Question 1

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 2

List the four components of GDP.

Accepted Answer

consumption, investm

Question 3

In 2012, U.S. net exports were

Accepted Answer

A)  positive and about 3.5 percent the size of GDP. 
B)  positive and about 6 percent the size of GDP. 
C)  negative and about 3.5 percent the size of GDP. 
D)  negative and about 6 percent the size of GDP. 
A)  positive and about 3.5 percent the size of GDP. 
B)  positive and about 6 percent the size of GDP. 
C)  negative and about 3.5 percent the size of GDP. 
D)  negative and about 6 percent the size of GDP.

Question 4

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 5

Disposable income is

Accepted Answer

A)  the total income earned by a nation's permanent residents. 
B)  the total income earned by a nation's residents in the production of goods and services. 
C)  the income that households and non-corporate businesses receive. 
D)  the income that households and businesses have remaining after satisfying their obligations to the government. 
A)  the total income earned by a nation's permanent residents. 
B)  the total income earned by a nation's residents in the production of goods and services. 
C)  the income that households and non-corporate businesses receive. 
D)  the income that households and businesses have remaining after satisfying their obligations to the government.

Question 6

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

Accepted Answer

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

Question 7

If a good produced this quarter goes into inventory, then it is included in this period's GDP. If it is sold in the next quarter, it will have no effect on GDP.

Accepted Answer

A) True 
 B)False

Question 8

The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

Accepted Answer

A) True 
 B)False

Question 9

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 10

A transfer payment is a payment made by

Accepted Answer

A)  consumers, but not in exchange for a tangible product. 
B)  firms, but not in exchange for capital equipment. 
C)  foreigners, but not in exchange for a domestically-produced good or service. 
D)  government, but not in exchange for a currently produced good or service. 
A)  consumers, but not in exchange for a tangible product. 
B)  firms, but not in exchange for capital equipment. 
C)  foreigners, but not in exchange for a domestically-produced good or service. 
D)  government, but not in exchange for a currently produced good or service.

Question 11

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

Accepted Answer

A) True 
 B)False

Question 12

Table 23-7
The table below contains data for the country of Togogo. The base year is 1974.
  
-Refer to Table 23-7. Which of the following is not correct?

Accepted Answer

A)  This economy experienced growth from 1974 to 1975. 
B)  This economy experienced growth from 1975 to 1976. 
C)  This economy experienced growth from 1976 to 1977. 
D)  This economy experienced inflation from 1974 to 1975, from 1975 to 1976, and from 1976 to 1977. 
A)  This economy experienced growth from 1974 to 1975. 
B)  This economy experienced growth from 1975 to 1976. 
C)  This economy experienced growth from 1976 to 1977. 
D)  This economy experienced inflation from 1974 to 1975, from 1975 to 1976, and from 1976 to 1977.

Question 13

Which of the following transactions would be included in GDP for 2015?

Accepted Answer

A)  In February 2015, Amanda sells a 2009 Hyundai to Isabella. 
B)  In March 2015, Amanda buys a ticket to visit a zoo in Florida. She visits the zoo in February 2016. 
C)  In November 2015, Isabella eats onions that she harvested from her backyard garden in October 2015. 
D)  All of the above are correct. 
A)  In February 2015, Amanda sells a 2009 Hyundai to Isabella. 
B)  In March 2015, Amanda buys a ticket to visit a zoo in Florida. She visits the zoo in February 2016. 
C)  In November 2015, Isabella eats onions that she harvested from her backyard garden in October 2015. 
D)  All of the above are correct.

Question 14

If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the consumption component of U.S. GDP and the net exports component of U.S. 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

Social Security payments are

Accepted Answer

A)  included in GDP because they represent current income. 
B)  included in GDP because they represent potential consumption. 
C)  excluded from GDP because they are not private pensions. 
D)  excluded from GDP because they do not reflect the economy's production. 
A)  included in GDP because they represent current income. 
B)  included in GDP because they represent potential consumption. 
C)  excluded from GDP because they are not private pensions. 
D)  excluded from GDP because they do not reflect the economy's production.

Question 17

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 18

GDP does not make adjustments for leisure time, environmental quality, or volunteer work.

Accepted Answer

A) True 
 B)False

Question 19

Recently, the U.S. national income accounts have switched to calling government purchases

Accepted Answer

A)  government spending and transfer payments. 
B)  transfer payments and gross investment by government. 
C)  government consumption expenditure and gross investment. 
D)  government wages, salaries, and investment expenditure. 
A)  government spending and transfer payments. 
B)  transfer payments and gross investment by government. 
C)  government consumption expenditure and gross investment. 
D)  government wages, salaries, and investment expenditure.

Question 20

Which of the following statements about nominal GDP and real GDP is correct?

Accepted Answer

A)  Nominal GDP is a better gauge of economic well-being than real GDP. 
B)  Real GDP is a better gauge of economic well-being than nominal GDP. 
C)  Real GDP and nominal GDP are equally good measures of economic well-being. 
D)  Neither nominal nor real GDP provide a measure of economic well-being. 
A)  Nominal GDP is a better gauge of economic well-being than real GDP. 
B)  Real GDP is a better gauge of economic well-being than nominal GDP. 
C)  Real GDP and nominal GDP are equally good measures of economic well-being. 
D)  Neither nominal nor real GDP provide a measure of economic well-being.

Exam 15: Measuring a Nations Income

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

List the four components of GDP.

In 2012, U.S. net exports were

Transfer payments are

Disposable income is

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

If a good produced this quarter goes into inventory, then it is included in this period's GDP. If it is sold in the next quarter, it will have no effect on GDP.

The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

A transfer payment is a payment made by

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

Table 23-7 The table below contains data for the country of Togogo. The base year is 1974. -Refer to Table 23-7. Which of the following is not correct?

Which of the following transactions would be included in GDP for 2015?

If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the consumption component of U.S. GDP and the net exports component of U.S. 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?

Social Security payments are

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

GDP does not make adjustments for leisure time, environmental quality, or volunteer work.

Recently, the U.S. national income accounts have switched to calling government purchases

Which of the following statements about nominal GDP and real GDP is correct?

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

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