Question 1

In early 2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Accepted Answer

A)   the price of the house, the cost of remodeling materials, the increase in rental value
B)   the price of the house and the cost of remodeling materials, but not the increase in rental value
C)   the costs of the remodeling materials and the increase in rent, but not the price of the house
D)   None of the above are correct.E) A) and D)
F) C) and D)

Question 2

For monitoring fluctuations in the national economy, which measure of income is best?

Accepted Answer

A)   GDP
B)   GNP
C)   NNP
D)   It does not matter very much which measure we use.E) C) and D)
F) A) and B)

Question 3

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

Accepted Answer

Real income is nominal income adjusted f...

Question 4

Real GDP will increase

Accepted Answer

A)   only when prices increase.
B)   only when output increases.
C)   when prices increase or output increases.
D)   All of the above are correct.E) All of the above
F) B) and D)

Question 5

If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator?

Accepted Answer

A)   87.5.
B)   114.3.
C)   400.
D)   896.E) B) and C)
F) A) and C)

Question 6

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

Accepted Answer

A)   Japan, Germany, United States
B)   Japan, United States, Germany
C)   Germany, United States, Japan
D)   United States, Japan, GermanyE) A) and C)
F) B) and D)

Question 7

If real GDP doubles and the GDP deflator doubles, then nominal GDP

Accepted Answer

A)   remains constant.
B)   doubles.
C)   triples.
D)   quadruples.E) A) and C)
F) B) and C)

Question 8

In the circular flow diagram what are the three types of payments from firms to factors of production? Is the sum of these payments greater than, less than, or equal to GDP?

Accepted Answer

Wages, rents, and pr...

Question 9

Which of the following transactions would be included in GDP for 2015?

Accepted Answer

A)   In February 2015, Amanda sells a 2009 Hyundai to Isabella.
B)   In March 2015, Amanda buys a ticket to visit a zoo in Florida. She visits the zoo in February 2016.
C)   In November 2015, Isabella eats onions that she harvested from her backyard garden in October 2015.
D)   All of the above are correct.E) A) and D)
F) B) and D)

Question 10

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

Question 11

Which of the following examples of household spending is categorized as investment rather than consumption?

Accepted Answer

A)   expenditures on durable goods such as automobiles and refrigerators
B)   expenditures on intangibles items such as medical care
C)   expenditures on new housing
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 12

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 2013, this country's GDP deflator was

Accepted Answer

A)   1.0.
B)   100.0.
C)   171.4.
D)   240.0.E) None of the above
F) C) and D)

Question 13

A U.S. citizen buys a tea kettle manufactured in China by a company that is owned and operated by U.S citizens. In which of the following components of U.S. GDP is this transaction accounted for?

Accepted Answer

A)   consumption and imports
B)   consumption but not imports
C)   imports but not consumption
D)   neither consumption nor importsE) None of the above
F) B) and C)

Question 14

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Accepted Answer

A)   U.S. consumption falls by $500, U.S. net exports decline by $500, and U.S. GDP declines by $1000.
B)   U.S. consumption does not change, U.S. net exports decline by $500, and U.S. GDP declines by $500.
C)   U.S. consumption increases by $500, U.S. net exports remain the same, and U.S. GDP increases by $500.
D)   U.S. consumption increases by $500, U.S. net exports decline by $500, and U.S. GDP remains the same.E) C) and D)
F) B) and C)

Question 15

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Accepted Answer

A)   saving per person.
B)   GDP per person.
C)   government expenditures per person.
D)   investment per business firm.E) C) and D)
F) A) and C)

Question 16

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

Question 17

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 18

If an economy's GDP falls, then it must be the case that the economy's

Accepted Answer

A)   income falls and saving rises.
B)   income and saving both fall.
C)   income falls and expenditure rises.
D)   income and expenditure both fall.E) B) and C)
F) A) and D)

Question 19

A statistical discrepancy

Accepted Answer

A)   exists because data sources are not perfect, so measures of expenditures and income are not equal.
B)   insures that GDP will approximately equal GNP.
C)   explains the close association between GDP and quality of life measures such as literacy and life expectancy.
D)   explains the inadequacy of GDP in capturing the value of leisure and the value of a clean environment.E) C) and D)
F) B) and D)

Question 20

Calculate GDP for a country with investment of $2 trillion, government purchases of $3 trillion, capital depreciation of $1.5 trillion, consumption of $10 trillion, exports of $3.4 trillion, and imports of $3.9 trillion.

Accepted Answer

The answer of Calculate GDP for a country with investment...

Exam 10: Measuring a Nations Income

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 2013, this country's GDP deflator was

Correct AnswerverifiedShow Answer

Which of the following examples of household spending is categorized as investment rather than consumption?

Correct AnswerverifiedShow Answer

In early 2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Correct AnswerverifiedShow Answer

Which of the following transactions would be included in GDP for 2015?

Correct AnswerverifiedShow Answer

A statistical discrepancy

Correct AnswerverifiedShow Answer

Real GDP will increase

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the circular flow diagram what are the three types of payments from firms to factors of production? Is the sum of these payments greater than, less than, or equal to GDP?

Correct AnswerverifiedWages, rents, and pr...View AnswerShow Answer

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

Correct AnswerverifiedReal income is nominal income adjusted f...View AnswerShow Answer

For monitoring fluctuations in the national economy, which measure of income is best?

Correct AnswerverifiedShow Answer

If real GDP doubles and the GDP deflator doubles, then nominal GDP

Correct AnswerverifiedShow Answer

A U.S. citizen buys a tea kettle manufactured in China by a company that is owned and operated by U.S citizens. In which of the following components of U.S. GDP is this transaction accounted for?

Correct AnswerverifiedShow Answer

If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator?

Correct AnswerverifiedShow Answer

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Correct AnswerverifiedShow Answer

Calculate GDP for a country with investment of $2 trillion, government purchases of $3 trillion, capital depreciation of $1.5 trillion, consumption of $10 trillion, exports of $3.4 trillion, and imports of $3.9 trillion.

Correct AnswerverifiedShow Answer

An identity is an equation that

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

If an economy's GDP falls, then it must be the case that the economy's

Correct AnswerverifiedShow Answer

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Wages, rents, and pr...
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Real income is nominal income adjusted f...
View Answer

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