Question 1

GDP per person tells us the income and expenditure of the

Accepted Answer

A) richest person in the economy. 
B) poorest person in the economy. 
C) average person in the economy. 
D) entire economy. 
A) richest person in the economy. 
B) poorest person in the economy. 
C) average person in the economy. 
D) entire economy.

Question 2

Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture. With each $1,000 of leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for $3,000. Neither firm had any inventory at the beginning of 2009. During that year, Cowhide produced enough leather for 20 couches. Couches, Inc. bought 80% of that leather for $16,000 and promised to buy the remaining 20% for $4,000 in 2010. Couches, Inc. produced 16 couches during 2009 and sold each one during that year for $3,000. What was the economy's GDP for 2009?

Accepted Answer

A) $48,000 
B) $52,000 
C) $64,000 
D) $68,000 
A) $48,000 
B) $52,000 
C) $64,000 
D) $68,000

Question 3

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 4

During the current quarter, a firm produces consumer goods and adds some of those goods to its 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 5

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 are used to place a value on these housing services. 
B) included in GDP, and the actual mortgage payments made on the houses are 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 are used to place a value on these housing services. 
B) included in GDP, and the actual mortgage payments made on the houses are 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 6

Income generated by a nation's domestic production

Accepted Answer

A) is less than its domestic production. 
B) is equal to its domestic production. 
C) is greater than its domestic production. 
D) could be less than, equal to, or greater than its domestic production. 
A) is less than its domestic production. 
B) is equal to its domestic production. 
C) is greater than its domestic production. 
D) could be less than, equal to, or greater than its domestic production.

Question 7

The inflation rate is the

Accepted Answer

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

Question 8

Which government entity computes U.S. GDP every three months?

Accepted Answer

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

Question 9

The government of country A, which has adopted American GDP accounting conventions, has calculated that the seasonally-adjusted market value of all final goods and services produced within country A in quarter 1 was $5 billion. The government will report that GDP in quarter 1 was

Accepted Answer

A) $1.25 billion at an annual rate. 
B) $4 billion at an annual rate. 
C) $5 billion at an annual rate. 
D) $20 billion at an annual rate. 
A) $1.25 billion at an annual rate. 
B) $4 billion at an annual rate. 
C) $5 billion at an annual rate. 
D) $20 billion at an annual rate.

Question 10

U.S. GDP

Accepted Answer

A) includes production of foreigners working in the U.S. and production by U.S. residents working in foreign countries. 
B) includes production of foreigners working in the U.S. but excludes production by U.S. residents working in foreign countries. 
C) excludes production of foreigners working in the U.S. but includes production by U.S. residents working in foreign countries. 
D) excludes production of foreigners working in the U.S. and production by U.S. residents working in foreign countries. 
A) includes production of foreigners working in the U.S. and production by U.S. residents working in foreign countries. 
B) includes production of foreigners working in the U.S. but excludes production by U.S. residents working in foreign countries. 
C) excludes production of foreigners working in the U.S. but includes production by U.S. residents working in foreign countries. 
D) excludes production of foreigners working in the U.S. and production by U.S. residents working in foreign countries.

Question 11

If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?

Accepted Answer

A) $6.7 billion 
B) $15 billion 
C) $21.6 billion 
D) $38 billion 
A) $6.7 billion 
B) $15 billion 
C) $21.6 billion 
D) $38 billion

Question 12

Table 10-3
The table below reports nominal and real GDP for the U.S. from 1929 to 1932. $$\begin{array} { c c c } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal } \
\text { GDP }
\end{array} & \text { Real GDP } \
\hline 1929 & 103.6 & 977 \
1930 & 91.2 & 892.8 \
1931 & 76.5 & 834.9 \
1932 & 58.7 & 725.8 \
\hline
\end{array}$$
-Refer to Table 10-3. What was the growth rate of real GDP for 1930?

Accepted Answer

A) -8.62%. Real GDP is a better gauge of economic well-being than nominal GDP. 
B) -8.62%. Nominal GDP is a better gauge of economic well-being than real GDP. 
C) -9.43%. Real GDP is a better gauge of economic well-being than nominal GDP. 
D) -9.43%. Nominal GDP is a better gauge of economic well-being than real GDP. 
A) -8.62%. Real GDP is a better gauge of economic well-being than nominal GDP. 
B) -8.62%. Nominal GDP is a better gauge of economic well-being than real GDP. 
C) -9.43%. Real GDP is a better gauge of economic well-being than nominal GDP. 
D) -9.43%. Nominal GDP is a better gauge of economic well-being than real GDP.

Question 13

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

Accepted Answer

A) purchases of staplers, paper clips, and pens by U.S. business firms 
B) purchases of natural gas by U.S. households 
C) purchases of newly constructed homes by U.S. households 
D) All of the above are correct. 
A) purchases of staplers, paper clips, and pens by U.S. business firms 
B) purchases of natural gas by U.S. households 
C) purchases of newly constructed homes by U.S. households 
D) All of the above are correct.

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

Suppose that an economy produces 40,000 units of good A which sells at $4 a unit and 20,000 units of good B which sells at $5 per unit. Production of good A contributes

Accepted Answer

A) 2 times as much to GDP as the production of good B. 
B) 8/5 times as much to GDP as the production of good B. 
C) 5/4 times as much to GDP as the production of good B. 
D) 4/5 times as much to GDP as production of good B. 
A) 2 times as much to GDP as the production of good B. 
B) 8/5 times as much to GDP as the production of good B. 
C) 5/4 times as much to GDP as the production of good B. 
D) 4/5 times as much to GDP as production of good B.

Question 16

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Accepted Answer

A) the effect of taxes on the prices of airline tickets, and the profitability of automobile-manufacturing firms 
B) the price of beef, and wage differences between genders 
C) how consumers maximize utility, and how prices are established in markets for agricultural products 
D) the percentage of the labor force that is out of work, and differences in average income from country to country 
A) the effect of taxes on the prices of airline tickets, and the profitability of automobile-manufacturing firms 
B) the price of beef, and wage differences between genders 
C) how consumers maximize utility, and how prices are established in markets for agricultural products 
D) the percentage of the labor force that is out of work, and differences in average income from country to country

Question 17

James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to GDP?

Accepted Answer

A) $0 
B) $10,000 
C) $12,000 
D) $22,000 
A) $0 
B) $10,000 
C) $12,000 
D) $22,000

Question 18

In early2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Accepted Answer

A) the price of the house, the cost of remodeling materials, the increase in rental value 
B) the price of the house and the cost of remodeling materials, but not the increase in rental value 
C) the costs of the remodeling materials and the increase in rent, but not the price of the house 
D) None of the above are correct. 
A) the price of the house, the cost of remodeling materials, the increase in rental value 
B) the price of the house and the cost of remodeling materials, but not the increase in rental value 
C) the costs of the remodeling materials and the increase in rent, but not the price of the house 
D) None of the above are correct.

Question 19

Darin grows and sells marijuana to Jennifer. Thomas is an organic farmer who sells broccoli to Jennifer. Marijuana is an illegal good and broccoli is a legal good. Assume that if Jennifer marries either, they give her what they use to sell her. Which of the following statements is consistent with the way GDP is computed?

Accepted Answer

A) GDP will fall if Jennifer marries either Darin or Thomas.. 
B) GDP will fall if Jennifer marries Darin but not if she marries Thomas. 
C) GDP will fall if Jennifer marries Thomas but not if she marries Darin. 
D) GDP remains the same whether Jennifer marries Darin or Thomas. 
A) GDP will fall if Jennifer marries either Darin or Thomas.. 
B) GDP will fall if Jennifer marries Darin but not if she marries Thomas. 
C) GDP will fall if Jennifer marries Thomas but not if she marries Darin. 
D) GDP remains the same whether Jennifer marries Darin or Thomas.

Question 20

The income that households and noncorporate businesses receive is called

Accepted Answer

A) personal income. 
B) net national product. 
C) disposable personal income. 
D) national income. 
A) personal income. 
B) net national product. 
C) disposable personal income. 
D) national income.

Exam 10: Measuring a Nations Income

GDP per person tells us the income and expenditure of the

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

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

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

Income generated by a nation's domestic production

The inflation rate is the

Which government entity computes U.S. GDP every three months?

The government of country A, which has adopted American GDP accounting conventions, has calculated that the seasonally-adjusted market value of all final goods and services produced within country A in quarter 1 was $5 billion. The government will report that GDP in quarter 1 was

U.S. GDP

If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?

Table 10-3 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. Year Nominal GDP Real GDP 1929 103.6 977 1930 91.2 892.8 1931 76.5 834.9 1932 58.7 725.8 -Refer to Table 10-3. What was the growth rate of real GDP for 1930?

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

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

Suppose that an economy produces 40,000 units of good A which sells at $4 a unit and 20,000 units of good B which sells at $5 per unit. Production of good A contributes

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to GDP?

In early2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

The income that households and noncorporate businesses receive is called

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

Application: The Costs of Taxation

Application: International Trade

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 Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

Filters