Question 1

An American retailer purchased 100 pairs of shoes from a company in Mexico in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016. In which quarter(s)  does(do)  the value of the shoes add to U.S. GDP?

Accepted Answer

A)   the second and third quarters
B)   the second quarter but not the third quarter
C)   the third but not the second quarter
D)   neither the second nor the third quarterE) A) and B)
F) B) and D)

Question 2

In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?

Accepted Answer

A)   -$75
B)   -$225
C)   $225
D)   $75E) A) and B)
F) C) and D)

Question 3

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 4

A transfer payment is a payment made by

Accepted Answer

A)   consumers, but not in exchange for a tangible product.
B)   firms, but not in exchange for capital equipment.
C)   foreigners, but not in exchange for a domestically-produced good or service.
D)   government, but not in exchange for a currently produced good or service.E) A) and B)
F) B) and D)

Question 5

Which of the following statements about GDP is correct?

Accepted Answer

A)   GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.
B)   Money continuously flows from households to firms and then back to households, and GDP measures this flow of money.
C)   GDP is generally regarded as the best single measure of a society's economic well­being.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 6

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

Accepted Answer

GDP excludes most items that a...

Question 7

In the national income accounts, depreciation is called

Accepted Answer

A)   "consumption of fixed capital."
B)   "negative investment."
C)   "diminished value."
D)   "loss due to wear."E) A) and C)
F) B) and D)

Question 8

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Accepted Answer

A)   the effect of taxes on the prices of airline tickets, and the profitability of automobile-manufacturing firms
B)   the price of beef, and wage differences between genders
C)   how consumers maximize utility, and how prices are established in markets for agricultural products
D)   the percentage of the labor force that is out of work, and differences in average income from country to countryE) A) and C)
F) B) and C)

Question 9

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 10

In the economy of Talikastan in 2015, consumption was $1000, GDP was $1950, government purchases were $500, and investment was $700. What were Talikastan's net exports in 2015?

Accepted Answer

A)   -$250
B)   $250
C)   $2200
D)   Net exports cannot be calculated from the information given.E) B) and D)
F) All of the above

Question 11

Table 23-11
The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009.
Prices and Quantities 
-Refer to Table 23-11.
What was nominal GDP, real GDP, and the GDP deflator for 2008?

Accepted Answer

Nominal GDP was $4x100 + $50X1...

Question 12

Estimates of the values of which of the following non-market goods or services are included in GDP?

Accepted Answer

A)   unpaid housework but not the rental value of owner-occupied homes.
B)   the rental value of owner-occupied homes but not unpaid housework.
C)   unpaid housework and the rental value of owner-occupied homes.
D)   Neither unpaid housework nor the rental value of owner-occupied homes.E) All of the above
F) B) and D)

Question 13

Nominal GDP is $15 trillion and real GDP is $10 trillion. What is the GDP deflator? Show your work.

Accepted Answer

The GDP Deflator = N...

Question 14

Which of the following is a true statement?

Accepted Answer

A)   International data leave few doubts that a nation's GDP per person is associated with its citizens' standard of living.
B)   Rich and poor countries often have vastly different standards of living, but similar levels of real GDP per person.
C)   The value of leisure time is included in the calculation of GDP per person.
D)   International data indicate that measures on the distribution of income are closely associated with GDP per person.E) None of the above
F) B) and D)

Question 15

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

Question 16

The government of a country, which has adopted American GDP accounting conventions, reported that seasonally adjusted GDP in quarter 3 was $48 billion at an annual rate. This means that the seasonally-adjusted market value of all final goods and services produced within this country in quarter 3 was

Accepted Answer

A)   $4 billion.
B)   $12 billion.
C)   $16 billion.
D)   $48 billion.E) A) and D)
F) None of the above

Question 17

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Accepted Answer

Since this is in real terms, it tells us...

Question 18

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

Accepted Answer

A)   U.S. investment and GDP increase, but German GDP is unaffected.
B)   U.S. investment and German GDP increase, but U.S. GDP is unaffected.
C)   U.S. investment, U.S. GDP, and German GDP are unaffected because tractors are intermediate goods.
D)   U.S. investment, U.S. GDP, and German GDP all increase.E) A) and C)
F) A) and B)

Question 19

The term economists use to describe a situation in which the economy's overall price level is rising is

Accepted Answer

A)   growth.
B)   inflation.
C)   recession.
D)   expansion.E) B) and C)
F) A) and B)

Question 20

Consider two items that might be included in GDP: (1)  the estimated rental value of owner-occupied housing and (2)  purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?

Accepted Answer

A)   Both item (1)  and item (2)  are included in the consumption component of GDP.
B)   Item (1)  is included in the consumption component of GDP, while item (2)  is included in the investment component of GDP.
C)   Item (1)  is included in the investment component of GDP, while item (2)  is included in the consumption component of GDP.
D)   Only item (2)  is included in GDP, and it is included in the investment component.E) A) and D)
F) None of the above

Exam 23: Measuring a Nations Income

The term economists use to describe a situation in which the economy's overall price level is rising is

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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?

Correct AnswerverifiedShow Answer

In the national income accounts, depreciation is called

Correct AnswerverifiedShow Answer

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Correct AnswerverifiedSince this is in real terms, it tells us...View AnswerShow Answer

An American retailer purchased 100 pairs of shoes from a company in Mexico in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016. In which quarter(s) does(do) the value of the shoes add to U.S. GDP?

Correct AnswerverifiedShow Answer

In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?

Correct AnswerverifiedShow Answer

Nominal GDP is $15 trillion and real GDP is $10 trillion. What is the GDP deflator? Show your work.

Correct AnswerverifiedThe GDP Deflator = N...View AnswerShow Answer

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Correct AnswerverifiedShow Answer

Table 23-11 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. Prices and Quantities -Refer to Table 23-11. What was nominal GDP, real GDP, and the GDP deflator for 2008?

Correct AnswerverifiedNominal GDP was $4x100 + $50X1...View AnswerShow Answer

Which of the following statements about GDP is correct?

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In the economy of Talikastan in 2015, consumption was $1000, GDP was $1950, government purchases were $500, and investment was $700. What were Talikastan's net exports in 2015?

Correct AnswerverifiedShow Answer

A transfer payment is a payment made by

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Real GDP will increase

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Estimates of the values of which of the following non-market goods or services are included in GDP?

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Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?

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A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

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

Correct AnswerverifiedGDP excludes most items that a...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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Since this is in real terms, it tells us...
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The GDP Deflator = N...
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Nominal GDP was $4x100 + $50X1...
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GDP excludes most items that a...
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Correct Answer
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