Question 1

Changes in nominal 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 2

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 3

In the economy of Talikastan in 2015, consumption was $3000, exports were $400, GDP was $5000, imports were $500, and investment was $1400. What were Talikastan's government purchases in 2015?

Accepted Answer

A)  $60 
B)  $500 
C)  $700 
D)  $1500

Question 4

A Mexican oil field service company works on oil rigs in the U.S. The value of the company's services produced by Mexican citizens and the equipment they own is included in

Accepted Answer

A)  Mexican GNP and U.S. GNP. 
B)  Mexican GDP and U.S. GNP. 
C)  Mexican GNP and U.S. GDP. 
D)  Mexican GDP and U.S. GDP.

Question 5

Table 23-2
The table below contains data for country A for the year 2010.
 
-Refer to Table 23-2. What were country A's exports in 2010?

Accepted Answer

A)  -$32 
B)  $32 
C)  $88 
D)  $120

Question 6

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.

Question 7

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 8

Table 23-7
The table below contains data for the country of Togogo. The base year is 1974.
 
-Refer to Table 23-7. From 1976 to 1977,

Accepted Answer

A)  inflation was 33.3% and output grew at a rate of 20%. 
B)  inflation was 33.3% and output grew at a rate of 60%. 
C)  inflation was 50% and output grew at a rate of 20%. 
D)  inflation was 50% and output grew at a rate of 60%.

Question 9

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013.
 
-Refer to Table 23-6. In 2010, this country's real GDP was

Accepted Answer

A)  $620. 
B)  $260. 
C)  $400. 
D)  $630.

Question 10

Which of the following is a way to compute GDP?

Accepted Answer

A)  add up the wages paid to all workers 
B)  add up the quantities of all final goods and services 
C)  add up the market values of all final goods and services 
D)  add up the difference between the market values of all final goods and services and then subtract the costs of producing those goods and services

Question 11

The underground economy

Accepted Answer

A)  excludes the amount of criminal activity in an economy. 
B)  is larger for developed nations than developing nations when measured as a percent of GDP. 
C)  includes otherwise legal transactions that go unreported or unrecorded. 
D)  in the United States is insignificant is size when compared to the official measure of GDP.

Question 12

Calculate GDP for an economy with exports of $5 trillion, investment of $1.5 trillion, consumption spending of $11 trillion, imports of $6 trillion, and government purchases of $3 trillion.

Accepted Answer

The answer of Calculate GDP for an economy with exports...

Question 13

GDP excludes most of two types of production. List one.

Accepted Answer

The answer of GDP excludes most of two types of...

Question 14

Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000. In 2014 she sold the house for $260,000. Which of the following statements is correct regarding the sale of the house?

Accepted Answer

A)  The 2014 sale increased 2014 GDP by $260,000 and had no effect on 2011 GDP. 
B)  The 2014 sale increased 2014 GDP by $20,000 and had no effect on 2011 GDP. 
C)  The 2014 sale increased 2014 GDP by $260,000; furthermore, the 2014 sale caused 2011 GDP to be revised upward by $20,000. 
D)  The 2014 sale affected neither 2014 GDP nor 2011 GDP.

Question 15

Changes in the GDP deflator 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 16

An identity is an equation that

Accepted Answer

A)  describes an equilibrium. 
B)  pertains to macroeconomics, not to microeconomics. 
C)  must be true because of how the variables in the equation are defined. 
D)  involves final goods, not intermediate goods.

Question 17

Macroeconomic statistics include GDP, the inflation rate, the unemployment rate, retail sales, and the trade deficit.

Accepted Answer

A) True 
 B)False

Question 18

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

Accepted Answer

A)  caused measured GDP to fall. 
B)  not caused any change in measured GDP. 
C)  caused measured GDP to rise. 
D)  probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.

Question 19

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

Accepted Answer