Question 1

An economy's income is the same as its expenditure because every transaction has a buyer and a seller.

Accepted Answer

A) True 
 B)False

Question 2

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

Accepted Answer

A) True 
 B)False

Question 3

If in some year real GDP was $5 trillion and the GDP deflator was 200, what was nominal GDP?

Accepted Answer

A)  $2.5 trillion. 
B)  $10 trillion. 
C)  $40 trillion. 
D)  $100 trillion. 
A)  $2.5 trillion. 
B)  $10 trillion. 
C)  $40 trillion. 
D)  $100 trillion.

Question 4

The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest?

Accepted Answer

A)  Ghana, Kenya, Tanzania 
B)  Ghana, Tanzania, Kenya 
C)  Kenya, Tanzania, Ghana 
D)  Kenya, Ghana, Tanzania 
A)  Ghana, Kenya, Tanzania 
B)  Ghana, Tanzania, Kenya 
C)  Kenya, Tanzania, Ghana 
D)  Kenya, Ghana, Tanzania

Question 5

Explain how GNP differs from GDP.

Accepted Answer

GNP includes income from a nat

Question 6

In a simple circular-flow diagram,

Accepted Answer

A)  households spend all of their income. 
B)  all goods and services are bought by households. 
C)  expenditures flow through the markets for goods and services, while income flows through the markets for the factors of production. 
D)  All of the above are correct. 
A)  households spend all of their income. 
B)  all goods and services are bought by households. 
C)  expenditures flow through the markets for goods and services, while income flows through the markets for the factors of production. 
D)  All of the above are correct.

Question 7

Grapes are considered intermediate goods

Accepted Answer

A)  whether the purchaser uses them to make wine to sell or eats them. 
B)  if the purchaser uses them to make wine to sell others but not if the purchaser eats them. 
C)  if the purchaser eats them, but not if the purchaser uses to them to make wine to sell. 
D)  None of the above is correct. 
A)  whether the purchaser uses them to make wine to sell or eats them. 
B)  if the purchaser uses them to make wine to sell others but not if the purchaser eats them. 
C)  if the purchaser eats them, but not if the purchaser uses to them to make wine to sell. 
D)  None of the above is correct.

Question 8

A farmer sells $25,000 worth of apples to individuals who take them home to eat, $50,000 worth of apples to a company that uses them all to produce cider, and $75,000 worth of apples to a grocery store that will sell them to households. How much of the farmer's sales will be included as apples in GDP?

Accepted Answer

A)  $25,000 
B)  $150,000 
C)  $100,000 
D)  $125,000 
A)  $25,000 
B)  $150,000 
C)  $100,000 
D)  $125,000

Question 9

Which of the following is not an example of a durable good?

Accepted Answer

A)  a refrigerator. 
B)  an automobile. 
C)  a business suit. 
D)  a furnace. 
A)  a refrigerator. 
B)  an automobile. 
C)  a business suit. 
D)  a furnace.

Question 10

Consider the following three items of spending by the government: i) the federal government pays a $500 unemployment benefit to an unemployed person; ii) the federal government makes a $2,000 salary payment to a Navy lieutenant; iii) the city of Bozeman, Montana makes a $10,000 payment to ABC Lighting Company for street lights in Bozeman. Which of these payments contributes directly to government purchases in the national income accounts?

Accepted Answer

A)  only item i) 
B)  only item ii) 
C)  only items i) and ii) 
D)  only items ii) and iii) 
A)  only item i) 
B)  only item ii) 
C)  only items i) and ii) 
D)  only items ii) and iii)

Question 11

If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then

Accepted Answer

A)  U.S. consumption increases, U.S. net exports decrease, and U.S. GDP decreases. 
B)  U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected. 
C)  U.S. consumption decreases, U.S. net exports increase, and U.S. GDP increases. 
D)  U.S. consumption decreases, U.S. net exports increase, and U.S. GDP is unaffected. 
A)  U.S. consumption increases, U.S. net exports decrease, and U.S. GDP decreases. 
B)  U.S. consumption increases, U.S. net exports decrease, and U.S. GDP is unaffected. 
C)  U.S. consumption decreases, U.S. net exports increase, and U.S. GDP increases. 
D)  U.S. consumption decreases, U.S. net exports increase, and U.S. GDP is unaffected.

Question 12

GDP per person tells us the income and expenditure of the

Accepted Answer

A)  richest person in the economy. 
B)  poorest person in the economy. 
C)  average person in the economy. 
D)  entire economy. 
A)  richest person in the economy. 
B)  poorest person in the economy. 
C)  average person in the economy. 
D)  entire economy.

Question 13

If foreign citizens earn less income in the U.S. than U.S. citizens earn in foreign countries,

Accepted Answer

A)  U.S. net factor payments from abroad are positive, and its GDP is larger than its GNP. 
B)  U.S. net factor payments from abroad are positive, and its GNP is larger than its GDP. 
C)  U.S. net factor payments from abroad are negative, and its GDP is larger than its GNP. 
D)  U.S. net factor payments from abroad are negative, and its GNP is larger than its GDP. 
A)  U.S. net factor payments from abroad are positive, and its GDP is larger than its GNP. 
B)  U.S. net factor payments from abroad are positive, and its GNP is larger than its GDP. 
C)  U.S. net factor payments from abroad are negative, and its GDP is larger than its GNP. 
D)  U.S. net factor payments from abroad are negative, and its GNP is larger than its GDP.

Question 14

Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house that could be rented for $21,000 a year. How much do these housing services contribute to GDP?

Accepted Answer

A)  $21,000 
B)  $28,000 
C)  $7,000 
D)  $14,000 
A)  $21,000 
B)  $28,000 
C)  $7,000 
D)  $14,000

Question 15

Table 23-11
The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009.
 
-Refer to Table 23-11.
What was the inflation rate for 2011? Show your work.

Accepted Answer

For 2010 the GDP Deflator was 112. Nomin

Question 16

Figure 23-2.  
-Refer to Figure 23-2. Identify the location for markets for factors of production and markets for goods and services.

Accepted Answer

X is markets for fac

Question 17

Sally purchased a log-splitter five years ago. This year, she purchases some new parts, gasoline, oil, and spends 2 hours repairing the log-splitter. Which of the following is included in this year's GDP?

Accepted Answer

A)  the amount she paid to buy the new parts 
B)  the amount she paid to buy new parts and gasoline 
C)  the amount she paid to buy new parts, gasoline, and oil. 
D)  the amount she paid to buy new parts, gasoline, oil, and the market value of the 2 hours spent to repair the log-splitter. 
A)  the amount she paid to buy the new parts 
B)  the amount she paid to buy new parts and gasoline 
C)  the amount she paid to buy new parts, gasoline, and oil. 
D)  the amount she paid to buy new parts, gasoline, oil, and the market value of the 2 hours spent to repair the log-splitter.

Question 18

How does U.S. gross domestic product GDP) differ from U.S. gross national product GNP)?

Accepted Answer

A)  GNP = GDP - losses from depreciation 
B)  GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S. 
C)  GNP = GDP + transfer payments to households + - indirect sales taxes 
D)  GNP = GDP - depreciation - retained earnings 
A)  GNP = GDP - losses from depreciation 
B)  GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S. 
C)  GNP = GDP + transfer payments to households + - indirect sales taxes 
D)  GNP = GDP - depreciation - retained earnings

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

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 1930?

Accepted Answer

A)  -8.62%. Real GDP is a better gauge of economic well-being than nominal GDP. 
B)  -8.62%. Nominal GDP is a better gauge of economic well-being than real GDP. 
C)  -9.43%. Real GDP is a better gauge of economic well-being than nominal GDP. 
D)  -9.43%. Nominal GDP is a better gauge of economic well-being than real GDP. 
A)  -8.62%. Real GDP is a better gauge of economic well-being than nominal GDP. 
B)  -8.62%. Nominal GDP is a better gauge of economic well-being than real GDP. 
C)  -9.43%. Real GDP is a better gauge of economic well-being than nominal GDP. 
D)  -9.43%. Nominal GDP is a better gauge of economic well-being than real GDP.

Exam 15: Measuring a Nations Income

An economy's income is the same as its expenditure because every transaction has a buyer and a seller.

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

If in some year real GDP was $5 trillion and the GDP deflator was 200, what was nominal GDP?

The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest?

Explain how GNP differs from GDP.

In a simple circular-flow diagram,

Grapes are considered intermediate goods

Which of the following is not an example of a durable good?

If a U.S. citizen buys a dress made in Nepal by a Nepalese firm, then

GDP per person tells us the income and expenditure of the

If foreign citizens earn less income in the U.S. than U.S. citizens earn in foreign countries,

Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house that could be rented for $21,000 a year. How much do these housing services contribute to GDP?

Table 23-11 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. -Refer to Table 23-11. What was the inflation rate for 2011? Show your work.

Figure 23-2. -Refer to Figure 23-2. Identify the location for markets for factors of production and markets for goods and services.

Sally purchased a log-splitter five years ago. This year, she purchases some new parts, gasoline, oil, and spends 2 hours repairing the log-splitter. Which of the following is included in this year's GDP?

How does U.S. gross domestic product GDP) differ from U.S. gross national product GNP)?

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

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 1930?

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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