Question 1

Which of the following examples of production of goods and services would be included in U.S. GDP?

Accepted Answer

A)  Sally, a Canadian citizen, works on a drilling crew in North Dakota for Northland Gas Services, and Northland sells the natural gas to a utility company in Canada. 
B)  Jim grows pecans for his family in the yard of their San Antonio home. 
C)  Joe grows marijuana in his Kansas City home and sells it to his friends and neighbors. 
D)  None of the above examples of production would be included in U.S. GDP. 
A)  Sally, a Canadian citizen, works on a drilling crew in North Dakota for Northland Gas Services, and Northland sells the natural gas to a utility company in Canada. 
B)  Jim grows pecans for his family in the yard of their San Antonio home. 
C)  Joe grows marijuana in his Kansas City home and sells it to his friends and neighbors. 
D)  None of the above examples of production would be included in U.S. GDP.

Question 2

Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2009,

Accepted Answer

A)  nominal GDP is $400, real GDP is $500, and the GDP deflator is 80. 
B)  nominal GDP is $400, real GDP is $500, and the GDP deflator is 125. 
C)  nominal GDP is $500, real GDP is $400, and the GDP deflator is 80. 
D)  nominal GDP is $500, real GDP is $400, and the GDP deflator is 125. 
A)  nominal GDP is $400, real GDP is $500, and the GDP deflator is 80. 
B)  nominal GDP is $400, real GDP is $500, and the GDP deflator is 125. 
C)  nominal GDP is $500, real GDP is $400, and the GDP deflator is 80. 
D)  nominal GDP is $500, real GDP is $400, and the GDP deflator is 125.

Question 3

U.S. GDP includes the market value of rental housing, but not the market value of owner-occupied housing services.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following headlines is more closely related to what microeconomists study than to what macroeconomists study?

Accepted Answer

A)  Unemployment rate falls from 7.5 percent to 7.3 percent. 
B)  Real GDP falls by 0.4 percent in the third quarter. 
C)  Inflation was 2.4 percent last year. 
D)  The price of gasoline rises due to rising oil prices. 
A)  Unemployment rate falls from 7.5 percent to 7.3 percent. 
B)  Real GDP falls by 0.4 percent in the third quarter. 
C)  Inflation was 2.4 percent last year. 
D)  The price of gasoline rises due to rising oil prices.

Question 5

GDP does not reflect

Accepted Answer

A)  the value of leisure. 
B)  the value of goods and services produced at home. 
C)  the quality of the environment. 
D)  All of the above are correct. 
A)  the value of leisure. 
B)  the value of goods and services produced at home. 
C)  the quality of the environment. 
D)  All of the above are correct.

Question 6

On the basis of the information presented in the table below, which presents the correct ordering of real GDP per person from highest to lowest?

Accepted Answer

A)  Atlantis, Merpois, Bensalem 
B)  Bensalem, Atlantis, Merpois 
C)  Atlantis, Bensalem, Merpois 
D)  Bensalem, Merpois, Atlantis 
A)  Atlantis, Merpois, Bensalem 
B)  Bensalem, Atlantis, Merpois 
C)  Atlantis, Bensalem, Merpois 
D)  Bensalem, Merpois, Atlantis

Question 7

Which of the following is not correct?

Accepted Answer

A)  GNP equals net national product plus losses from depreciation. 
B)  For most countries, including the United States, GDP and GNP are nearly the same. 
C)  GDP and GNP typically move in opposite directions. 
D)  Personal income equals disposable personal income plus personal taxes plus certain nontax payments. 
A)  GNP equals net national product plus losses from depreciation. 
B)  For most countries, including the United States, GDP and GNP are nearly the same. 
C)  GDP and GNP typically move in opposite directions. 
D)  Personal income equals disposable personal income plus personal taxes plus certain nontax payments.

Question 8

The value of goods added to a firm's inventory in a certain year is treated as

Accepted Answer

A)  consumption, since the goods will be sold to consumers in another period. 
B)  intermediate goods, and so is not included in that year's GDP. 
C)  investment, since GDP aims to measure the value of the economy's production that year. 
D)  spending on durable goods, since the goods could not be inventoried unless they were durable. 
A)  consumption, since the goods will be sold to consumers in another period. 
B)  intermediate goods, and so is not included in that year's GDP. 
C)  investment, since GDP aims to measure the value of the economy's production that year. 
D)  spending on durable goods, since the goods could not be inventoried unless they were durable.

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

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  spending to build new houses 
B)  spending to build new factories 
C)  spending on business equipment such as welding equipment 
D)  All of the above are included in the investment component of GDP. 
A)  spending to build new houses 
B)  spending to build new factories 
C)  spending on business equipment such as welding equipment 
D)  All of the above are included in the investment component of GDP.

Question 12

Table 23-3
The table below contains data for the country of Crete for the year 2010.
  
-Refer to Table 23-3. What were Crete's net exports in 2010?

Accepted Answer

A)  -$217 
B)  -$88 
C)  $88 
D)  $217 
A)  -$217 
B)  -$88 
C)  $88 
D)  $217

Question 13

One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP?

Accepted Answer

A)  GDP increases by $3.00. 
B)  GDP increases by $5.00. 
C)  GDP increases by $6.00. 
D)  GDP increases by $7.00. 
A)  GDP increases by $3.00. 
B)  GDP increases by $5.00. 
C)  GDP increases by $6.00. 
D)  GDP increases by $7.00.

Question 14

How is net national product NNP) calculated?

Accepted Answer

A)  Saving is added to the total income of a nation's citizens. 
B)  Saving is added to the total income earned within a nation. 
C)  Depreciation losses are subtracted from the total income of a nation's citizens. 
D)  Depreciation losses are subtracted from the total income earned within a nation. 
A)  Saving is added to the total income of a nation's citizens. 
B)  Saving is added to the total income earned within a nation. 
C)  Depreciation losses are subtracted from the total income of a nation's citizens. 
D)  Depreciation losses are subtracted from the total income earned within a nation.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements about recessions is true?

Accepted Answer

A)  An old rule of thumb defining recession is two consecutive quarters of falling nominal GDP. 
B)  Recessions occur at regular intervals and last standard amounts of time. 
C)  There is no ironclad rule for the declaration of recessions. 
D)  Recessions are associated with low unemployment and high income. 
A)  An old rule of thumb defining recession is two consecutive quarters of falling nominal GDP. 
B)  Recessions occur at regular intervals and last standard amounts of time. 
C)  There is no ironclad rule for the declaration of recessions. 
D)  Recessions are associated with low unemployment and high income.

Question 17

Table 23-12
A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year.
  
-Refer to Table 23-12. Calculate real and nominal GDP for the year 2013.

Accepted Answer

Nominal GD

Question 18

For monitoring fluctuations in the national economy, which measure of income is best?

Accepted Answer

A)  GDP 
B)  GNP 
C)  NNP 
D)  It does not matter very much which measure we use. 
A)  GDP 
B)  GNP 
C)  NNP 
D)  It does not matter very much which measure we use.

Question 19

Write the formula for calculating a country's inflation rate using the GDP deflator.

Accepted Answer

The answer of Write the formula for calculating a country's...

Question 20

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

Accepted Answer

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

Exam 15: Measuring a Nations Income

Which of the following examples of production of goods and services would be included in U.S. GDP?

Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2009,

U.S. GDP includes the market value of rental housing, but not the market value of owner-occupied housing services.

Which of the following headlines is more closely related to what microeconomists study than to what macroeconomists study?

GDP does not reflect

On the basis of the information presented in the table below, which presents the correct ordering of real GDP per person from highest to lowest?

Which of the following is not correct?

The value of goods added to a firm's inventory in a certain year is treated as

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

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

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

Table 23-3 The table below contains data for the country of Crete for the year 2010. -Refer to Table 23-3. What were Crete's net exports in 2010?

One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP?

How is net national product NNP) calculated?

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

Which of the following statements about recessions is true?

Table 23-12 A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year. -Refer to Table 23-12. Calculate real and nominal GDP for the year 2013.

For monitoring fluctuations in the national economy, which measure of income is best?

Write the formula for calculating a country's inflation rate using the GDP deflator.

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

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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