Question 1

Gross domestic product includes all

Accepted Answer

A)  legal and illegal final goods, but it excludes all legal and illegal final services. 
B)  legal and illegal final goods and all legal and illegal final services. 
C)  legal final goods and services, but it excludes illegal final goods and services. 
D)  legal and illegal final goods and legal final services, but it excludes illegal final services.

Question 2

Which of the following is always measured in prices from a base-year?

Accepted Answer

A)  both nominal and real GDP. 
B)  nominal but not real GDP. 
C)  real but not nominal GDP. 
D)  neither nominal nor real GDP.

Question 3

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.

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 GDP in 2010?

Accepted Answer

A)  $4623 
B)  $5731 
C)  $6037 
D)  $6839

Question 5

In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was $7500, imports were $200, and investment was $1000. What were Talikastan's government purchases in 2015?

Accepted Answer

A)  $1200 
B)  $1900 
C)  $2500 
D)  $4500

Question 6

Real GDP is the yearly production of final goods and services valued at

Accepted Answer

A)  current prices. 
B)  constant prices. 
C)  expected future prices. 
D)  the ratio of current prices to constant prices.

Question 7

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.

Question 8

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.

Question 9

For an economy as a whole, income must equal expenditure because

Accepted Answer

A)  the number of firms is equal to the number of households in an economy. 
B)  individuals can only spend what they earn each period. 
C)  every dollar of spending by some buyer is a dollar of income for some seller. 
D)  every dollar of saving by some consumer is a dollar of spending by some other consumer.

Question 10

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

Accepted Answer

A)  The value of the goods and services produced by the restaurant is included in both French GDP and U.S. GDP. 
B)  The value added by American workers and equipment in France is included in U.S. GDP and the value added by French workers and equipment is added to French GDP. 
C)  The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP. 
D)  The value of the goods and services produced by the restaurant is included in U.S. GDP, but not in French GDP.

Question 11

Table 23-5
The country of Caspir produces only cereal and milk. 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 23-5. In 2015, this country's

Accepted Answer

A)  nominal GDP was greater than real GDP, and the GDP deflator was greater than 100. 
B)  nominal GDP was equal to real GDP, and the GDP deflator was equal to 100%. 
C)  nominal GDP was less than real GDP, and the GDP deflator was less than 100. 
D)  nominal GDP was equal to real GDP, and the GDP deflator was equal to 100.

Question 12

The basic tools of supply and demand are central to microeconomic analysis but are of little use to macroeconomics.

Accepted Answer

A) True 
 B)False

Question 13

Which government entity computes U.S. GDP every three months?

Accepted Answer

A)  the Council of Economic Advisers 
B)  the Department of Commerce 
C)  the Department of Treasury 
D)  the Federal Reserve

Question 14

Table 23-12
A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year.
 
-Refer to Table 23-12. Calculate the rate of inflation for 2012.

Accepted Answer

The answer of Table 23-12
A country produces only ice cream...

Question 15

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

Accepted Answer

A) True 
 B)False

Question 16

Foreign countries buy $1.2 trillion of U.S. goods and services. U.S. residents purchase $1.8 trillion of foreign goods and services. What is net exports?

Accepted Answer

The answer of Foreign countries buy $1.2 trillion of U.S....

Question 17

In 2012, U.S. net exports were

Accepted Answer

A)  positive and about 3.5 percent the size of GDP. 
B)  positive and about 6 percent the size of GDP. 
C)  negative and about 3.5 percent the size of GDP. 
D)  negative and about 6 percent the size of GDP.

Question 18

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.

Question 19

Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?

Accepted Answer

A)  Sam's and Ellen's. 
B)  Sam's but not Ellen's. 
C)  Ellen's but not Sam's. 
D)  Neither Sam's nor Ellen's.

Question 20

Table 23-5
The country of Caspir produces only cereal and milk. 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 23-5. In 2016, this country's

Accepted Answer

A)  real GDP was $880, and the GDP deflator was 111.4. 
B)  real GDP was $780, and the GDP deflator was 88.6. 
C)  real GDP was $880, and the GDP deflator was 112.8. 
D)  real GDP was $780, and the GDP deflator was 112.8.

Exam 5: Measuring a Nations Income