Question 1

Which of the following is not included in U.S. GDP?

Accepted Answer

A)  additions of newly produced output to inventory 
B)  production of U.S citizens working in foreign countries. 
C)  the estimated rental value of owner-occupied housing 
D)  the value of food purchased from a grocery store to make meals at home without pay 
A)  additions of newly produced output to inventory 
B)  production of U.S citizens working in foreign countries. 
C)  the estimated rental value of owner-occupied housing 
D)  the value of food purchased from a grocery store to make meals at home without pay

Question 2

Income generated by a nation's domestic production

Accepted Answer

A)  is less than its domestic production. 
B)  is equal to its domestic production. 
C)  is greater than its domestic production. 
D)  could be less than, equal to, or greater than its domestic production. 
A)  is less than its domestic production. 
B)  is equal to its domestic production. 
C)  is greater than its domestic production. 
D)  could be less than, equal to, or greater than its domestic production.

Question 3

Consider two cars manufactured by Chevrolet in 2014. During 2014, Chevrolet sells one of the two cars to Emily for $20,000. Later in the same year, Emily sells the car to Jim for $18,000. The second automobile, with a market value of $19,000, is unsold at the end of 2014 and it remains in Chevrolet's inventory. The transactions just described contribute how much to GDP for 2014?

Accepted Answer

A)  $20,000 
B)  $37,000 
C)  $38,000 
D)  $39,000 
A)  $20,000 
B)  $37,000 
C)  $38,000 
D)  $39,000

Question 4

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 5

How is net national product NNP) calculated?

Accepted Answer

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

Question 6

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 imports in 2010?

Accepted Answer

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

Question 7

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 8

Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture. With each $1,000 worth of leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for $2,600. Neither firm had any inventory at the beginning of 2015. During that year, Cowhide produced enough leather for 25 couches. Couches, Inc. bought 80% of that leather for $20,000 and promised to buy the remaining 20% for $5,000 in 2016. Couches, Inc. produced 20 couches during 2015 and sold each one during that year for $2,600. What was the economy's GDP for 2015?

Accepted Answer

A)  $25,000 
B)  $52,000 
C)  $57,000 
D)  $65,000 
A)  $25,000 
B)  $52,000 
C)  $57,000 
D)  $65,000

Question 9

Which of the following represents a transfer payment?

Accepted Answer

A)  You transfer $1,000 from your bank account to a mutual fund. 
B)  The government sends your grandfather his Social Security check. 
C)  You make a payment to get legal documents showing you purchased a previously owned home. 
D)  Your employer automatically transfers $100 each month from your wages to a non-taxable medical spending account. 
A)  You transfer $1,000 from your bank account to a mutual fund. 
B)  The government sends your grandfather his Social Security check. 
C)  You make a payment to get legal documents showing you purchased a previously owned home. 
D)  Your employer automatically transfers $100 each month from your wages to a non-taxable medical spending account.

Question 10

Figure 23-1.  
-Refer to Figure 23-1. Which of the following correctly identifies the flow of dollars?

Accepted Answer

A)  W, X, Y and Z 
B)  K, M, L and N 
C)  C, K, M and D 
D)  A, L, N and B 
A)  W, X, Y and Z 
B)  K, M, L and N 
C)  C, K, M and D 
D)  A, L, N and B

Question 11

Which of the following is not included in GDP?

Accepted Answer

A)  carrots grown in your garden and eaten by your family 
B)  carrots purchased at a farmer's market and eaten by your family 
C)  carrots purchased at a grocery store and eaten by your family 
D)  None of the above are included in GDP. 
A)  carrots grown in your garden and eaten by your family 
B)  carrots purchased at a farmer's market and eaten by your family 
C)  carrots purchased at a grocery store and eaten by your family 
D)  None of the above are included in GDP.

Question 12

Which of the following statements about GDP is correct?

Accepted Answer

A)  GDP measures two things at once: the total income of everyone in the economy and the unemployment rate of the economy's labor force. 
B)  Money continuously flows from households to government and then back to households, and GDP measures this flow of money. 
C)  GDP is to a nation's economy as household income is to a household. 
D)  All of the above are correct. 
A)  GDP measures two things at once: the total income of everyone in the economy and the unemployment rate of the economy's labor force. 
B)  Money continuously flows from households to government and then back to households, and GDP measures this flow of money. 
C)  GDP is to a nation's economy as household income is to a household. 
D)  All of the above are correct.

Question 13

U.S. GDP includes estimates of the value of items that are produced and consumed at home, such as housework and car maintenance.

Accepted Answer

A) True 
 B)False

Question 14

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

Accepted Answer

A) True 
 B)False

Question 15

Since it is counted as investment, why doesn't the purchase of earthmoving equipment from China by a U.S. corporation increase U.S. GDP?

Accepted Answer

The purchase of foreign equipment is cou

Question 16

If a U.S. company buys an electrical generator made in Japan by a Japanese firm, and the Japanese firm uses the payment to buy stocks issued by a U.S. company then

Accepted Answer

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

Question 17

Suppose an economy's production consists only of corn and soybeans. In 2010, 20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel. In 2009, the price of corn was $2 per bushel and the price of soybeans was $1 per bushel. Using 2009 as the base year, it follows that, for 2010,

Accepted Answer

A)  nominal GDP is $50, real GDP is $100, and the GDP deflator is 50. 
B)  nominal GDP is $50, real GDP is $100, and the GDP deflator is 200. 
C)  nominal GDP is $100, real GDP is $50, and the GDP deflator is 50. 
D)  nominal GDP is $100, real GDP is $50, and the GDP deflator is 200. 
A)  nominal GDP is $50, real GDP is $100, and the GDP deflator is 50. 
B)  nominal GDP is $50, real GDP is $100, and the GDP deflator is 200. 
C)  nominal GDP is $100, real GDP is $50, and the GDP deflator is 50. 
D)  nominal GDP is $100, real GDP is $50, and the GDP deflator is 200.

Question 18

Transactions involving items produced in the past, such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale, are

Accepted Answer

A)  included in current GDP because GDP measures the value of all goods and services sold in the current year. 
B)  included in current GDP but valued at their original prices. 
C)  not included in current GDP because it is difficult to determine their value. 
D)  not included in current GDP because GDP only measures the value of goods and services produced in the current year. 
A)  included in current GDP because GDP measures the value of all goods and services sold in the current year. 
B)  included in current GDP but valued at their original prices. 
C)  not included in current GDP because it is difficult to determine their value. 
D)  not included in current GDP because GDP only measures the value of goods and services produced in the current year.

Question 19

The residents of country A earn $500 million of income from abroad. Residents of other countries earn $200 million in country A. These earnings are accounted for in country A's

Accepted Answer

A)  GNP which is larger than GDP in country A. 
B)  GNP which is smaller than GDP in country A. 
C)  GDP which is larger than GNP in country A. 
D)  GDP which is smaller than GNP in country A. 
A)  GNP which is larger than GDP in country A. 
B)  GNP which is smaller than GDP in country A. 
C)  GDP which is larger than GNP in country A. 
D)  GDP which is smaller than GNP in country A.

Question 20

Changes in real GDP reflect

Accepted Answer

A)  only changes in prices. 
B)  only changes in the amounts being produced. 
C)  both changes in prices and changes in the amounts being produced. 
D)  neither changes in prices nor changes in the amounts being produced. 
A)  only changes in prices. 
B)  only changes in the amounts being produced. 
C)  both changes in prices and changes in the amounts being produced. 
D)  neither changes in prices nor changes in the amounts being produced.

Exam 15: Measuring a Nations Income

Which of the following is not included in U.S. GDP?

Income generated by a nation's domestic production

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?

How is net national product NNP) calculated?

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 imports in 2010?

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

Which of the following represents a transfer payment?

Figure 23-1. -Refer to Figure 23-1. Which of the following correctly identifies the flow of dollars?

Which of the following is not included in GDP?

Which of the following statements about GDP is correct?

U.S. GDP includes estimates of the value of items that are produced and consumed at home, such as housework and car maintenance.

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

Since it is counted as investment, why doesn't the purchase of earthmoving equipment from China by a U.S. corporation increase U.S. GDP?

If a U.S. company buys an electrical generator made in Japan by a Japanese firm, and the Japanese firm uses the payment to buy stocks issued by a U.S. company then

Transactions involving items produced in the past, such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale, are

The residents of country A earn $500 million of income from abroad. Residents of other countries earn $200 million in country A. These earnings are accounted for in country A's

Changes in real GDP reflect

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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