Question 1

In 1820,the country with the highest per capita GDP was

Accepted Answer

A)  Australia. 
B)  the United States. 
C)  Austria. 
D)  Germany. 
E)  the Netherlands. 
A)  Australia. 
B)  the United States. 
C)  Austria. 
D)  Germany. 
E)  the Netherlands.

Question 2

Underground activities are not counted in GDP because

Accepted Answer

A)  some underground activities are illegal and the government doesn't want to place,for instance,drug dealers on an equal footing with small businesses. 
B)  there are no written records of underground activities. 
C)  of a decision made in the 1930s and no one has gotten around to changing it yet. 
D)  although it is possible to accurately measure underground activities,it is harder than measuring above-ground activities because with the latter,one doesn't have to dig as deep. 
A)  some underground activities are illegal and the government doesn't want to place,for instance,drug dealers on an equal footing with small businesses. 
B)  there are no written records of underground activities. 
C)  of a decision made in the 1930s and no one has gotten around to changing it yet. 
D)  although it is possible to accurately measure underground activities,it is harder than measuring above-ground activities because with the latter,one doesn't have to dig as deep.

Question 3

Which of the following statements is false?

Accepted Answer

A)  The market value of all nonmarket goods is omitted from GDP. 
B)  The sale of used goods is omitted from GDP. 
C)  The market value of a person mowing his or her own lawn is omitted from GDP. 
D)  If a good is produced but not sold,it is included in GDP. 
A)  The market value of all nonmarket goods is omitted from GDP. 
B)  The sale of used goods is omitted from GDP. 
C)  The market value of a person mowing his or her own lawn is omitted from GDP. 
D)  If a good is produced but not sold,it is included in GDP.

Question 4

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 1 and year 2?

Accepted Answer

A)  7.3% 
B)  8.3% 
C)  5.3% 
D)  6.8% 
A)  7.3% 
B)  8.3% 
C)  5.3% 
D)  6.8%

Question 5

Disposable income equals national income minus personal taxes.

Accepted Answer

A) True 
 B)False

Question 6

The sale of __________ goods is omitted from current GDP because __________.

Accepted Answer

A)  intermediate goods; these goods do not constitute production 
B)  used goods; these goods were counted in an earlier year 
C)  illegal; these goods do not constitute economic value 
D)  b and c 
E)  a,b,and c 
A)  intermediate goods; these goods do not constitute production 
B)  used goods; these goods were counted in an earlier year 
C)  illegal; these goods do not constitute economic value 
D)  b and c 
E)  a,b,and c

Question 7

-Refer to Exhibit 7-4.Did Country A experience a recession (based on the standard definition)in 2019?

Accepted Answer

A)  Yes,because its Real GDP declined during two consecutive quarters in 2019. 
B)  No,because its Real GDP did not decline during three consecutive quarters in 2019. 
C)  Yes,because its Real GDP was lower at the end of the year than it was at the beginning of the year. 
D)  This information cannot be determined because the determination of a recession is based upon GDP not Real GDP. 
A)  Yes,because its Real GDP declined during two consecutive quarters in 2019. 
B)  No,because its Real GDP did not decline during three consecutive quarters in 2019. 
C)  Yes,because its Real GDP was lower at the end of the year than it was at the beginning of the year. 
D)  This information cannot be determined because the determination of a recession is based upon GDP not Real GDP.

Question 8

The interest income received by U.S.households and government minus the interest they paid out is termed net interest.

Accepted Answer

A) True 
 B)False

Question 9

GDP includes some nonmarket goods.

Accepted Answer

A) True 
 B)False

Question 10

-Refer to Exhibit 7-6.Given the information provided in this table,did country ABC experience a recession during 2019 (based upon the standard definition of a recession)?

Accepted Answer

A)  Yes,country ABC experienced a recession in 2019 since its GDP declined in two consecutive quarters. 
B)  Yes,country ABC experienced a recession in 2019 since its GDP declined in three consecutive quarters. 
C)  No,country ABC did not experience a recession in 2019 because its GDP did not decline four consecutive quarters. 
D)  We cannot say whether or not country ABC is in a recession without knowing what its Real GDP was each quarter. 
A)  Yes,country ABC experienced a recession in 2019 since its GDP declined in two consecutive quarters. 
B)  Yes,country ABC experienced a recession in 2019 since its GDP declined in three consecutive quarters. 
C)  No,country ABC did not experience a recession in 2019 because its GDP did not decline four consecutive quarters. 
D)  We cannot say whether or not country ABC is in a recession without knowing what its Real GDP was each quarter.

Question 11

Given that GDP is a measure of what is produced in a country,explain how the expenditure approach can measure GDP.How are items produced,but not yet sold,accounted for in the expenditure approach?

Accepted Answer

The expenditure approach measures GDP by

Question 12

Suppose that nondurable goods spending is $200 billion,durable goods spending is $400 billion,new residential housing spending is $500 billion,and spending on services is $700 billion.What does consumption equal?

Accepted Answer

A)  $600 billion 
B)  $1,100 billion 
C)  $1,800 billion 
D)  $1,300 billion 
E)  There is not enough information to answer this question. 
A)  $600 billion 
B)  $1,100 billion 
C)  $1,800 billion 
D)  $1,300 billion 
E)  There is not enough information to answer this question.

Question 13

-Refer to Exhibit 7-1.What is the value of gross domestic product?

Accepted Answer

A)  $6,062 
B)  $5,731 
C)  $3,072 
D)  $6,382 
E)  $2,637 
A)  $6,062 
B)  $5,731 
C)  $3,072 
D)  $6,382 
E)  $2,637

Question 14

If the GDP in one year is greater than it was in the previous year,then economic growth must have occurred.

Accepted Answer

A) True 
 B)False

Question 15

An example of income earned but not received is corporate dividends.

Accepted Answer

A) True 
 B)False

Question 16

Real GDP is GDP

Accepted Answer

A)  in current-year prices. 
B)  in base-year prices. 
C)  in GDP-prices. 
D)  in that year's prices. 
A)  in current-year prices. 
B)  in base-year prices. 
C)  in GDP-prices. 
D)  in that year's prices.

Question 17

Explain why GDP figures do not necessarily measure happiness or well-being.

Accepted Answer

Well-being and happiness are subjective.

Question 18

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

Accepted Answer

A) True 
 B)False

Question 19

Why do economists prefer to compare Real GDP figures for various years instead of GDP figures?

Accepted Answer

A)  Because when GDP in one year is higher than in another year,there is no way to tell why it is higher.Is it because output is higher,prices are higher,etc.? This is not the case with Real GDP.If Real GDP is higher in one year than in another year,it is because output is higher. 
B)  Because when GDP in one year is higher than in another year,there is no way of knowing if the quality of goods produced is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year,it is because the quality of the goods produced is higher. 
C)  Actually the question is incorrect.Economists prefer to compare GDP figures instead of Real GDP figures. 
D)  Because Real GDP is easier to compute than GDP. 
E)  Because when GDP in one year is higher than in another year,there is no way to tell if the quality of life is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year,it is because the quality of life is higher. 
A)  Because when GDP in one year is higher than in another year,there is no way to tell why it is higher.Is it because output is higher,prices are higher,etc.? This is not the case with Real GDP.If Real GDP is higher in one year than in another year,it is because output is higher. 
B)  Because when GDP in one year is higher than in another year,there is no way of knowing if the quality of goods produced is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year,it is because the quality of the goods produced is higher. 
C)  Actually the question is incorrect.Economists prefer to compare GDP figures instead of Real GDP figures. 
D)  Because Real GDP is easier to compute than GDP. 
E)  Because when GDP in one year is higher than in another year,there is no way to tell if the quality of life is higher in one year than the other.This is not the case with Real GDP.If Real GDP is higher in one year than in another year,it is because the quality of life is higher.

Question 20

Personal income is equal to consumption plus saving.

Accepted Answer

A) True 
 B)False

Exam 7: Consumer Choice: Maximizing Utility and Behavioral Economics

In 1820,the country with the highest per capita GDP was

Underground activities are not counted in GDP because

Which of the following statements is false?

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 1 and year 2?

Disposable income equals national income minus personal taxes.

The sale of __________ goods is omitted from current GDP because __________.

-Refer to Exhibit 7-4.Did Country A experience a recession (based on the standard definition)in 2019?

The interest income received by U.S.households and government minus the interest they paid out is termed net interest.

GDP includes some nonmarket goods.

-Refer to Exhibit 7-6.Given the information provided in this table,did country ABC experience a recession during 2019 (based upon the standard definition of a recession)?

Given that GDP is a measure of what is produced in a country,explain how the expenditure approach can measure GDP.How are items produced,but not yet sold,accounted for in the expenditure approach?

Suppose that nondurable goods spending is $200 billion,durable goods spending is $400 billion,new residential housing spending is $500 billion,and spending on services is $700 billion.What does consumption equal?

-Refer to Exhibit 7-1.What is the value of gross domestic product?

If the GDP in one year is greater than it was in the previous year,then economic growth must have occurred.

An example of income earned but not received is corporate dividends.

Real GDP is GDP

Explain why GDP figures do not necessarily measure happiness or well-being.

Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads such as pollution.

Why do economists prefer to compare Real GDP figures for various years instead of GDP figures?

Personal income is equal to consumption plus saving.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

The sale of goods is omitted from current GDP because .