Question 1

How does U.S. gross domestic product GDP) differ from U.S. gross national product GNP)?

Accepted Answer

A)  GNP = GDP - losses from depreciation 
B)  GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S. 
C)  GNP = GDP + transfer payments to households + - indirect sales taxes 
D)  GNP = GDP - depreciation - retained earnings 
A)  GNP = GDP - losses from depreciation 
B)  GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S. 
C)  GNP = GDP + transfer payments to households + - indirect sales taxes 
D)  GNP = GDP - depreciation - retained earnings B

Question 2

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013.
  
-Refer to Table 23-6. This country's inflation rate from 2010 to 2011 was

Accepted Answer

A)  1.38%. 
B)  38.20%. 
C)  138.20%. 
D)  41.90. 
A)  1.38%. 
B)  38.20%. 
C)  138.20%. 
D)  41.90. B

Question 3

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following values would be included in U.S. GDP for 2015?

Accepted Answer

A)  the rent that Sam, an American citizen, would have paid on his home in Houston in 2015 had he not owned that home. 
B)  the rent that Jim, an American citizen, paid on his apartment in San Francisco in 2015. 
C)  the value of the legal services provided by Juan, an attorney and a Mexican citizen, who lived in San Antonio and practiced law there in 2015 
D)  All of the above would be included in U.S. GDP for 2015. 
A)  the rent that Sam, an American citizen, would have paid on his home in Houston in 2015 had he not owned that home. 
B)  the rent that Jim, an American citizen, paid on his apartment in San Francisco in 2015. 
C)  the value of the legal services provided by Juan, an attorney and a Mexican citizen, who lived in San Antonio and practiced law there in 2015 
D)  All of the above would be included in U.S. GDP for 2015.

Question 5

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

Accepted Answer

A)  market prices. 
B)  statistical estimates of the value of goods and services to consumers. 
C)  prices based on the assumption that producers make no profits. 
D)  the maximum amount consumers would be willing to pay. 
A)  market prices. 
B)  statistical estimates of the value of goods and services to consumers. 
C)  prices based on the assumption that producers make no profits. 
D)  the maximum amount consumers would be willing to pay.

Question 6

An identity is an equation that

Accepted Answer

A)  describes an equilibrium. 
B)  pertains to macroeconomics, not to microeconomics. 
C)  must be true because of how the variables in the equation are defined. 
D)  involves final goods, not intermediate goods. 
A)  describes an equilibrium. 
B)  pertains to macroeconomics, not to microeconomics. 
C)  must be true because of how the variables in the equation are defined. 
D)  involves final goods, not intermediate goods.

Question 7

Which of the following transactions is not included in GDP?

Accepted Answer

A)  oranges sold to households by a grocer. 
B)  orange juice sold by a restaurant to its diners. 
C)  oranges sold by a farmer to a grocery store. 
D)  All of the above are included in GDP. 
A)  oranges sold to households by a grocer. 
B)  orange juice sold by a restaurant to its diners. 
C)  oranges sold by a farmer to a grocery store. 
D)  All of the above are included in GDP.

Question 8

The term economists use to describe a situation in which the economy's overall price level is rising is

Accepted Answer

A)  growth. 
B)  inflation. 
C)  recession. 
D)  expansion. 
A)  growth. 
B)  inflation. 
C)  recession. 
D)  expansion.

Question 9

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

Accepted Answer

A)  both Mexican GDP and U.S. GDP. 
B)  Mexican GDP, but it is not included in U.S. GDP. 
C)  U.S. GDP, but it is not included in Mexican GDP. 
D)  neither Mexican GDP nor U.S. GDP. 
A)  both Mexican GDP and U.S. GDP. 
B)  Mexican GDP, but it is not included in U.S. GDP. 
C)  U.S. GDP, but it is not included in Mexican GDP. 
D)  neither Mexican GDP nor U.S. GDP.

Question 10

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Accepted Answer

A)  longer life expectancy and a lower percentage of the population that is literate. 
B)  longer life expectancy and a higher percentage of the population that is literate. 
C)  very nearly the same life expectancy and a lower percentage of the population that is literate. 
D)  very nearly the same life expectancy and a higher percentage of the population that is literate. 
A)  longer life expectancy and a lower percentage of the population that is literate. 
B)  longer life expectancy and a higher percentage of the population that is literate. 
C)  very nearly the same life expectancy and a lower percentage of the population that is literate. 
D)  very nearly the same life expectancy and a higher percentage of the population that is literate.

Question 11

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that

Accepted Answer

A)  GDP is not a useful measure of society's welfare. 
B)  GDP is still a useful measure of society's welfare because providing these other attributes is the responsibility of government. 
C)  GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare. 
D)  GDP is still the best measure of society's welfare because these other values cannot actually be measured. 
A)  GDP is not a useful measure of society's welfare. 
B)  GDP is still a useful measure of society's welfare because providing these other attributes is the responsibility of government. 
C)  GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare. 
D)  GDP is still the best measure of society's welfare because these other values cannot actually be measured.

Question 12

According to the circular-flow diagram GDP

Accepted Answer

A)  can be computed as the total income paid by firms or as expenditures on final goods and services. 
B)  can be computed as the total income paid by firms, but not as expenditures on final goods and services. 
C)  can be computed as expenditures on final goods and services, but not as the total income paid by firms. 
D)  cannot be computed as either total income paid by firms or expenditures on final goods and services. 
A)  can be computed as the total income paid by firms or as expenditures on final goods and services. 
B)  can be computed as the total income paid by firms, but not as expenditures on final goods and services. 
C)  can be computed as expenditures on final goods and services, but not as the total income paid by firms. 
D)  cannot be computed as either total income paid by firms or expenditures on final goods and services.

Question 13

Which of the following transactions adds to U.S. GDP for 2015?

Accepted Answer

A)  In 2015, Frank's Feta manufactures 2000 pounds of cheese that will eventually be sold to grocery stores. The 2000 pounds of cheese remains in Frank's inventory at the end of 2015. 
B)  An Irish marketing consultant works in Richmond during the summer of 2015 and earns $45,000 during that time. 
C)  When Len and Mika were both single, they lived in separate apartments and each paid $700 in rent. Len and Mika got married in 2015 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for $1,500 per month. 
D)  All of the above transactions add to U.S. GDP for 2015. 
A)  In 2015, Frank's Feta manufactures 2000 pounds of cheese that will eventually be sold to grocery stores. The 2000 pounds of cheese remains in Frank's inventory at the end of 2015. 
B)  An Irish marketing consultant works in Richmond during the summer of 2015 and earns $45,000 during that time. 
C)  When Len and Mika were both single, they lived in separate apartments and each paid $700 in rent. Len and Mika got married in 2015 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for $1,500 per month. 
D)  All of the above transactions add to U.S. GDP for 2015.

Question 14

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 15

List the four components of GDP.

Accepted Answer

consumption, investm

Question 16

Which of the following statistics is usually regarded as the best single measure of a society's economic well­being?

Accepted Answer

A)  the unemployment rate 
B)  the inflation rate 
C)  gross domestic product 
D)  the trade deficit 
A)  the unemployment rate 
B)  the inflation rate 
C)  gross domestic product 
D)  the trade deficit

Question 17

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013.
  
-Refer to Table 23-6. In 2010, this country's GDP deflator was

Accepted Answer

A)  41.9. 
B)  100. 
C)  165.0. 
D)  This cannot be calculated from the information given. 
A)  41.9. 
B)  100. 
C)  165.0. 
D)  This cannot be calculated from the information given.

Question 18

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

Accepted Answer

Real income is nominal income adjusted f

Question 19

A U.S. grocery chain purchases olive oil from Tunisia and sells it to U.S. consumers. In which of the following is this transaction included?

Accepted Answer

A)  U.S. consumption and U.S. imports 
B)  U.S. consumption but not U.S. imports 
C)  U.S. imports but not U.S. consumption 
D)  neither U.S. consumption nor U.S. imports 
A)  U.S. consumption and U.S. imports 
B)  U.S. consumption but not U.S. imports 
C)  U.S. imports but not U.S. consumption 
D)  neither U.S. consumption nor U.S. imports

Question 20

Table 23-5
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 2015.
Prices and Quantities
  
-Refer to Table 23-5. In 2018, this country's

Accepted Answer

A)  real GDP was $1080, and the GDP deflator was 156.3. 
B)  real GDP was $1080, and the GDP deflator was 177.8. 
C)  real GDP was $1920, and the GDP deflator was 177.8. 
D)  real GDP was $1920, and the GDP deflator was 156.3. 
A)  real GDP was $1080, and the GDP deflator was 156.3. 
B)  real GDP was $1080, and the GDP deflator was 177.8. 
C)  real GDP was $1920, and the GDP deflator was 177.8. 
D)  real GDP was $1920, and the GDP deflator was 156.3.

How does U.S. gross domestic product GDP) differ from U.S. gross national product GNP)?

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. This country's inflation rate from 2010 to 2011 was

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

Which of the following values would be included in U.S. GDP for 2015?

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

An identity is an equation that

Which of the following transactions is not included in GDP?

The term economists use to describe a situation in which the economy's overall price level is rising is

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that

According to the circular-flow diagram GDP

Which of the following transactions adds to U.S. GDP for 2015?

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

List the four components of GDP.

Which of the following statistics is usually regarded as the best single measure of a society's economic wellbeing?

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2010, this country's GDP deflator was

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

A U.S. grocery chain purchases olive oil from Tunisia and sells it to U.S. consumers. In which of the following is this transaction included?

Table 23-5 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 2015. Prices and Quantities -Refer to Table 23-5. In 2018, this country's

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 and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Exam 5: Measuring a Nations Income

How does U.S. gross domestic product GDP) differ from U.S. gross national product GNP)?

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. This country's inflation rate from 2010 to 2011 was

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

Which of the following values would be included in U.S. GDP for 2015?

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

An identity is an equation that

Which of the following transactions is not included in GDP?

The term economists use to describe a situation in which the economy's overall price level is rising is

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that

According to the circular-flow diagram GDP

Which of the following transactions adds to U.S. GDP for 2015?

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

List the four components of GDP.

Which of the following statistics is usually regarded as the best single measure of a society's economic well­being?

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2010, this country's GDP deflator was

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

A U.S. grocery chain purchases olive oil from Tunisia and sells it to U.S. consumers. In which of the following is this transaction included?

Table 23-5 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 2015. Prices and Quantities -Refer to Table 23-5. In 2018, this country's

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 and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Which of the following statistics is usually regarded as the best single measure of a society's economic wellbeing?