Question 1

Suppose an economy produces only cheese and fish. In 2010, 20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each. In 2009, the base year, the price of cheese was $10 per unit and the price of fish was $75 per unit. For 2010,

Accepted Answer

A) nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5. 
B) nominal GDP is $500, real GDP is $800, and the GDP deflator is 160. 
C) nominal GDP is $800, real GDP is $500, and the GDP deflator is 62.5. 
D) nominal GDP is $800, real GDP is $500, and the GDP deflator is 160.

Question 2

​GDP and GNP are identical when

Accepted Answer

A) exports and imports exactly balance. 
B) ​all domestic production is by domestically owned producers and no foreign production is carried out by domestic producers. 
C) ​production by domestic producers in other countries is greater than production by foreign producers domestically. 
D) ​there are no taxes.

Question 3

The investment component of GDP refers to financial investment in stocks and bonds.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) $1810 
B) $2013 
C) $2315 
D) $3131

Question 5

Suppose that over the last twenty-five years a country's nominal GDP grew to three times its former size. In the meantime, population grew by 40 percent and prices rose by 100 percent. What happened to real GDP per person?

Accepted Answer

A) It more than doubled. 
B) It increased, but it less than doubled. 
C) It was unchanged. 
D) It decreased.

Question 6

The government's purchases of goods but not its purchases of services are included in GDP.

Accepted Answer

A) True 
 B)False

Question 7

In the economy of Talikastan in 2015, consumption was 75% of GDP, government purchases were $200, imports were $50 and 125% of the value of exports, investment was one-sixth of the value of consumption. What was Talikastan's GDP in 2015?

Accepted Answer

A) $218 
B) $2500 
C) $1520 
D) $2100

Question 8

For the economy as a whole, how does income compare to expenditures? Explain.

Accepted Answer

The answer of For the economy as a whole, how...

Question 9

Which of the following items is included in GDP?

Accepted Answer

A) the sale of stocks and bonds 
B) the sale of used goods 
C) the sale of services such as those performed by a doctor 
D) All of the above are included in GDP.

Question 10

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Accepted Answer

The answer of A farmer sells sugar to a candy...

Question 11

Table 23-10
A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 .
Prices and Quantities 
-Refer to Table 23-10. What was this country's real GDP in 2016?

Accepted Answer

A) $10,575 
B) $11,250 
C) $10,950 
D) $12,550

Question 12

During the third quarter of this year a firm produces consumer goods and adds some of those goods to its inventory. During the fourth quarter of this year, the firm sells the goods at a retail outlet, with the result that the value of its inventory at the end of the fourth quarter is smaller than the value of its inventory at the end of the third quarter. These actions affect which component(s) of fourth-quarter GDP?

Accepted Answer

A) they increase consumption and have no affect on investment 
B) they increase consumption and decrease investment 
C) they have no affect on either consumption or investment 
D) they have no affect on consumption and decrease investment

Question 13

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

Accepted Answer

A) spending on education 
B) the purchase of stocks and bonds 
C) the purchase of a new house 
D) the purchase of durable goods such as stoves and washing machines

Question 14

When an Egyptian firm purchases a cement mixer from Slovakia,

Accepted Answer

A) Egyptian investment does not change, Egyptian net exports decrease, Egyptian GDP decreases, Slovakian net exports increase, and Slovakian GDP increases. 
B) Egyptian investment increases, Egyptian net exports decrease, Egyptian GDP is unaffected, Slovakian net exports increase, and Slovakian GDP increases. 
C) Egyptian investment decreases, Egyptian net exports increase, Egyptian GDP is unaffected, Slovakian net exports decrease, and Slovakian GDP decreases. 
D) Egyptian investment increases, Egyptian net exports do not change, Egyptian GDP increases, Slovakian net exports do not change, and Slovakian GDP is unaffected.

Question 15

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Accepted Answer

The answer of U.S. real GDP is substantially higher today...

Question 16

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

Question 17

A German citizen buys an automobile produced in the United States by a Japanese company. As a result,

Accepted Answer

A) U.S. net exports increase, U.S. GDP is unaffected, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. 
B) U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, German GNP is unaffected, and German GDP decreases. 
C) U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected. 
D) U.S. net exports and GDP are unaffected, Japanese GNP increases, and German net exports, GNP, and GDP decrease.

Question 18

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

Question 19

Figure 23-2. 
-Refer to Figure 23-2. List the locations associated with the flow of inputs and outputs.

Accepted Answer

The answer of Figure 23-2. 
-Refer to Figure 23-2. List...

Question 20

Total income from the domestic production of final goods and services equals

Accepted Answer

A) only household expenditures on these goods and services 
B) only household and business expenditures on these goods and services. 
C) only household and government expenditures on these goods and services. 
D) the expenditures on these goods and services by whoever buys them.

Exam 23: Measuring a Nation S Income