Question 1

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Accepted Answer

A)  would be included in GDP because they are part of government purchases. 
B)  would be included in GDP because they are part of investment expenditures. 
C)  would not be included in GDP because they are transfer payments. 
D)  would not be included in GDP because the government raises taxes to pay for them. 
A)  would be included in GDP because they are part of government purchases. 
B)  would be included in GDP because they are part of investment expenditures. 
C)  would not be included in GDP because they are transfer payments. 
D)  would not be included in GDP because the government raises taxes to pay for them.

Question 2

In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200. What was Talikastan's GDP in 2015?

Accepted Answer

A)  $6200 
B)  $6400 
C)  $7000 
D)  $8200 
A)  $6200 
B)  $6400 
C)  $7000 
D)  $8200

Question 3

GDP adds together many different kinds of products into a single measure of the value of economic activity by using market prices.

Accepted Answer

A) True 
 B)False

Question 4

In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?

Accepted Answer

A)  -$75 
B)  -$225 
C)  $225 
D)  $75 
A)  -$75 
B)  -$225 
C)  $225 
D)  $75

Question 5

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Accepted Answer

A)  80, and this indicates that the price level has decreased by 20 percent since the base year. 
B)  80, and this indicates that the price level has increased by 80 percent since the base year. 
C)  125, and this indicates that the price level has increased by 25 percent since the base year. 
D)  125, and this indicates that the price level has increased by 125 percent since the base year. 
A)  80, and this indicates that the price level has decreased by 20 percent since the base year. 
B)  80, and this indicates that the price level has increased by 80 percent since the base year. 
C)  125, and this indicates that the price level has increased by 25 percent since the base year. 
D)  125, and this indicates that the price level has increased by 125 percent since the base year.

Question 6

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

Accepted Answer

The GDP Deflator = 1

Question 7

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $8000, government purchases were $1200, and imports were $600. What was Talikastan's investment in 2015?

Accepted Answer

A)  $3200 
B)  $5600 
C)  $2000 
D)  $4400 
A)  $3200 
B)  $5600 
C)  $2000 
D)  $4400

Question 8

Additions to inventory subtract from GDP, and when the goods in inventory are sold, the reductions in inventory add to GDP.

Accepted Answer

A) True 
 B)False

Question 9

Java Hut, a U.S. coffee retailer, buys $10 million worth of coffee beans from Colombia. It also pays $5 million for paper cups and utilities, all produced in the U.S. It sells the coffee it produces using the above inputs to U.S. consumers for $50 million. Overall how do these expenditure affect net exports? How do these expenditures effect U.S. consumption?

Accepted Answer

Net exports are $10 million le

Question 10

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following correctly orders U.S. income measures from largest to smallest?

Accepted Answer

A)  disposable personal income, gross national product, national income, net national product, personal income 
B)  personal income, net national product, national income, gross national product, disposable personal income 
C)  gross national product, net national product, national income, personal income, disposable personal income 
D)  disposable personal income, personal income, national income, net national product, gross national product 
A)  disposable personal income, gross national product, national income, net national product, personal income 
B)  personal income, net national product, national income, gross national product, disposable personal income 
C)  gross national product, net national product, national income, personal income, disposable personal income 
D)  disposable personal income, personal income, national income, net national product, gross national product

Question 12

If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

Accepted Answer

A)  83.33, and this indicates that the price level has decreased by 16.67 percent since the base year. 
B)  83.33, and this indicates that the price level has increased by 83.33 percent since the base year. 
C)  120, and this indicates that the price level has increased by 20 percent since the base year. 
D)  120, and this indicates that the price level has increased by 120 percent since the base year. 
A)  83.33, and this indicates that the price level has decreased by 16.67 percent since the base year. 
B)  83.33, and this indicates that the price level has increased by 83.33 percent since the base year. 
C)  120, and this indicates that the price level has increased by 20 percent since the base year. 
D)  120, and this indicates that the price level has increased by 120 percent since the base year.

Question 13

If total spending rises from one year to the next, then

Accepted Answer

A)  the economy must be producing a larger output of goods and services. 
B)  goods and services must be selling at higher prices. 
C)  either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both. 
D)  employment or productivity must be rising. 
A)  the economy must be producing a larger output of goods and services. 
B)  goods and services must be selling at higher prices. 
C)  either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both. 
D)  employment or productivity must be rising.

Question 14

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

Accepted Answer

Real income is nominal income adjusted f

Question 15

In 2012, U.S. GDP was almost

Accepted Answer

A)  $16 trillion. 
B)  $12 trillion. 
C)  $15 trillion. 
D)  $14 trillion. 
A)  $16 trillion. 
B)  $12 trillion. 
C)  $15 trillion. 
D)  $14 trillion.

Question 16

Which of the following is the correct formula for the GDP deflator?

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Question 17

Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread. Wholesome Wheat sells the bread to the public for $22.00. Taking these two transactions into account, what is the effect on GDP?

Accepted Answer

A)  GDP increases by $10.00 
B)  GDP increases by $12.00 
C)  GDP increases by $22.00 
D)  GDP increases by $32.00 
A)  GDP increases by $10.00 
B)  GDP increases by $12.00 
C)  GDP increases by $22.00 
D)  GDP increases by $32.00

Question 18

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Accepted Answer

A)  Country A because it had the higher nominal GDP per person. 
B)  Country B because it had the higher nominal GDP per person. 
C)  Country A because it had the higher real GDP per person. 
D)  Country B because it had the higher real GDP per person. 
A)  Country A because it had the higher nominal GDP per person. 
B)  Country B because it had the higher nominal GDP per person. 
C)  Country A because it had the higher real GDP per person. 
D)  Country B because it had the higher real GDP per person.

Question 19

Alexandria, a British citizen, owns and manages a fish and chips shop in Washington, D.C.
She buys fresh food produced by U.S. workers, pays utilities to a U.S. company, and employs only U.S. citizens. What part, if any, of the restaurant's production is included in U.S. GDP? What part, if any, of the restaurant's production is included in U.S. GNP?

Accepted Answer

All of the output is included

Question 20

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

Accepted Answer

A) True 
 B)False

Exam 15: Measuring a Nations Income

To encourage formation of small businesses, the government could provide subsidies; these subsidies

In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200. What was Talikastan's GDP in 2015?

GDP adds together many different kinds of products into a single measure of the value of economic activity by using market prices.

In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $8000, government purchases were $1200, and imports were $600. What was Talikastan's investment in 2015?

Additions to inventory subtract from GDP, and when the goods in inventory are sold, the reductions in inventory add to GDP.

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Which of the following correctly orders U.S. income measures from largest to smallest?

If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

If total spending rises from one year to the next, then

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

In 2012, U.S. GDP was almost

Which of the following is the correct formula for the GDP deflator?

Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread. Wholesome Wheat sells the bread to the public for $22.00. Taking these two transactions into account, what is the effect on GDP?

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

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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