Question 1

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 2

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

Accepted Answer

A) capital 
B) consumption 
C) investment 
D) costs

Question 3

Much of macroeconomics attempts to explain

Accepted Answer

A) changes in the price of oil and gasoline. 
B) long-run growth and short-run fluctuations in real GDP. 
C) changes in the growth rate of state government spending. 
D) changes in the prices and quantities of individual goods and services.

Question 4

Both the value of hamburgers sold by a restaurant and the value of the beef it used to make these hamburgers are included in GDP.

Accepted Answer

A) True 
 B)False

Question 5

Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2008, Quality Motors produced $25 million worth of automobiles and sold $12 million in the U.S. and $13 million in Mexico. In addition, it sold $2 million from the previous year's inventory in the U.S. The transactions just described contribute how much to U.S. GDP for 2008?

Accepted Answer

A) $12 million 
B) $14 million 
C) $25 million 
D) $27 million

Question 6

In the economy of Ukzten in 2010, consumption was $4000, exports were $800, GDP was $9500, imports were $200, and investment was $1000. What were Ukzten's government purchases in 2010?

Accepted Answer

A) $3700 
B) $3900 
C) $5100 
D) $5500

Question 7

If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the consumption component of U.S. GDP and the net exports component of U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 8

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) is (are) GDP higher?

Accepted Answer

A) the first and the second 
B) the first but not the second 
C) the second but not the first 
D) neither the first nor the second

Question 9

If nominal GDP is $10 trillion and real GDP is $12 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.

Question 10

Table 10-7
The table below contains data for the country of Togogo. The base year is 1974. $$\begin{array} { c c c } 
\text { Year } & \begin{array} { c } 
\text { Nomintal } \
\text { GDP }
\end{array} & \begin{array} { c } 
\text { CDP } \
\text { Deflatar }
\end{array} \
\hline 1974 & \mathbf { \$ 20 0 0 } & 100 \
1975 & \$ 3000 & 120 \
1976 & \mathbf { \$37 5 0 } & 150 \
1977 & \mathbf { \$ 6 0 0 0 } & 200
\end{array}$$
-Refer to Table 10-7. From 1975 to 1976,

Accepted Answer

A) inflation was 25% and output did not grow. 
B) inflation was 25% and output grew. 
C) inflation was 50% and output did not grow. 
D) inflation was 50% and output grew.

Question 11

If real GDP and the GDP deflator both rise, then it must be that nominal GDP rose.

Accepted Answer

A) True 
 B)False

Question 12

Recessions are associated with lower incomes, rising unemployment, and falling profits.

Accepted Answer

A) True 
 B)False

Question 13

John buys a used car for $5,400 and spends $600 on new parts, made in the U.S., to fix the car. The end result of these two transactions is

Accepted Answer

A) U.S. consumption purchases increase by $5,400 and U.S. GDP increases by $5,400. 
B) U.S. consumption purchases increase by $6,000 and U.S. GDP increases by $6,000. 
C) U.S. consumption purchases increase by $600 and U.S. GDP increases by $600. 
D) U.S. consumption purchases increase by $600 and U.S. GDP increases by $6,000.

Question 14

When economists refer to intangible items, they are referring to such things as

Accepted Answer

A) illegal goods, and the value of such items is included in GDP. 
B) illegal goods, and the value of such items is excluded from GDP. 
C) hair styling and dental care, and the value of such items is included in GDP. 
D) hair styling and dental care, and the value of such items is excluded from GDP.

Question 15

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

Accepted Answer

A) $500 
B) $700 
C) $1200 
D) $1700

Question 16

Between 1929 and 1933, NNP measured in current prices fell from $96 billion to $48 billion. Over the same period, the relevant price index fell from 100 to 75.
a.What was the percentage decline in nominal NNP from 1929 to1933?
b.What was the percentage decline in real NNP from 1929 to 1933? Show your work.

Accepted Answer

The answer of Between 1929 and 1933, NNP measured in...

Question 17

Because every transaction has a buyer and a seller,

Accepted Answer

A) GDP is more closely associated with an economy's income than it is with an economy's expenditure. 
B) every transaction contributes equally to an economy's income and to its expenditure. 
C) the number of firms must be equal to the number of households in a simple circular-flow diagram. 
D) firms' profits are necessarily zero in a simple circular-flow diagram.

Question 18

A good is produced by a firm in 2010, added to the firm's inventory in 2010, and sold to a household in 2011. It follows that

Accepted Answer

A) the value of the good is added to the investment category of 2010 GDP, added to the consumption category of 2011 GDP, and subtracted from the investment category of 2011 GDP. 
B) the value of the good is added to the investment category of 2010 GDP, added to the consumption category of 2011 GDP, and not included in the investment category of 2011 GDP. 
C) the value of the good is added to the investment category of 2010 GDP, subtracted from the consumption category of 2011 GDP, and not included in the investment category of 2011 GDP. 
D) the value of the good is added to the investment category of 2010 GDP, subtracted from the consumption category of 2011 GDP, and added to the investment category of 2011 GDP.

Question 19

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Accepted Answer

A) longer life expectancy and a lower percentage of the population that is literate. 
B) longer life expectancy and a higher percentage of the population that is literate. 
C) very nearly the same life expectancy and a lower percentage of the population that is literate. 
D) very nearly the same life expectancy and a higher percentage of the population that is literate.

Question 20

Gross domestic product measures

Accepted Answer

A) income and expenditures. 
B) income but not expenditures. 
C) expenditures but not income. 
D) neither income nor expenditures.

Exam 10: Measuring a Nations Income

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

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

Much of macroeconomics attempts to explain

Both the value of hamburgers sold by a restaurant and the value of the beef it used to make these hamburgers are included in GDP.

In the economy of Ukzten in 2010, consumption was $4000, exports were $800, GDP was $9500, imports were $200, and investment was $1000. What were Ukzten's government purchases in 2010?

If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the consumption component of U.S. GDP and the net exports component of U.S. GDP.

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarter(s) is (are) GDP higher?

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

If real GDP and the GDP deflator both rise, then it must be that nominal GDP rose.

Recessions are associated with lower incomes, rising unemployment, and falling profits.

John buys a used car for $5,400 and spends $600 on new parts, made in the U.S., to fix the car. The end result of these two transactions is

When economists refer to intangible items, they are referring to such things as

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

Because every transaction has a buyer and a seller,

A good is produced by a firm in 2010, added to the firm's inventory in 2010, and sold to a household in 2011. It follows that

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Gross domestic product measures