Question 1

Gasoline is considered a final good if it is sold by a

Accepted Answer

A) gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. 
B) pipeline operator to a gasoline station in San Francisco. 
C) gasoline station to a motorist in Los Angeles. 
D) All of the above are correct. 
A) gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles. 
B) pipeline operator to a gasoline station in San Francisco. 
C) gasoline station to a motorist in Los Angeles. 
D) All of the above are correct.

Question 2

GDP is not a perfect measure of well-being;for example,

Accepted Answer

A) GDP incorporates a large number of non-market goods and services that are of little value to society. 
B) GDP places too much emphasis on the value of leisure. 
C) GDP fails to account for the quality of the environment. 
D) All of the above are correct. 
A) GDP incorporates a large number of non-market goods and services that are of little value to society. 
B) GDP places too much emphasis on the value of leisure. 
C) GDP fails to account for the quality of the environment. 
D) All of the above are correct.

Question 3

During a presidential campaign,the incumbent argues that he should be reelected because 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 4

Real GDP in the United States is five times as great as it was 50 years ago,yet GDP weighs almost the same as it did a half century ago and the population has less than doubled.These facts suggest that

Accepted Answer

A) consumers are having to settle for lower quality goods. 
B) we are no longer in danger of running out of raw materials. 
C) each U.S.worker is more productive, and international trade is less expensive to conduct. 
D) Americans are actually consuming fewer goods per person than they did 50 years ago. 
A) consumers are having to settle for lower quality goods. 
B) we are no longer in danger of running out of raw materials. 
C) each U.S.worker is more productive, and international trade is less expensive to conduct. 
D) Americans are actually consuming fewer goods per person than they did 50 years ago.

Question 5

The basic tools of supply and demand are

Accepted Answer

A) useful only in the analysis of economic behavior in individual markets. 
B) useful in analyzing the overall economy, but not in analyzing individual markets. 
C) central to microeconomic analysis, but seldom used in macroeconomic analysis. 
D) central to macroeconomic analysis as well as to microeconomic analysis. 
A) useful only in the analysis of economic behavior in individual markets. 
B) useful in analyzing the overall economy, but not in analyzing individual markets. 
C) central to microeconomic analysis, but seldom used in macroeconomic analysis. 
D) central to macroeconomic analysis as well as to microeconomic analysis.

Question 6

In 2004,U.S.net exports were

Accepted Answer

A) positive and about 2 percent the size of GDP. 
B) positive and about 5 percent the size of GDP. 
C) negative and about 2 percent the size of GDP. 
D) negative and about 5 percent the size of GDP. 
A) positive and about 2 percent the size of GDP. 
B) positive and about 5 percent the size of GDP. 
C) negative and about 2 percent the size of GDP. 
D) negative and about 5 percent the size of GDP.

Question 7

The total sales of all firms in the economy for a year

Accepted Answer

A) equals GDP for the year. 
B) is larger than GDP for the year. 
C) is smaller than GDP for the year. 
D) equals GNP for the year. 
A) equals GDP for the year. 
B) is larger than GDP for the year. 
C) is smaller than GDP for the year. 
D) equals GNP for the year.

Question 8

The government-purchases component of GDP includes salaries paid to Army generals but not Social Security benefits to the elderly.

Accepted Answer

A) True 
 B)False

Question 9

Suppose a small economy produces only cheese and fish.In 2005,20 units of cheese are sold at $5 each,and 8 units of fish are sold at $50 each.In 2004,the base year,the price of cheese was $10 per unit,and the price of fish was $75 per unit.For 2005,

Accepted Answer

A) nominal GDP is $800, real GDP is $500, and the GDP deflator is 160. 
B) nominal GDP is $500, real GDP is $800, and the GDP deflator is 160. 
C) nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5. 
D) nominal GDP is $800, real GDP is $500, and the GDP deflator is 62.5. 
A) nominal GDP is $800, real GDP is $500, and the GDP deflator is 160. 
B) nominal GDP is $500, real GDP is $800, and the GDP deflator is 160. 
C) nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5. 
D) nominal GDP is $800, real GDP is $500, and the GDP deflator is 62.5.

Question 10

In the United States in 2004,consumption represented approximately

Accepted Answer

A) 40 percent of GDP. 
B) 50 percent of GDP. 
C) 60 percent of GDP. 
D) 70 percent of GDP. 
A) 40 percent of GDP. 
B) 50 percent of GDP. 
C) 60 percent of GDP. 
D) 70 percent of GDP.

Question 11

A country reported nominal GDP of $200 billion in 2006 and $180 billion in 2005;it reported a GDP deflator of 125 in 2006 and 105 in 2005.Between 2005 and 2006,

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 12

The value of goods added to a firm's inventory in a certain year is treated as

Accepted Answer

A) consumption, since the goods will be sold to consumers in another period. 
B) saving, since the goods are being saved until they are sold in another period. 
C) investment, since GDP aims to measure the value of the economy's production. 
D) spending on durable goods, since the goods could not be inventoried unless they were durable. 
A) consumption, since the goods will be sold to consumers in another period. 
B) saving, since the goods are being saved until they are sold in another period. 
C) investment, since GDP aims to measure the value of the economy's production. 
D) spending on durable goods, since the goods could not be inventoried unless they were durable.

Question 13

In a certain economy in 2005,government purchases exceeded investment by $2,000;investment amounted to 1/6 of GDP;consumption amounted to 1/2 of GDP;and the economy's imports exceeded its exports by $500.It follows that GDP amounted to

Accepted Answer

A) $4,500. 
B) $7,500. 
C) $9,000. 
D) $10,500. 
A) $4,500. 
B) $7,500. 
C) $9,000. 
D) $10,500.

Question 14

New home construction is included in the consumption component of GDP.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following sub-components of GDP can be either positive or negative?

Accepted Answer

A) inventory investment 
B) spending on services 
C) government purchases 
D) All of the above are correct. 
A) inventory investment 
B) spending on services 
C) government purchases 
D) All of the above are correct.

Question 16

If real GDP doubles and the GDP deflator doubles,then nominal GDP

Accepted Answer

A) remains constant. 
B) doubles. 
C) triples. 
D) quadruples. 
A) remains constant. 
B) doubles. 
C) triples. 
D) quadruples.

Question 17

The value of the housing services provided by the economy's owner-occupied houses is

Accepted Answer

A) included in GDP and the estimated rental values of the houses is used to place a value on these housing services. 
B) included in GDP and the actual mortgage payments made on the houses is used to estimate the value of these rental services. 
C) excluded from GDP since these services are not sold in any market. 
D) excluded from GDP since the value of these housing services cannot be estimated with any degree of precision. 
A) included in GDP and the estimated rental values of the houses is used to place a value on these housing services. 
B) included in GDP and the actual mortgage payments made on the houses is used to estimate the value of these rental services. 
C) excluded from GDP since these services are not sold in any market. 
D) excluded from GDP since the value of these housing services cannot be estimated with any degree of precision.

Question 18

The basic tools of supply and demand analysis are as central to macroeconomic analysis as they are to microeconomic analysis.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements about GDP is correct?

Accepted Answer

A) Nominal GDP values production at current prices, whereas real GDP values production at constant prices. 
B) Nominal GDP values production at constant prices, whereas real GDP values production at current prices. 
C) Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process. 
D) Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production. 
A) Nominal GDP values production at current prices, whereas real GDP values production at constant prices. 
B) Nominal GDP values production at constant prices, whereas real GDP values production at current prices. 
C) Nominal GDP values production at market prices, whereas real GDP values production at the cost of the resources used in the production process. 
D) Nominal GDP consistently underestimates the value of production, whereas real GDP consistently overestimates the value of production.

Question 20

Which of the following statements is correct?

Accepted Answer

A) The value of all intermediate goods and final goods is included in GDP. 
B) The value of intermediate goods is included in GDP only if those goods were produced in the previous year. 
C) The value of intermediate goods is included in GDP only if those goods are added to firms' inventories to be used or sold at a later date. 
D) The value of intermediate goods is never included in GDP. 
A) The value of all intermediate goods and final goods is included in GDP. 
B) The value of intermediate goods is included in GDP only if those goods were produced in the previous year. 
C) The value of intermediate goods is included in GDP only if those goods are added to firms' inventories to be used or sold at a later date. 
D) The value of intermediate goods is never included in GDP.

Exam 23: Measuring a Nations Income

Gasoline is considered a final good if it is sold by a

GDP is not a perfect measure of well-being;for example,

Real GDP in the United States is five times as great as it was 50 years ago,yet GDP weighs almost the same as it did a half century ago and the population has less than doubled.These facts suggest that

The basic tools of supply and demand are

In 2004,U.S.net exports were

The total sales of all firms in the economy for a year

The government-purchases component of GDP includes salaries paid to Army generals but not Social Security benefits to the elderly.

Suppose a small economy produces only cheese and fish.In 2005,20 units of cheese are sold at $5 each,and 8 units of fish are sold at $50 each.In 2004,the base year,the price of cheese was $10 per unit,and the price of fish was $75 per unit.For 2005,

In the United States in 2004,consumption represented approximately

A country reported nominal GDP of $200 billion in 2006 and $180 billion in 2005;it reported a GDP deflator of 125 in 2006 and 105 in 2005.Between 2005 and 2006,

The value of goods added to a firm's inventory in a certain year is treated as

In a certain economy in 2005,government purchases exceeded investment by $2,000;investment amounted to 1/6 of GDP;consumption amounted to 1/2 of GDP;and the economy's imports exceeded its exports by $500.It follows that GDP amounted to

New home construction is included in the consumption component of GDP.

Which of the following sub-components of GDP can be either positive or negative?

If real GDP doubles and the GDP deflator doubles,then nominal GDP

The value of the housing services provided by the economy's owner-occupied houses is

The basic tools of supply and demand analysis are as central to macroeconomic analysis as they are to microeconomic analysis.

Which of the following statements about GDP is correct?

Which of the following statements is 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

Filters