Question 1

A form of government spending that is not made in exchange for a currently produced good or service is called

Accepted Answer

A) a transfer payment. 
B) consumption. 
C) investment. 
D) None of the above is correct. 
A) a transfer payment. 
B) consumption. 
C) investment. 
D) None of the above is correct.

Question 2

Household spending on education is counted in which component or subcomponent of GDP?

Accepted Answer

A) consumption of durable goods 
B) consumption of nondurable goods 
C) consumption of services 
D) investment 
A) consumption of durable goods 
B) consumption of nondurable goods 
C) consumption of services 
D) investment

Question 3

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 U.S. 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 U.S. GDP.

Question 4

Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

Accepted Answer

A) GDP would definitely increase, despite the fact that GDP includes leisure. 
B) GDP would definitely increase because GDP excludes leisure. 
C) GDP could either increase or decrease because GDP includes leisure. 
D) GDP could either increase or decrease because GDP excludes leisure. 
A) GDP would definitely increase, despite the fact that GDP includes leisure. 
B) GDP would definitely increase because GDP excludes leisure. 
C) GDP could either increase or decrease because GDP includes leisure. 
D) GDP could either increase or decrease because GDP excludes leisure.

Question 6

The GDP deflator can be used to take inflation out of nominal GDP.

Accepted Answer

A) True 
 B)False

Question 7

In the economy of Ukzten in 2010, consumption was $1000, GDP was $1950, government purchases were $500, and investment was $700. What were Ukzten's net exports in 2010?

Accepted Answer

A) -$250 
B) $250 
C) $2200 
D) Net exports cannot be calculated from the information given. 
A) -$250 
B) $250 
C) $2200 
D) Net exports cannot be calculated from the information given.

Question 8

An American retailer purchased 100 pairs of shoes from a company in Denmark in the second quarter of 2010 but does not sell them to a consumer until the third quarter of 2010. In which quarter(s) is (are) the value of the shoes included in U.S. GDP?

Accepted Answer

A) the second and third quarters 
B) the second quarter but not the third quarter 
C) the third but not the second quarter 
D) neither the second nor the third quarter 
A) the second and third quarters 
B) the second quarter but not the third quarter 
C) the third but not the second quarter 
D) neither the second nor the third quarter

Question 9

The information for 2008 in millions in the table below was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of real GDP per person from highest to lowest? 
$$\begin{array} { | l | l | l | l | } 
\hline \text { Country } & \text { GDP (Constant US\$) } & \text { GDP(Current US\$) } & \text { Population } \
\hline \text { Germany } & 2,091,573 & 3,649,493 & 82.11 \
\hline \text { Japan } & 5,166,281 & 4,910,839 & 127.70 \
\hline \text { U.S. } & 11,513,872 & 14,093,309 & 304.06 \
\hline
\end{array}$$

Accepted Answer

A) Japan, Germany, United States 
B) Japan, United States, Germany 
C) Germany, United States, Japan 
D) United States, Japan, Germany 
A) Japan, Germany, United States 
B) Japan, United States, Germany 
C) Germany, United States, Japan 
D) United States, Japan, Germany

Question 10

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s) does(do) these transactions raise consumption?

Accepted Answer

A) the first and the second 
B) the first but not the second 
C) the second but not the first 
D) neither the first nor the second 
A) the first and the second 
B) the first but not the second 
C) the second but not the first 
D) neither the first nor the second

Question 11

Retained earnings is income that

Accepted Answer

A) households retain after paying taxes. 
B) businesses retain after paying taxes. 
C) corporations have earned but have not used to invest in plant, equipment, and inventories. 
D) corporations have earned but have not paid out to their owners. 
A) households retain after paying taxes. 
B) businesses retain after paying taxes. 
C) corporations have earned but have not used to invest in plant, equipment, and inventories. 
D) corporations have earned but have not paid out to their owners.

Question 12

Whip-It manufactures blenders. In 2009 it had $50,000 of blenders in inventory. In 2010 it sold $300,000 of blenders to consumers and had $40,000 of blenders in inventory. How much did blenders produced by Whip-it add to GDP in 2010?

Accepted Answer

A) $340,000 
B) $310,000 
C) $300,000 
D) $290,000 
A) $340,000 
B) $310,000 
C) $300,000 
D) $290,000

Question 13

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Accepted Answer

A) 80, and this indicates that the price level has decreased by 20 percent since the base year. 
B) 80, and this indicates that the price level has increased by 80 percent since the base year. 
C) 125, and this indicates that the price level has increased by 25 percent since the base year. 
D) 125, and this indicates that the price level has increased by 125 percent since the base year. 
A) 80, and this indicates that the price level has decreased by 20 percent since the base year. 
B) 80, and this indicates that the price level has increased by 80 percent since the base year. 
C) 125, and this indicates that the price level has increased by 25 percent since the base year. 
D) 125, and this indicates that the price level has increased by 125 percent since the base year.

Question 14

Which of the following is not correct?

Accepted Answer

A) GNP equals net national product plus losses from depreciation. 
B) For most countries, including the United States, GDP and GNP are nearly the same. 
C) GDP and GNP typically move in opposite directions. 
D) Personal income equals disposable personal income plus personal taxes plus certain nontax payments. 
A) GNP equals net national product plus losses from depreciation. 
B) For most countries, including the United States, GDP and GNP are nearly the same. 
C) GDP and GNP typically move in opposite directions. 
D) Personal income equals disposable personal income plus personal taxes plus certain nontax payments.

Question 15

If in some year real GDP was $5 trillion and the GDP deflator was 200, what was nominal GDP?

Accepted Answer

A) $2.5 trillion 
B) $10 trillion 
C) $40 trillion 
D) $100 trillion 
A) $2.5 trillion 
B) $10 trillion 
C) $40 trillion 
D) $100 trillion

Question 16

Which of the following transactions adds to U.S. GDP for 2010?

Accepted Answer

A) In 2010, Marvin Windows manufactures 20 windows that will eventually be installed in an office building in Minneapolis. The windows remain in Marvin's inventory at the end of 2010. 
B) An Irish marketing consultant works in Boston during the summer of 2010 and earns $50,000 during that time. 
C) When Tim and Tina were both single, they lived in separate apartments and each paid $750 in rent. Tim and Tina got married in 2010 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for $1,550 per month. 
D) All of the above transactions add to U.S. GDP for 2006. 
A) In 2010, Marvin Windows manufactures 20 windows that will eventually be installed in an office building in Minneapolis. The windows remain in Marvin's inventory at the end of 2010. 
B) An Irish marketing consultant works in Boston during the summer of 2010 and earns $50,000 during that time. 
C) When Tim and Tina were both single, they lived in separate apartments and each paid $750 in rent. Tim and Tina got married in 2010 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for $1,550 per month. 
D) All of the above transactions add to U.S. GDP for 2006.

Question 17

In the economy of Ukzten in 2010, consumption was $500, exports were $200, GDP was $1200, government purchases were $250, and investment was $300. What were Ukzten's imports in 2010?

Accepted Answer

A) -$150 
B) -$50 
C) $50 
D) $150 
A) -$150 
B) -$50 
C) $50 
D) $150

Question 18

In the economy of Ukzten in 2010, consumption was $2000, exports were $800, GDP was $4800, government purchases were $840, and investment was $1400. What were Ukzten's imports in 2010?

Accepted Answer

A) -$560 
B) -$240 
C) $240 
D) $560 
A) -$560 
B) -$240 
C) $240 
D) $560

Question 19

A Texas household receives a Social Security check for $500, which it uses to purchase a $460 television made in Korea by a Korean firm and a $40 dinner at a local restaurant. As a result, U.S. GDP

Accepted Answer

A) does not change. 
B) increases by $40. 
C) increases by $540. 
D) increases by $1000. 
A) does not change. 
B) increases by $40. 
C) increases by $540. 
D) increases by $1000.

Question 20

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Accepted Answer

A) Country A because it had the higher nominal GDP per person. 
B) Country B because it had the higher nominal GDP per person. 
C) Country A because it had the higher real GDP per person. 
D) Country B because it had the higher real GDP per person. 
A) Country A because it had the higher nominal GDP per person. 
B) Country B because it had the higher nominal GDP per person. 
C) Country A because it had the higher real GDP per person. 
D) Country B because it had the higher real GDP per person.

Exam 10: Measuring a Nations Income

A form of government spending that is not made in exchange for a currently produced good or service is called

Household spending on education is counted in which component or subcomponent of GDP?

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

Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person.

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

The GDP deflator can be used to take inflation out of nominal GDP.

In the economy of Ukzten in 2010, consumption was $1000, GDP was $1950, government purchases were $500, and investment was $700. What were Ukzten's net exports in 2010?

An American retailer purchased 100 pairs of shoes from a company in Denmark in the second quarter of 2010 but does not sell them to a consumer until the third quarter of 2010. In which quarter(s) is (are) the value of the shoes included in U.S. GDP?

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s) does(do) these transactions raise consumption?

Retained earnings is income that

Whip-It manufactures blenders. In 2009 it had $50,000 of blenders in inventory. In 2010 it sold $300,000 of blenders to consumers and had $40,000 of blenders in inventory. How much did blenders produced by Whip-it add to GDP in 2010?

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Which of the following is not correct?

If in some year real GDP was $5 trillion and the GDP deflator was 200, what was nominal GDP?

Which of the following transactions adds to U.S. GDP for 2010?

In the economy of Ukzten in 2010, consumption was $500, exports were $200, GDP was $1200, government purchases were $250, and investment was $300. What were Ukzten's imports in 2010?

In the economy of Ukzten in 2010, consumption was $2000, exports were $800, GDP was $4800, government purchases were $840, and investment was $1400. What were Ukzten's imports in 2010?

A Texas household receives a Social Security check for $500, which it uses to purchase a $460 television made in Korea by a Korean firm and a $40 dinner at a local restaurant. As a result, U.S. GDP

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

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

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