Question 1

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. A

Question 2

A U.S.firm produces nail guns in the first quarter of 2010 and adds them to its inventory.In the second quarter of 2010 the firm sells the nail guns to a U.S.construction company.In which quarter(s)does(do)these transactions raise investment?

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 B

Question 3

GDP and GNP are identical when

Accepted Answer

A) exports and imports exactly balance. 
B) ​all domestic production is by domestically owned producers and no foreign production is carried out by domestic producers. 
C) ​production by domestic producers in other countries is greater than production by foreign producers domestically. 
D) ​there are no taxes. 
A) exports and imports exactly balance. 
B) ​all domestic production is by domestically owned producers and no foreign production is carried out by domestic producers. 
C) ​production by domestic producers in other countries is greater than production by foreign producers domestically. 
D) ​there are no taxes. B

Question 4

In the economy of Talikastan in 2015,consumption was $4000,exports were $800,GDP was $7500,imports were $200,and investment was $1000.What were Talikastan's government purchases in 2015?

Accepted Answer

A) $1200 
B) $1900 
C) $2500 
D) $4500 
A) $1200 
B) $1900 
C) $2500 
D) $4500

Question 5

Which of the following is included in the investment component of GDP?

Accepted Answer

A) spending on new business equipment such as power tools and spending on stocks and bonds 
B) spending on new business equipment such as power tools but not spending on stocks and bonds 
C) spending on stocks and bonds but not spending on new business equipment such as power tools 
D) neither spending on new business equipment such as power tools nor spending on stocks and bonds 
A) spending on new business equipment such as power tools and spending on stocks and bonds 
B) spending on new business equipment such as power tools but not spending on stocks and bonds 
C) spending on stocks and bonds but not spending on new business equipment such as power tools 
D) neither spending on new business equipment such as power tools nor spending on stocks and bonds

Question 6

Which of the following is included in the investment component of GDP?

Accepted Answer

A) households' purchases of newly constructed homes 
B) net additions to firms' inventories 
C) firms' purchases of capital equipment 
D) All of the above are correct. 
A) households' purchases of newly constructed homes 
B) net additions to firms' inventories 
C) firms' purchases of capital equipment 
D) All of the above are correct.

Question 7

A transfer payment is

Accepted Answer

A) a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location. 
B) a payment that is automatically transferred from your bank account to pay a bill or some other obligation. 
C) a form of government spending that is not made in exchange for a currently produced good or service. 
D) the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure. 
A) a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location. 
B) a payment that is automatically transferred from your bank account to pay a bill or some other obligation. 
C) a form of government spending that is not made in exchange for a currently produced good or service. 
D) the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure.

Question 8

Which of the following examples of household spending is categorized as investment rather than consumption?

Accepted Answer

A) expenditures on durable goods such as automobiles and refrigerators 
B) expenditures on intangibles items such as medical care 
C) expenditures on new housing 
D) All of the above are correct. 
A) expenditures on durable goods such as automobiles and refrigerators 
B) expenditures on intangibles items such as medical care 
C) expenditures on new housing 
D) All of the above are correct.

Question 9

When a U.S.citizen buys $500 of Chinese-made parts for a motorcycle,

Accepted Answer

A) U.S.consumption falls by $500,U.S.net exports decline by $500,and U.S.GDP declines by $1000. 
B) U.S.consumption does not change,U.S.net exports decline by $500,and U.S.GDP declines by $500. 
C) U.S.consumption increases by $500,U.S.net exports remain the same,and U.S.GDP increases by $500. 
D) U.S.consumption increases by $500,U.S.net exports decline by $500,and U.S.GDP remains the same. 
A) U.S.consumption falls by $500,U.S.net exports decline by $500,and U.S.GDP declines by $1000. 
B) U.S.consumption does not change,U.S.net exports decline by $500,and U.S.GDP declines by $500. 
C) U.S.consumption increases by $500,U.S.net exports remain the same,and U.S.GDP increases by $500. 
D) U.S.consumption increases by $500,U.S.net exports decline by $500,and U.S.GDP remains the same.

Question 10

Transfer payments are

Accepted Answer

A) included in GDP because they represent income to individuals. 
B) included in GDP because they eventually will be spent on consumption. 
C) not included in GDP because they are not payments for currently produced goods or services. 
D) not included in GDP because taxes will have to be raised to pay for them. 
A) included in GDP because they represent income to individuals. 
B) included in GDP because they eventually will be spent on consumption. 
C) not included in GDP because they are not payments for currently produced goods or services. 
D) not included in GDP because taxes will have to be raised to pay for them.

Question 11

In 2015,U.S.net exports were

Accepted Answer

A) positive and about 3 percent the size of GDP. 
B) positive and about 6 percent the size of GDP. 
C) negative and about 3 percent the size of GDP. 
D) negative and about 6 percent the size of GDP. 
A) positive and about 3 percent the size of GDP. 
B) positive and about 6 percent the size of GDP. 
C) negative and about 3 percent the size of GDP. 
D) negative and about 6 percent the size of GDP.

Question 12

In the economy of Talikastan in 2015,consumption was $200,exports were $150,GDP was $475,government purchases were $100,imports were $75,and investment was $100.What were Talikastan's net exports in 2015?

Accepted Answer

A) -$75 
B) -$225 
C) $225 
D) $75 
A) -$75 
B) -$225 
C) $225 
D) $75

Question 13

In the economy of Talikastan in 2015,consumption was $3000,exports were $400,GDP was $5000,imports were $500,and investment was $1400.What were Talikastan's government purchases in 2015?

Accepted Answer

A) $60 
B) $500 
C) $700 
D) $1500 
A) $60 
B) $500 
C) $700 
D) $1500

Question 14

Which of the following is an example of a durable good?

Accepted Answer

A) a hair dryer. 
B) a suit. 
C) a pair of shoes. 
D) All of the above are correct. 
A) a hair dryer. 
B) a suit. 
C) a pair of shoes. 
D) All of the above are correct.

Question 15

Consumer goods that are produced,go into inventory,and are not sold during the current period are

Accepted Answer

A) counted as intermediate goods and so are not included in current period GDP. 
B) counted in current period GDP only if the firm that produced them sells them to another firm. 
C) included in current period GDP as inventory investment. 
D) included in current period GDP as consumption. 
A) counted as intermediate goods and so are not included in current period GDP. 
B) counted in current period GDP only if the firm that produced them sells them to another firm. 
C) included in current period GDP as inventory investment. 
D) included in current period GDP as consumption.

Question 16

When an Egyptian firm purchases a cement mixer from Slovakia,

Accepted Answer

A) Egyptian investment does not change,Egyptian net exports decrease,Egyptian GDP decreases,Slovakian net exports increase,and Slovakian GDP increases. 
B) Egyptian investment increases,Egyptian net exports decrease,Egyptian GDP is unaffected,Slovakian net exports increase,and Slovakian GDP increases. 
C) Egyptian investment decreases,Egyptian net exports increase,Egyptian GDP is unaffected,Slovakian net exports decrease,and Slovakian GDP decreases. 
D) Egyptian investment increases,Egyptian net exports do not change,Egyptian GDP increases,Slovakian net exports do not change,and Slovakian GDP is unaffected. 
A) Egyptian investment does not change,Egyptian net exports decrease,Egyptian GDP decreases,Slovakian net exports increase,and Slovakian GDP increases. 
B) Egyptian investment increases,Egyptian net exports decrease,Egyptian GDP is unaffected,Slovakian net exports increase,and Slovakian GDP increases. 
C) Egyptian investment decreases,Egyptian net exports increase,Egyptian GDP is unaffected,Slovakian net exports decrease,and Slovakian GDP decreases. 
D) Egyptian investment increases,Egyptian net exports do not change,Egyptian GDP increases,Slovakian net exports do not change,and Slovakian GDP is unaffected.

Question 17

In the economy of Talikastan in 2015,exports were $200,GDP was $2000,government purchases were $200,imports were $270,and investment was $500.What was Talikastan's consumption in 2015?

Accepted Answer

A) $830 
B) $1230 
C) $1370 
D) $1770 
A) $830 
B) $1230 
C) $1370 
D) $1770

Question 18

Which of the following subcomponents of GDP can be either positive or negative?

Accepted Answer

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

Question 19

An American retailer purchased 500 pairs of shoes from a company in Thailand in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016.Which of the following components of U.S.GDP is affected by this transaction in the third quarter of 2016?

Accepted Answer

A) consumption,investment and imports 
B) only consumption and investment 
C) only consumption and imports 
D) only investment and imports 
A) consumption,investment and imports 
B) only consumption and investment 
C) only consumption and imports 
D) only investment and imports

Question 20

Rocket Energy Drink Company buys sugar to produce energy drinks.At the end of a quarter both its inventory of sugar and its inventory of energy drinks has increased.Investment for the quarter will include

Accepted Answer

A) both the increased inventory of sugar and the increased inventory of energy drinks. 
B) the increased inventory of sugar,but not the increased inventory of energy drinks. 
C) the increased inventory of energy drinks,but not the increased inventory of sugar. 
D) neither the increased inventory of sugar nor the increased inventory of energy drinks. 
A) both the increased inventory of sugar and the increased inventory of energy drinks. 
B) the increased inventory of sugar,but not the increased inventory of energy drinks. 
C) the increased inventory of energy drinks,but not the increased inventory of sugar. 
D) neither the increased inventory of sugar nor the increased inventory of energy drinks.

Exam 10: Measuring a Nations Income: The Components of GDP

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

A U.S.firm produces nail guns in the first quarter of 2010 and adds them to its inventory.In the second quarter of 2010 the firm sells the nail guns to a U.S.construction company.In which quarter(s)does(do)these transactions raise investment?

GDP and GNP are identical when

In the economy of Talikastan in 2015,consumption was $4000,exports were $800,GDP was $7500,imports were $200,and investment was $1000.What were Talikastan's government purchases in 2015?

Which of the following is included in the investment component of GDP?

Which of the following is included in the investment component of GDP?

A transfer payment is

Which of the following examples of household spending is categorized as investment rather than consumption?

When a U.S.citizen buys $500 of Chinese-made parts for a motorcycle,

Transfer payments are

In 2015,U.S.net exports were

In the economy of Talikastan in 2015,consumption was $200,exports were $150,GDP was $475,government purchases were $100,imports were $75,and investment was $100.What were Talikastan's net exports in 2015?

In the economy of Talikastan in 2015,consumption was $3000,exports were $400,GDP was $5000,imports were $500,and investment was $1400.What were Talikastan's government purchases in 2015?

Which of the following is an example of a durable good?

Consumer goods that are produced,go into inventory,and are not sold during the current period are

When an Egyptian firm purchases a cement mixer from Slovakia,

In the economy of Talikastan in 2015,exports were $200,GDP was $2000,government purchases were $200,imports were $270,and investment was $500.What was Talikastan's consumption in 2015?

Which of the following subcomponents of GDP can be either positive or negative?

An American retailer purchased 500 pairs of shoes from a company in Thailand in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016.Which of the following components of U.S.GDP is affected by this transaction in the third quarter of 2016?

Rocket Energy Drink Company buys sugar to produce energy drinks.At the end of a quarter both its inventory of sugar and its inventory of energy drinks has increased.Investment for the quarter will include

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion