Question 1

Changes in the GDP deflator reflect only changes in the prices of goods and services.

Accepted Answer

A) True 
 B)False

Question 2

The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest? Country
GDP (Constant US$)
GDP(Current US$)
Population
Ghana
7,690
16,653
23)35
Kenya
17,569
30,354
38)76
Tanzania
15,394
20,490
41)276

Accepted Answer

A)  Ghana, Kenya, Tanzania 
B)  Ghana, Tanzania, Kenya 
C)  Kenya, Tanzania, Ghana 
D)  Kenya, Ghana, Tanzania 
A)  Ghana, Kenya, Tanzania 
B)  Ghana, Tanzania, Kenya 
C)  Kenya, Tanzania, Ghana 
D)  Kenya, Ghana, Tanzania

Question 3

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Accepted Answer

A)  would be included in GDP because they are part of government purchases. 
B)  would be included in GDP because they are part of investment expenditures. 
C)  would not be included in GDP because they are transfer payments. 
D)  would not be included in GDP because the government raises taxes to pay for them. 
A)  would be included in GDP because they are part of government purchases. 
B)  would be included in GDP because they are part of investment expenditures. 
C)  would not be included in GDP because they are transfer payments. 
D)  would not be included in GDP because the government raises taxes to pay for them.

Question 4

Table 5-4
The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2008.
Prices and Quantities
  
-Refer to Table 5-4. This country's inflation rate from 2010 to 2011 was

Accepted Answer

A)  15.4%. 
B)  26.1%. 
C)  45.5%. 
D)  77.8%. 
A)  15.4%. 
B)  26.1%. 
C)  45.5%. 
D)  77.8%.

Question 5

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 6

In a simple circular-flow diagram, total income and total expenditure are

Accepted Answer

A)  never equal because total income always exceeds total expenditure. 
B)  seldom equal because of the ongoing changes in an economy's unemployment rate. 
C)  equal only when the government purchases no goods or services. 
D)  always equal because every transaction has a buyer and a seller. 
A)  never equal because total income always exceeds total expenditure. 
B)  seldom equal because of the ongoing changes in an economy's unemployment rate. 
C)  equal only when the government purchases no goods or services. 
D)  always equal because every transaction has a buyer and a seller.

Question 7

In a simple circular-flow diagram, firms use the money they get from a sale to

Accepted Answer

A)  pay wages to workers. 
B)  pay rent to landlords. 
C)  pay profit to the firms' owners. 
D)  All of the above are correct. 
A)  pay wages to workers. 
B)  pay rent to landlords. 
C)  pay profit to the firms' owners. 
D)  All of the above are correct.

Question 8

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 9

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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

Accepted Answer

A) True 
 B)False

Question 12

When economists refer to intangible items, they are referring to such things as

Accepted Answer

A)  illegal goods, and the value of such items is included in GDP. 
B)  illegal goods, and the value of such items is excluded from GDP. 
C)  hair styling and dental care, and the value of such items is included in GDP. 
D)  hair styling and dental care, and the value of such items is excluded from GDP. 
A)  illegal goods, and the value of such items is included in GDP. 
B)  illegal goods, and the value of such items is excluded from GDP. 
C)  hair styling and dental care, and the value of such items is included in GDP. 
D)  hair styling and dental care, and the value of such items is excluded from GDP.

Question 13

Table 5-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.
  
-Refer to Table 5-3. What is the GDP deflator and the inflation rate for 1932?

Accepted Answer

A)  8.09, -11.7 
B)  8.09.16, -13.3 
C)  1236.46, 11.7 
D)  1236.46, 13.3 
A)  8.09, -11.7 
B)  8.09.16, -13.3 
C)  1236.46, 11.7 
D)  1236.46, 13.3

Question 14

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 15

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Accepted Answer

A)  reduced measured GDP. 
B)  not affected measured GDP. 
C)  increased measured GDP by the value of the restaurant meals. 
D)  increased measured GDP by the value added by the restaurant's preparation and serving of the meals. 
A)  reduced measured GDP. 
B)  not affected measured GDP. 
C)  increased measured GDP by the value of the restaurant meals. 
D)  increased measured GDP by the value added by the restaurant's preparation and serving of the meals.

Question 16

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 17

Expenditures on a nation's domestic production

Accepted Answer

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

Question 18

The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest? Country
GDP (Constant US$)
GDP(Current US$)
Population
Argentina
$394,595
$328,465
39)88
Bolivia
$11,373
$16,674
9)69
Peru
$84,241
$129,109
28)84

Accepted Answer

A)  Argentina, Bolivia, Peru 
B)  Argentina, Peru, Bolivia 
C)  Bolivia, Argentina, Peru 
D)  Peru, Bolivia, Argentina 
A)  Argentina, Bolivia, Peru 
B)  Argentina, Peru, Bolivia 
C)  Bolivia, Argentina, Peru 
D)  Peru, Bolivia, Argentina

Question 19

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

Accepted Answer

A) True 
 B)False

Question 20

Table 5-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009.
Prices and Quantities
  
-Refer to Table 5-6. This country's inflation rate from 2008 to 2009 was

Accepted Answer

A)  -25%. 
B)  25%. 
C)  33.3%. 
D)  100%. 
A)  -25%. 
B)  25%. 
C)  33.3%. 
D)  100%.

Changes in the GDP deflator reflect only changes in the prices of goods and services.

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Table 5-4 The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Prices and Quantities -Refer to Table 5-4. This country's inflation rate from 2010 to 2011 was

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

In a simple circular-flow diagram, total income and total expenditure are

In a simple circular-flow diagram, firms use the money they get from a sale to

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

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

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

When economists refer to intangible items, they are referring to such things as

Table 5-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 5-3. What is the GDP deflator and the inflation rate for 1932?

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

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Retained earnings is income that

Expenditures on a nation's domestic production

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

Table 5-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009. Prices and Quantities -Refer to Table 5-6. This country's inflation rate from 2008 to 2009 was

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

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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Exam 5: Measuring a Nations Income

Changes in the GDP deflator reflect only changes in the prices of goods and services.

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Table 5-4 The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Prices and Quantities -Refer to Table 5-4. This country's inflation rate from 2010 to 2011 was

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

In a simple circular-flow diagram, total income and total expenditure are

In a simple circular-flow diagram, firms use the money they get from a sale to

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

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

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

When economists refer to intangible items, they are referring to such things as

Table 5-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 5-3. What is the GDP deflator and the inflation rate for 1932?

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

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Retained earnings is income that

Expenditures on a nation's domestic production

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

Table 5-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009. Prices and Quantities -Refer to Table 5-6. This country's inflation rate from 2008 to 2009 was

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

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