payment is included in 2006 GDP as government purchases, but the 2007 payment is not included in 2007 GDP. 
C) The 2006 payment is included in 2006 GDP as government purchases, and the 2007 payment is included in 2007 GDP as government transfer payments. 
D) The 2006 payment is included in 2006 GDP as government purchases, and the 2007 payment is allocated to previous years' GDP according to the amount of work performed by the economist each year. 
A) Each payment will be included in GDP as government purchases for the respective years. 
B) The 2006 payment is included in 2006 GDP as government purchases, but the 2007 payment is not included in 2007 GDP. 
C) The 2006 payment is included in 2006 GDP as government purchases, and the 2007 payment is included in 2007 GDP as government transfer payments. 
D) The 2006 payment is included in 2006 GDP as government purchases, and the 2007 payment is allocated to previous years' GDP according to the amount of work performed by the economist each year.

Question 18

Grapes are

Accepted Answer

A) always counted as an intermediate good. 
B) counted as an intermediate good only if they are used to produce another good such as wine. 
C) counted as an intermediate good only if they are consumed. 
D) counted as an intermediate good, whether they are used to produce another good or consumed. 
A) always counted as an intermediate good. 
B) counted as an intermediate good only if they are used to produce another good such as wine. 
C) counted as an intermediate good only if they are consumed. 
D) counted as an intermediate good, whether they are used to produce another good or consumed.

Question 19

Ralph pays someone to mow his lawn,while Mike mows his own lawn.Regarding these two practices,which of the following statements is correct?

Accepted Answer

A) Only Ralph's payments are included in GDP. 
B) Ralph's payments as well as the estimated value of Mike's mowing services are included in GDP. 
C) Neither Ralph's payments nor the estimated value of Mike's mowing services is included in GDP. 
D) Ralph's payments are definitely included in GDP, while the estimated value of Mike's mowing services is included in GDP only if Mike voluntarily provides his estimate of that value to the government. 
A) Only Ralph's payments are included in GDP. 
B) Ralph's payments as well as the estimated value of Mike's mowing services are included in GDP. 
C) Neither Ralph's payments nor the estimated value of Mike's mowing services is included in GDP. 
D) Ralph's payments are definitely included in GDP, while the estimated value of Mike's mowing services is included in GDP only if Mike voluntarily provides his estimate of that value to the government.

Question 20

In computing GDP,market prices are used to value final goods and services because

Accepted Answer

A) market prices reflect the values of goods and services. 
B) market prices do not change much over time, so it is easy to make comparisons between years. 
C) if market prices are out of line with how people value goods, the government sets price ceilings and price floors. 
D) None of the above is correct; market prices are not used in computing GDP. 
A) market prices reflect the values of goods and services. 
B) market prices do not change much over time, so it is easy to make comparisons between years. 
C) if market prices are out of line with how people value goods, the government sets price ceilings and price floors. 
D) None of the above is correct; market prices are not used in computing GDP.

Exam 23: Measuring a Nations Income

If a U.S.citizen buys a television made in Korea by a Korean firm,

GDP is defined as the market value of all final goods and services produced

If a small country has current nominal GDP of $25 billion and the GDP deflator is 125,what is real GDP?

Identify the immediate effect of each of the following events on U.S.GDP and its components. a.James receives a Social Security check. b.John buys an Italian sports car. c.Henry buys domestically produced tools for his construction company.

GDP is used as the basic measure of a society's economic well-being.A better measure of the economic well-being of individuals in society is

In a certain economy in 2005,GDP amounted to $5,000;consumption amounted to $3,000;government purchases were equal to investment;and the value of imports exceeded the value of exports by $200.It follows that government purchases amounted to

National income is defined as

Suppose that twenty-five years ago a country had nominal GDP of $1,000,a GDP deflator of 200,and a population of 100.Today it has nominal GDP of $3,000,a GDP deflator of 400,and population of 150.What happened to the real GDP per person?

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition,some production is left out of GDP.Explain why some final goods and services are not included.

Table 23-1. The data pertain to the nation of Simplia for the year 2006. -Refer to Table 23-1.Disposable personal income for this economy is

Consumption consists of spending by households on goods and services,with the exception of

If a small country has current nominal GDP of $20 billion and a GDP deflator of 50,what is its real GDP?

An increase in nominal U.S.GDP necessarily implies that the United States is producing a larger output of goods and services.

A Minnesota farmer buys a new tractor made in Iowa by a German company.As a result,

Tyler and Camille both live in Oklahoma.A new-car dealer in Oklahoma bought a new car from the manufacturer for $17,000 and sold it to Tyler for $20,000.Later that year,Tyler sold the car to Camille for $15,000.By how much did these transactions contribute to U.S.GDP for the year?

If GDP is higher in one country than in another,we can be sure that the standard of living is higher in the country with the higher GDP.

The U.S.government pays an economist at the U.S.Department of Commerce $50,000 in salary in 2006.The economist then retires.In 2007,the government pays him $30,000 in retirement benefits.Which of the following is correct?

Grapes are

Ralph pays someone to mow his lawn,while Mike mows his own lawn.Regarding these two practices,which of the following statements is correct?

In computing GDP,market prices are used to value final goods and services because

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

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