Question 1

Consumption consists of spending by households on goods and services, with the exception of

Accepted Answer

A)  purchases of intangible services. 
B)  purchases of durable goods. 
C)  purchases of new houses. 
D)  spending on education. 
A)  purchases of intangible services. 
B)  purchases of durable goods. 
C)  purchases of new houses. 
D)  spending on education.

Question 2

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

Accepted Answer

A)  Why do prices in general rise by more in some countries than in others? 
B)  Why do wages differ across industries? 
C)  Why do national production and income increase in some periods and not in others? 
D)  How rapidly is GDP currently increasing? 
A)  Why do prices in general rise by more in some countries than in others? 
B)  Why do wages differ across industries? 
C)  Why do national production and income increase in some periods and not in others? 
D)  How rapidly is GDP currently increasing?

Question 4

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 5

If an economy's GDP falls, then it must be the case that the economy's

Accepted Answer

A)  income and saving fall. 
B)  income and market value of all production both fall. 
C)  income falls and market value of all production rises. 
D)  income rises and market value of all production falls. 
A)  income and saving fall. 
B)  income and market value of all production both fall. 
C)  income falls and market value of all production rises. 
D)  income rises and market value of all production falls.

Question 6

Rachel babysits for her sister for no pay. When she babysits for someone else she charges $8 an hour. When is Rachel's babysitting included in GDP?

Accepted Answer

A)  When she babysits for her sister and when she babysits for someone else. 
B)  When she babysits for her sister, but not when she babysits for someone else. 
C)  When she babysits for someone else, but not when she babysits for her sister. 
D)  Neither when she babysits for her sister nor for someone else. 
A)  When she babysits for her sister and when she babysits for someone else. 
B)  When she babysits for her sister, but not when she babysits for someone else. 
C)  When she babysits for someone else, but not when she babysits for her sister. 
D)  Neither when she babysits for her sister nor for someone else.

Question 7

According to the circular-flow diagram GDP

Accepted Answer

A)  can be computed as either the revenue firms receive from the sales of goods and services or the payments they make to factors of production. 
B)  can be computed as the revenue firms receive from the sales of goods and services but not as the payments they make to factors of production. 
C)  can be computed as payments firms make to factors of production but not as revenues they receive from the sales of goods and services. 
D)  cannot be computed as either the revenue firms receive or the payments they make to factors of production. 
A)  can be computed as either the revenue firms receive from the sales of goods and services or the payments they make to factors of production. 
B)  can be computed as the revenue firms receive from the sales of goods and services but not as the payments they make to factors of production. 
C)  can be computed as payments firms make to factors of production but not as revenues they receive from the sales of goods and services. 
D)  cannot be computed as either the revenue firms receive or the payments they make to factors of production.

Question 8

Table 23-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.
  
-Refer to Table 23-4. What was the growth rate of real GDP for 1931?

Accepted Answer

A)  -6.93%. Real GDP is a better gauge of economic well-being than nominal GDP. 
B)  -6.93%. Nominal GDP is a better gauge of economic well-being than real GDP. 
C)  -6.49%. Real GDP is a better gauge of economic well-being than nominal GDP. 
D)  -6.49%. Nominal GDP is a better gauge of economic well-being than real GDP. 
A)  -6.93%. Real GDP is a better gauge of economic well-being than nominal GDP. 
B)  -6.93%. Nominal GDP is a better gauge of economic well-being than real GDP. 
C)  -6.49%. Real GDP is a better gauge of economic well-being than nominal GDP. 
D)  -6.49%. Nominal GDP is a better gauge of economic well-being than real GDP.

Question 9

Which of the following is not a question that macroeconomists address?

Accepted Answer

A)  Why is average income high in some countries while it is low in others? 
B)  Why does the price of oil rise when war erupts in the Middle East? 
C)  Why do production and employment expand in some years and contract in others? 
D)  Why do prices rise rapidly in some periods of time while they are more stable in other periods? 
A)  Why is average income high in some countries while it is low in others? 
B)  Why does the price of oil rise when war erupts in the Middle East? 
C)  Why do production and employment expand in some years and contract in others? 
D)  Why do prices rise rapidly in some periods of time while they are more stable in other periods?

Question 10

Which of the following is a true statement?

Accepted Answer

A)  International data leave few doubts that a nation's GDP per person is associated with its citizens' standard of living. 
B)  Rich and poor countries often have vastly different standards of living, but similar levels of real GDP per person. 
C)  The value of leisure time is included in the calculation of GDP per person. 
D)  International data indicate that measures on the distribution of income are closely associated with GDP per person. 
A)  International data leave few doubts that a nation's GDP per person is associated with its citizens' standard of living. 
B)  Rich and poor countries often have vastly different standards of living, but similar levels of real GDP per person. 
C)  The value of leisure time is included in the calculation of GDP per person. 
D)  International data indicate that measures on the distribution of income are closely associated with GDP per person.

Question 11

If nominal GDP is $10 trillion and real GDP is $8 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 12

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

Accepted Answer

A)  decreases. 
B)  increases. 
C)  doesn't change because both legal and illegal production are included in GDP. 
D)  doesn't change because these activities are never included in GDP. 
A)  decreases. 
B)  increases. 
C)  doesn't change because both legal and illegal production are included in GDP. 
D)  doesn't change because these activities are never included in GDP.

Question 13

Janet bought flour and used it to bake bread she ate. ABC Bakery bought flour which it used to bake bread that customers purchased. In which case will the flour be counted as a final good?

Accepted Answer

A)  Janet's purchase and ABC Bakery's purchase. 
B)  ABC Bakery's purchase but not Janet's purchase. 
C)  Janet's purchase but not ABC Bakery's purchase. 
D)  Neither Janet's purchase nor ABC Bakery's purchase. 
A)  Janet's purchase and ABC Bakery's purchase. 
B)  ABC Bakery's purchase but not Janet's purchase. 
C)  Janet's purchase but not ABC Bakery's purchase. 
D)  Neither Janet's purchase nor ABC Bakery's purchase.

Question 14

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Accepted Answer

A) True 
 B)False

Question 15

Table 23-2
The table below contains data for country A for the year 2010.
  
-Refer to Table 23-2. What were country A's net exports in 2010?

Accepted Answer

A)  -$32 
B)  $32 
C)  $88 
D)  $120 
A)  -$32 
B)  $32 
C)  $88 
D)  $120

Question 16

Total income from the domestic production of final goods and services equals

Accepted Answer

A)  only household expenditures for these goods. 
B)  only household and business expenditures for these goods. 
C)  only household and government expenditures for these goods. 
D)  the expenditures for these goods whoever buys them. 
A)  only household expenditures for these goods. 
B)  only household and business expenditures for these goods. 
C)  only household and government expenditures for these goods. 
D)  the expenditures for these goods whoever buys them.

Question 17

Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his back yard. Regarding these two practices, which of the following statements is correct?

Accepted Answer

A)  Only Joe's grocery store purchases are included in GDP. 
B)  Only Joe's and Jim's grocery store purchases are included in GDP. 
C)  Joe's and Jim's grocery store purchases are included in GDP. The vegetables from Jim's backyard garden are included at their market value. 
D)  Joe's and Jim's grocery store purchases are included in GDP. The vegetables from Jim's backyard garden are included at their market value, if Jim provides this information. 
A)  Only Joe's grocery store purchases are included in GDP. 
B)  Only Joe's and Jim's grocery store purchases are included in GDP. 
C)  Joe's and Jim's grocery store purchases are included in GDP. The vegetables from Jim's backyard garden are included at their market value. 
D)  Joe's and Jim's grocery store purchases are included in GDP. The vegetables from Jim's backyard garden are included at their market value, if Jim provides this information.

Question 18

Otherwise legal transactions that go unreported or unrecorded are called

Accepted Answer

A)  the underground economy. 
B)  the shadow economy. 
C)  the informal economy. 
D)  All of the above are correct. 
A)  the underground economy. 
B)  the shadow economy. 
C)  the informal economy. 
D)  All of the above are correct.

Question 19

Table 23-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.
  
-Refer to Table 23-4. If prices had remained constant between 1929 and 1930, Nominal GDP would have decreased

Accepted Answer

A)  8.62%. 
B)  9.43%. 
C)  11.97%. 
D)  13.6%. 
A)  8.62%. 
B)  9.43%. 
C)  11.97%. 
D)  13.6%.

Question 20

Which of the following statements regarding GDP is correct?

Accepted Answer

A)  GDP includes factory production, but not any harm that may be inflicted on the environment. 
B)  GDP accounts for all activities taking place outside markets. 
C)  GDP provides detailed information about the distribution of income. 
D)  GDP is a good measure of economic well-being for all purposes. 
A)  GDP includes factory production, but not any harm that may be inflicted on the environment. 
B)  GDP accounts for all activities taking place outside markets. 
C)  GDP provides detailed information about the distribution of income. 
D)  GDP is a good measure of economic well-being for all purposes.

Consumption consists of spending by households on goods and services, with the exception of

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

If an economy's GDP falls, then it must be the case that the economy's

Rachel babysits for her sister for no pay. When she babysits for someone else she charges $8 an hour. When is Rachel's babysitting included in GDP?

According to the circular-flow diagram GDP

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. What was the growth rate of real GDP for 1931?

Which of the following is not a question that macroeconomists address?

Which of the following is a true statement?

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

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

Janet bought flour and used it to bake bread she ate. ABC Bakery bought flour which it used to bake bread that customers purchased. In which case will the flour be counted as a final good?

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Table 23-2 The table below contains data for country A for the year 2010. -Refer to Table 23-2. What were country A's net exports in 2010?

Total income from the domestic production of final goods and services equals

Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his back yard. Regarding these two practices, which of the following statements is correct?

Otherwise legal transactions that go unreported or unrecorded are called

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. If prices had remained constant between 1929 and 1930, Nominal GDP would have decreased

Which of the following statements regarding GDP is correct?

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

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Exam 5: Measuring a Nations Income

Consumption consists of spending by households on goods and services, with the exception of

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

If an economy's GDP falls, then it must be the case that the economy's

Rachel babysits for her sister for no pay. When she babysits for someone else she charges $8 an hour. When is Rachel's babysitting included in GDP?

According to the circular-flow diagram GDP

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. What was the growth rate of real GDP for 1931?

Which of the following is not a question that macroeconomists address?

Which of the following is a true statement?

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

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

Janet bought flour and used it to bake bread she ate. ABC Bakery bought flour which it used to bake bread that customers purchased. In which case will the flour be counted as a final good?

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Table 23-2 The table below contains data for country A for the year 2010. -Refer to Table 23-2. What were country A's net exports in 2010?

Total income from the domestic production of final goods and services equals

Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his back yard. Regarding these two practices, which of the following statements is correct?

Otherwise legal transactions that go unreported or unrecorded are called

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. If prices had remained constant between 1929 and 1930, Nominal GDP would have decreased

Which of the following statements regarding GDP is correct?

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