Question 1

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

Accepted Answer

A)  income falls and saving rises. 
B)  income and saving both fall. 
C)  income falls and expenditure rises. 
D)  income and expenditure both fall. 
A)  income falls and saving rises. 
B)  income and saving both fall. 
C)  income falls and expenditure rises. 
D)  income and expenditure both fall.

Question 2

Nominal GDP uses constant base­year prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.

Accepted Answer

A) True 
 B)False

Question 3

In early 2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Accepted Answer

A)  the price of the house, the cost of remodeling materials, the increase in rental value 
B)  the price of the house and the cost of remodeling materials, but not the increase in rental value 
C)  the costs of the remodeling materials and the increase in rent, but not the price of the house 
D)  None of the above are correct. 
A)  the price of the house, the cost of remodeling materials, the increase in rental value 
B)  the price of the house and the cost of remodeling materials, but not the increase in rental value 
C)  the costs of the remodeling materials and the increase in rent, but not the price of the house 
D)  None of the above are correct.

Question 4

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

Accepted Answer

A) True 
 B)False

Question 5

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 6

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Accepted Answer

The answer of A farmer sells sugar to a candy...

Question 7

Table 23-10
A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 .
  
-Refer to Table 23-10. What was this country's real GDP in 2016?

Accepted Answer

A)  $10,575 
B)  $11,250 
C)  $10,950 
D)  $12,550 
A)  $10,575 
B)  $11,250 
C)  $10,950 
D)  $12,550

Question 8

The GDP deflator is the ratio of

Accepted Answer

A)  real GDP to nominal GDP multiplied by 100. 
B)  real GDP to the inflation rate multiplied by 100. 
C)  nominal GDP to real GDP multiplied by 100. 
D)  nominal GDP to the inflation rate multiplied by 100. 
A)  real GDP to nominal GDP multiplied by 100. 
B)  real GDP to the inflation rate multiplied by 100. 
C)  nominal GDP to real GDP multiplied by 100. 
D)  nominal GDP to the inflation rate multiplied by 100.

Question 9

Table 23-9
A country produces only ice cream and pie. Quantities and prices of these goods for the last several years are shown below. The base year is 2008.
 
-Refer to Table 23-9. In 2009, this country's

Accepted Answer

A)  real GDP was $250, and the GDP deflator was 125. 
B)  real GDP was $250, and the GDP deflator was 120. 
C)  real GDP was $240, and the GDP deflator was 125. 
D)  real GDP was $240, and the GDP deflator was 120. 
A)  real GDP was $250, and the GDP deflator was 125. 
B)  real GDP was $250, and the GDP deflator was 120. 
C)  real GDP was $240, and the GDP deflator was 125. 
D)  real GDP was $240, and the GDP deflator was 120.

Question 10

Table 23-1
The table below contains data for Chereaux for the year 2015.
  
-Refer to Table 23-1. Disposable personal income for Chereaux in 2015 is

Accepted Answer

A)  $190. 
B)  $211. 
C)  $130. 
D)  $141. 
A)  $190. 
B)  $211. 
C)  $130. 
D)  $141.

Question 11

Periods during which real GDP rises are called recessions.

Accepted Answer

A) True 
 B)False

Question 12

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Accepted Answer

Since this is in real terms, it tells us

Question 13

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 14

Which of the following is included in GDP?

Accepted Answer

A)  the market value of rental housing services, but not the market value of owner-occupied housing services. 
B)  the market value of owner-occupied housing services, but not the market value of rental housing services 
C)  both the market value of rental housing services and the market value of owner-occupied housing services 
D)  neither the market value of owner-occupied housing services nor the market value of rental housing services. 
A)  the market value of rental housing services, but not the market value of owner-occupied housing services. 
B)  the market value of owner-occupied housing services, but not the market value of rental housing services 
C)  both the market value of rental housing services and the market value of owner-occupied housing services 
D)  neither the market value of owner-occupied housing services nor the market value of rental housing services.

Question 15

Which of the following is an example of depreciation?

Accepted Answer

A)  falling stock prices 
B)  the retirement of several employees 
C)  computers becoming obsolete 
D)  All of the above are examples of depreciation. 
A)  falling stock prices 
B)  the retirement of several employees 
C)  computers becoming obsolete 
D)  All of the above are examples of depreciation.

Question 16

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

Accepted Answer

A) True 
 B)False

Question 17

GDP is not a perfect measure of well-being; for example,

Accepted Answer

A)  GDP incorporates a large number of non-market goods and services that are of little value to society. 
B)  GDP places too much emphasis on the value of leisure. 
C)  GDP fails to account for the quality of the environment. 
D)  All of the above are correct. 
A)  GDP incorporates a large number of non-market goods and services that are of little value to society. 
B)  GDP places too much emphasis on the value of leisure. 
C)  GDP fails to account for the quality of the environment. 
D)  All of the above are correct.

Question 18

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.

Question 19

Table 23-1
The table below contains data for Chereaux for the year 2015.
  
-Refer to Table 23-1. Net national product for Chereaux in 2015 is

Accepted Answer

A)  $194. 
B)  $196. 
C)  $198. 
D)  $204. 
A)  $194. 
B)  $196. 
C)  $198. 
D)  $204.

Question 20

U.S. GNP

Accepted Answer

A)  includes production of foreigners working in the U.S. and production of U.S. citizens working in foreign countries. 
B)  includes production of foreigners working in the U.S. but excludes production of U.S. citizens working in foreign countries. 
C)  excludes production of foreigners working in the U.S. but includes production by U.S. citizens working in foreign countries. 
D)  excludes production of foreigners working in the U.S. and production by U.S. citizens working in foreign countries. 
A)  includes production of foreigners working in the U.S. and production of U.S. citizens working in foreign countries. 
B)  includes production of foreigners working in the U.S. but excludes production of U.S. citizens working in foreign countries. 
C)  excludes production of foreigners working in the U.S. but includes production by U.S. citizens working in foreign countries. 
D)  excludes production of foreigners working in the U.S. and production by U.S. citizens working in foreign countries.

Exam 15: Measuring a Nations Income

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

Nominal GDP uses constant base­year prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.

In early 2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

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.

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Table 23-10 A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 . -Refer to Table 23-10. What was this country's real GDP in 2016?

The GDP deflator is the ratio of

Table 23-9 A country produces only ice cream and pie. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. -Refer to Table 23-9. In 2009, this country's

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Disposable personal income for Chereaux in 2015 is

Periods during which real GDP rises are called recessions.

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

When an Egyptian firm purchases a cement mixer from Slovakia,

Which of the following is included in GDP?

Which of the following is an example of depreciation?

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

GDP is not a perfect measure of well-being; for example,

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

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Net national product for Chereaux in 2015 is

U.S. GNP

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Costs of Production

Firms in Competitive Markets

Monopoly

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

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

Filters

Nominal GDP uses constant baseyear prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.