Question 1

In the economy of Talikastan in 2015, consumption was $5300, GDP was $8800, government purchases were $1800, imports were $600, and investment was $2000. What were Talikastan's exports in 2015?

Accepted Answer

A)   -$900
B)   -$600
C)   $200
D)   $300E) A) and C)
F) B) and D)

Question 2

List the four components of GDP.

Accepted Answer

consumption, investm...

Question 3

Which of the following statistics is usually regarded as the best single measure of a society's economic well­being?

Accepted Answer

A)   the unemployment rate
B)   the inflation rate
C)   gross domestic product
D)   the trade deficitE) C) and D)
F) B) and D)

Question 4

Table 23-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932. 
-Refer to Table 23-4. What was the growth rate of real GDP for 1930?

Accepted Answer

A)   -8.62%. Real GDP is a better gauge of economic well-being than nominal GDP.
B)   -8.62%. Nominal GDP is a better gauge of economic well-being than real GDP.
C)   -9.43%. Real GDP is a better gauge of economic well-being than nominal GDP.
D)   -9.43%. Nominal GDP is a better gauge of economic well-being than real GDP.E) B) and D)
F) A) and B)

Question 5

Typically in countries with lower levels of real GDP person, a smaller percentage of the population is literate.

Accepted Answer

A) True 
 B)False

Question 6

The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest?

Accepted Answer

A)   Argentina, Bolivia, Peru
B)   Argentina, Peru, Bolivia
C)   Bolivia, Argentina, Peru
D)   Peru, Bolivia, ArgentinaE) A) and C)
F) C) and D)

Question 7

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.E) C) and D)
F) B) and D)

Question 8

If a good produced this quarter goes into inventory, then it is included in this period's GDP. If it is sold in the next quarter, it will have no effect on GDP.

Accepted Answer

A) True 
 B)False

Question 9

Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2009,

Accepted Answer

A)   nominal GDP is $400, real GDP is $500, and the GDP deflator is 80.
B)   nominal GDP is $400, real GDP is $500, and the GDP deflator is 125.
C)   nominal GDP is $500, real GDP is $400, and the GDP deflator is 80.
D)   nominal GDP is $500, real GDP is $400, and the GDP deflator is 125.E) A) and B)
F) A) and C)

Question 10

When economists talk about growth in the economy, they measure that growth as the

Accepted Answer

A)   absolute change in nominal GDP from one period to another.
B)   percentage change in nominal GDP from one period to another.
C)   absolute change in real GDP from one period to another.
D)   percentage change in real GDP from one period to another.E) A) and C)
F) A) and D)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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 ReserveE) All of the above
F) A) and D)

Question 13

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 secondE) B) and D)
F) C) and D)

Question 14

Changes in the GDP deflator reflect only changes in the prices of goods and services.

Accepted Answer

A) True 
 B)False

Question 15

According to the circular-flow diagram, GDP

Accepted Answer

A)   can be computed as payments firms make to factors of production plus revenues they receive from the sales of goods and services.
B)   can be computed as the revenue firms receive from the sales of goods and services minus the payments they make to factors of production.
C)   can be computed as either the revenue firms receive from the sales of goods and services or as revenues they receive from the sales of goods and services.
D)   can be computed as the payments firms make to factors of production, but not as revenues they receive from the sales of goods and services.E) C) and D)
F) B) and D)

Question 16

Which of the following is not included in the investment component of GDP?

Accepted Answer

A)   The purchase of 100 shares of stock.
B)   The purchase of a $1000 bond.
C)   A firm's purchase of a used van to use for deliveries.
D)   None of the above are included in the investment component of GDP.E) C) and D)
F) A) and B)

Question 17

Which component of GDP includes spending on new structures and equipment?

Accepted Answer

The answer of Which component of GDP includes spending on...

Question 18

Which of the following correctly lists what is included in the consumption component of GDP?

Accepted Answer

A)   household purchases of services and household purchases of nondurable goods but not any household purchases of durable goods
B)   household purchases of nondurable goods and durable goods other than residential construction but not household purchases of services
C)   household purchases of services, nondurable goods, and all durable goods
D)   household purchases of services, nondurable goods, and durable goods other than residential constructionE) A) and D)
F) C) and D)

Question 19

Suppose an economy produces only cranberries and maple syrup. In 2010, 50 units of cranberries are sold at $20 per unit and 100 units of maple syrup are sold at $8 per unit. In 2009, the base year, the price of cranberries was $10 per unit and the price of maple syrup was $15 per unit. For 2010,

Accepted Answer

A)   nominal GDP is $1800, real GDP is $2000, and the GDP deflator is 90.
B)   nominal GDP is $1800, real GDP is $2000, and the GDP deflator is 111.1.
C)   nominal GDP is $2000, real GDP is $1800, and the GDP deflator is 90.
D)   nominal GDP is $2000, real GDP is $1800, and the GDP deflator is 111.1.E) C) and D)
F) B) and D)

Question 20

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.E) A) and B)
F) A) and C)

Exam 23: Measuring a Nations Income

When economists talk about growth in the economy, they measure that growth as the

Correct AnswerverifiedShow Answer

According to the circular-flow diagram, GDP

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Which component of GDP includes spending on new structures and equipment?

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Typically in countries with lower levels of real GDP person, a smaller percentage of the population is literate.

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Suppose an economy produces only cranberries and maple syrup. In 2010, 50 units of cranberries are sold at $20 per unit and 100 units of maple syrup are sold at $8 per unit. In 2009, the base year, the price of cranberries was $10 per unit and the price of maple syrup was $15 per unit. For 2010,

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In the economy of Talikastan in 2015, consumption was $5300, GDP was $8800, government purchases were $1800, imports were $600, and investment was $2000. What were Talikastan's exports in 2015?

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If a good produced this quarter goes into inventory, then it is included in this period's GDP. If it is sold in the next quarter, it will have no effect on GDP.

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Which of the following correctly lists what is included in the consumption component of GDP?

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Changes in the GDP deflator reflect only changes in the prices of goods and services.

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

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Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. What was the growth rate of real GDP for 1930?

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

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

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The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest?

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Which of the following statistics is usually regarded as the best single measure of a society's economic well­being?

Correct AnswerverifiedShow Answer

Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2009,

Correct AnswerverifiedShow Answer

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?

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Which of the following is not included in the investment component of GDP?

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List the four components of GDP.

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Which of the following statistics is usually regarded as the best single measure of a society's economic wellbeing?

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consumption, investm...
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