Question 1

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. 
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. 
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 2

Darla,a Canadian citizen,works only in the United States.The value that her labor contributes to U.S.output is

Accepted Answer

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

Question 3

An Italian company operates a pasta restaurant in the U.S.The profits from this pasta restaurant are included in

Accepted Answer

A) U.S.GNP and Italian GNP. 
B) U.S.GDP and Italian GDP. 
C) U.S.GDP and Italian GNP. 
D) U.S.GNP and Italian GDP. 
A) U.S.GNP and Italian GNP. 
B) U.S.GDP and Italian GDP. 
C) U.S.GDP and Italian GNP. 
D) U.S.GNP and Italian GDP.

Question 4

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 expenditures. 
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 expenditures. 
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 5

Real GDP

Accepted Answer

A) evaluates current production at current prices. 
B) evaluates current production at the prices that prevailed in some specific year in the past. 
C) is not a valid measure of the economy's performance, since prices change from year to year. 
D) is a measure of the value of goods only; it excludes the value of services. 
A) evaluates current production at current prices. 
B) evaluates current production at the prices that prevailed in some specific year in the past. 
C) is not a valid measure of the economy's performance, since prices change from year to year. 
D) is a measure of the value of goods only; it excludes the value of services.

Question 6

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

Accepted Answer

A) $100. 
B) $96. 
C) $90. 
D) $88. 
A) $100. 
B) $96. 
C) $90. 
D) $88.

Question 7

Which of the following items is included in U.S.GDP?

Accepted Answer

A) the estimated value of production accomplished at home, such as backyard production of fruits and vegetables 
B) the value of illegally-produced goods and services 
C) the value of cars and trucks produced in foreign countries and sold in the U.S. 
D) None of the above is included in U.S.GDP. 
A) the estimated value of production accomplished at home, such as backyard production of fruits and vegetables 
B) the value of illegally-produced goods and services 
C) the value of cars and trucks produced in foreign countries and sold in the U.S. 
D) None of the above is included in U.S.GDP.

Question 8

A country reported a nominal GDP of $85 billion in 2005 and $100 billion in 2004;it reported a GDP deflator of 100 in 2005 and 105 in 2004.Between 2004 and 2005,

Accepted Answer

A) real output and the price level both rose. 
B) real output rose and the price level fell. 
C) real output fell and the price level rose. 
D) real output and the price level both fell. 
A) real output and the price level both rose. 
B) real output rose and the price level fell. 
C) real output fell and the price level rose. 
D) real output and the price level both fell.

Question 9

Disposable personal income is the income that

Accepted Answer

A) households have left after paying taxes and non-tax payments to the government. 
B) businesses have left after paying taxes and non-tax payments to the government. 
C) households and noncorporate businesses have left after paying taxes and non-tax payments to the government. 
D) households and businesses have left after paying taxes and non-tax payments to the government. 
A) households have left after paying taxes and non-tax payments to the government. 
B) businesses have left after paying taxes and non-tax payments to the government. 
C) households and noncorporate businesses have left after paying taxes and non-tax payments to the government. 
D) households and businesses have left after paying taxes and non-tax payments to the government.

Question 10

If a nation's GDP rises,then it must be the case that the nation's

Accepted Answer

A) income and expenditure both rise. 
B) income and saving both rise. 
C) income rises, but expenditure may rise or fall. 
D) saving rises, but income may rise or fall. 
A) income and expenditure both rise. 
B) income and saving both rise. 
C) income rises, but expenditure may rise or fall. 
D) saving rises, but income may rise or fall.

Question 11

Which of the following newspaper headlines would be more closely related to what microeconomists study than to what macroeconomists study?

Accepted Answer

A) Unemployment rate rises from 5 percent to 5.5 percent. 
B) Real GDP grows by 3.1 percent in the third quarter. 
C) Retail sales at stores show large gains. 
D) The price of oranges rises after an early frost. 
A) Unemployment rate rises from 5 percent to 5.5 percent. 
B) Real GDP grows by 3.1 percent in the third quarter. 
C) Retail sales at stores show large gains. 
D) The price of oranges rises after an early frost.

Question 12

The U.S.Air Force pays a Turkish citizen $30,000 to work on a U.S.base in Turkey.As a result,

Accepted Answer

A) U.S.government purchases increase by $30,000; U.S.net exports decrease by $30,000; and U.S.GDP and GNP are unaffected. 
B) U.S.government purchases increase by $30,000; U.S.GNP increases by $30,000; and U.S.GDP and U.S.net exports are unaffected. 
C) U.S.government purchases; and U.S.net exports, GDP, and GNP are unaffected. 
D) U.S.government purchases increase by $30,000; U.S.net exports decrease by $30,000; U.S.GNP increases by $30,000; and U.S.GDP is unaffected. 
A) U.S.government purchases increase by $30,000; U.S.net exports decrease by $30,000; and U.S.GDP and GNP are unaffected. 
B) U.S.government purchases increase by $30,000; U.S.GNP increases by $30,000; and U.S.GDP and U.S.net exports are unaffected. 
C) U.S.government purchases; and U.S.net exports, GDP, and GNP are unaffected. 
D) U.S.government purchases increase by $30,000; U.S.net exports decrease by $30,000; U.S.GNP increases by $30,000; and U.S.GDP is unaffected.

Question 13

Macroeconomic statistics include the inflation rate,the unemployment rate,GDP,and retail sales.

Accepted Answer

A) True 
 B)False

Question 14

Table 23-3
  
-Refer to Table 23-3.Using 2007 as the base year,for 2006,

Accepted Answer

A) real GDP is $760 and the GDP deflator is 100. 
B) real GDP is $760 and the GDP deflator is 125. 
C) real GDP is $880 and the GDP deflator is 80. 
D) real GDP is $950 and the GDP deflator is 80. 
A) real GDP is $760 and the GDP deflator is 100. 
B) real GDP is $760 and the GDP deflator is 125. 
C) real GDP is $880 and the GDP deflator is 80. 
D) real GDP is $950 and the GDP deflator is 80.

Question 15

You find that your paycheck for the year is higher this year than last.Does that mean that your real income has increased? Explain carefully.

Accepted Answer

Real income is nominal income adjusted f

Question 16

Dave,a student who knits ski caps with tassels and sells them on the Quad,sells the same number of caps this year as last year,but at 20 percent higher prices.Which of the following statements is correct?

Accepted Answer

A) Dave must be better off than last year because his income is higher. 
B) Dave cannot be better off than last year because he sold the same number of caps both years. 
C) We do not have enough information to determine whether Dave is better off this year than last year. 
D) Dave is better off this year only if there was no inflation over the past year. 
A) Dave must be better off than last year because his income is higher. 
B) Dave cannot be better off than last year because he sold the same number of caps both years. 
C) We do not have enough information to determine whether Dave is better off this year than last year. 
D) Dave is better off this year only if there was no inflation over the past year.

Question 17

We would expect a macroeconomist,as opposed to a microeconomist,to be particularly interested in

Accepted Answer

A) explaining how economic changes affect prices of particular goods. 
B) devising policies to deal with market failures such as externalities and market power. 
C) devising policies to promote low inflation. 
D) identifying those markets that are competitive and those that are not competitive. 
A) explaining how economic changes affect prices of particular goods. 
B) devising policies to deal with market failures such as externalities and market power. 
C) devising policies to promote low inflation. 
D) identifying those markets that are competitive and those that are not competitive.

Question 18

Which of the following items is included in U.S.GDP?

Accepted Answer

A) goods produced by foreign citizens working in the United States 
B) the difference in the price of the sale of an existing home and its original purchase price 
C) known illegal activities 
D) None of the above is included in GDP. 
A) goods produced by foreign citizens working in the United States 
B) the difference in the price of the sale of an existing home and its original purchase price 
C) known illegal activities 
D) None of the above is included in GDP.

Question 19

Since it is counted as investment,why doesn't the purchase of earthmoving equipment from China by a U.S.corporation increase U.S.GDP?

Accepted Answer

The purchase of foreign equipment is cou

Question 20

Table 23-2. The information in the table pertains to the country of Ophir.
  
-Refer to Table 23-2.Which of the following statements do we know to be correct?

Accepted Answer

A) Total spending in Ophir increased throughout the period. 
B) Household spending in Ophir increased throughout the period. 
C) The production of goods and services increased in Ophir throughout the period. 
D) All of the above are correct. 
A) Total spending in Ophir increased throughout the period. 
B) Household spending in Ophir increased throughout the period. 
C) The production of goods and services increased in Ophir throughout the period. 
D) All of the above are correct.

Exam 23: Measuring a Nations Income

Which of the following statements about GDP is correct?

Darla,a Canadian citizen,works only in the United States.The value that her labor contributes to U.S.output is

An Italian company operates a pasta restaurant in the U.S.The profits from this pasta restaurant are included in

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

Real GDP

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

Which of the following items is included in U.S.GDP?

A country reported a nominal GDP of $85 billion in 2005 and $100 billion in 2004;it reported a GDP deflator of 100 in 2005 and 105 in 2004.Between 2004 and 2005,

Disposable personal income is the income that

If a nation's GDP rises,then it must be the case that the nation's

Which of the following newspaper headlines would be more closely related to what microeconomists study than to what macroeconomists study?

The U.S.Air Force pays a Turkish citizen $30,000 to work on a U.S.base in Turkey.As a result,

Macroeconomic statistics include the inflation rate,the unemployment rate,GDP,and retail sales.

Table 23-3 -Refer to Table 23-3.Using 2007 as the base year,for 2006,

You find that your paycheck for the year is higher this year than last.Does that mean that your real income has increased? Explain carefully.

Dave,a student who knits ski caps with tassels and sells them on the Quad,sells the same number of caps this year as last year,but at 20 percent higher prices.Which of the following statements is correct?

We would expect a macroeconomist,as opposed to a microeconomist,to be particularly interested in

Which of the following items is included in U.S.GDP?

Since it is counted as investment,why doesn't the purchase of earthmoving equipment from China by a U.S.corporation increase U.S.GDP?

Table 23-2. The information in the table pertains to the country of Ophir. -Refer to Table 23-2.Which of the following statements do we know to be correct?

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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