Question 1

If a small country has current nominal GDP of $20 billion and a GDP deflator of 50,what is its real GDP?

Accepted Answer

A)  $100 billion
B)  $40 billion
C)  $10 billion
D)  $4 billionE) All of the above
F) A) and B)

Question 2

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition,some production is left out of GDP.Explain why some final goods and services are not included.

Accepted Answer

GDP excludes some products because they ...

Question 3

In a certain economy in 2005,GDP amounted to $5,000;consumption amounted to $3,000;government purchases were equal to investment;and the value of imports exceeded the value of exports by $200.It follows that government purchases amounted to

Accepted Answer

A)  $900.
B)  $1,100.
C)  $1,250.
D)  $1,325.E) All of the above
F) B) and C)

Question 4

If a small country has current nominal GDP of $25 billion and the GDP deflator is 125,what is real GDP?

Accepted Answer

A)  $312.5 billion
B)  $207.5 billion
C)  $31.25 billion
D)  None of the above is correct.E) A) and D)
F) All of the above

Question 5

National income is defined as

Accepted Answer

A)  GDP minus losses from depreciation.
B)  GDP plus personal income.
C)  GDP minus taxes paid by U.S.residents.
D)  the total income earned by a nation's residents in the production of goods and services.E) All of the above
F) B) and C)

Question 6

If a U.S.citizen buys a television made in Korea by a Korean firm,

Accepted Answer

A)  U.S.net exports decrease and U.S.GDP decreases.
B)  U.S.net exports are unaffected and U.S.GDP decreases.
C)  U.S.net exports are unaffected and U.S.GDP is unaffected.
D)  U.S.net exports decrease and U.S.GDP is unaffected.E) C) and D)
F) A) and B)

Question 7

Identify the immediate effect of each of the following events on U.S.GDP and its components.
a.James receives a Social Security check.
b.John buys an Italian sports car.
c.Henry buys domestically produced tools for his construction company.

Accepted Answer

a. Since this is a transfer payment,ther...

Question 8

Ralph pays someone to mow his lawn,while Mike mows his own lawn.Regarding these two practices,which of the following statements is correct?

Accepted Answer

A)  Only Ralph's payments are included in GDP.
B)  Ralph's payments as well as the estimated value of Mike's mowing services are included in GDP.
C)  Neither Ralph's payments nor the estimated value of Mike's mowing services is included in GDP.
D)  Ralph's payments are definitely included in GDP, while the estimated value of Mike's mowing services is included in GDP only if Mike voluntarily provides his estimate of that value to the government.E) A) and C)
F) None of the above

Question 9

Suppose that twenty-five years ago a country had nominal GDP of $1,000,a GDP deflator of 200,and a population of 100.Today it has nominal GDP of $3,000,a GDP deflator of 400,and population of 150.What happened to the real GDP per person?

Accepted Answer

A)  It more than doubled.
B)  It increased, but it less than doubled.
C)  It was unchanged.
D)  It decreased.E) B) and D)
F) B) and C)

Question 10

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)  GDP per person.
B)  the consumption component of GDP.
C)  government expenditures per person.
D)  investment per business firm.E) A) and B)
F) All of the above

Question 11

GDP is defined as the market value of all final goods and services produced

Accepted Answer

A)  by the citizens of a country, regardless of where they live, in a given period of time; this definition focuses on GDP as a measure of total income.
B)  by the citizens of a country, regardless of where they live, in a given period of time; this definition focuses on GDP as a measure of total expenditure.
C)  within a country in a given period of time; this definition focuses on GDP as a measure of total income.
D)  within a country in a given period of time; this definition focuses on GDP as a measure of total expenditure.E) A) and D)
F) All of the above

Question 12

The U.S.government pays an economist at the U.S.Department of Commerce $50,000 in salary in 2006.The economist then retires.In 2007,the government pays him $30,000 in retirement benefits.Which of the following is correct?

Accepted Answer

A)  Each payment will be included in GDP as government purchases for the respective years.
B)  The 2006 payment is included in 2006 GDP as government purchases, but the 2007 payment is not included in 2007 GDP.
C)  The 2006 payment is included in 2006 GDP as government purchases, and the 2007 payment is included in 2007 GDP as government transfer payments.
D)  The 2006 payment is included in 2006 GDP as government purchases, and the 2007 payment is allocated to previous years' GDP according to the amount of work performed by the economist each year.E) A) and D)
F) B) and C)

Question 13

An increase in nominal U.S.GDP necessarily implies that the United States is producing a larger output of goods and services.

Accepted Answer

A) True 
 B)False

Question 14

In computing GDP,market prices are used to value final goods and services because

Accepted Answer

A)  market prices reflect the values of goods and services.
B)  market prices do not change much over time, so it is easy to make comparisons between years.
C)  if market prices are out of line with how people value goods, the government sets price ceilings and price floors.
D)  None of the above is correct; market prices are not used in computing GDP.E) A) and B)
F) C) and D)

Question 15

Grapes are

Accepted Answer

A)  always counted as an intermediate good.
B)  counted as an intermediate good only if they are used to produce another good such as wine.
C)  counted as an intermediate good only if they are consumed.
D)  counted as an intermediate good, whether they are used to produce another good or consumed.E) B) and C)
F) A) and B)

Question 16

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

Question 17

Table 23-1. The data pertain to the nation of Simplia for the year 2006.
 
-Refer to Table 23-1.Disposable personal income for this economy is

Accepted Answer

A)  $61
B)  $56.
C)  $47.
D)  $41.E) A) and C)
F) A) and B)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Tyler and Camille both live in Oklahoma.A new-car dealer in Oklahoma bought a new car from the manufacturer for $17,000 and sold it to Tyler for $20,000.Later that year,Tyler sold the car to Camille for $15,000.By how much did these transactions contribute to U.S.GDP for the year?

Accepted Answer

A)  $17,000
B)  $20,000
C)  $35,000
D)  $52,000E) A) and C)
F) All of the above

Question 20

Consumption consists of spending by households on goods and services,with the exception of

Accepted Answer

A)  purchase of intangible services.
B)  purchases of durable goods.
C)  purchases of new houses.
D)  All of the above are exceptions.E) None of the above
F) A) and B)

Exam 23: Measuring a Nations Income

GDP is defined as the market value of all final goods and services produced

Correct AnswerverifiedShow Answer

An increase in nominal U.S.GDP necessarily implies that the United States is producing a larger output of goods and services.

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The U.S.government pays an economist at the U.S.Department of Commerce $50,000 in salary in 2006.The economist then retires.In 2007,the government pays him $30,000 in retirement benefits.Which of the following is correct?

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Tyler and Camille both live in Oklahoma.A new-car dealer in Oklahoma bought a new car from the manufacturer for $17,000 and sold it to Tyler for $20,000.Later that year,Tyler sold the car to Camille for $15,000.By how much did these transactions contribute to U.S.GDP for the year?

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Suppose that twenty-five years ago a country had nominal GDP of $1,000,a GDP deflator of 200,and a population of 100.Today it has nominal GDP of $3,000,a GDP deflator of 400,and population of 150.What happened to the real GDP per person?

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National income is defined as

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In a certain economy in 2005,GDP amounted to $5,000;consumption amounted to $3,000;government purchases were equal to investment;and the value of imports exceeded the value of exports by $200.It follows that government purchases amounted to

Correct AnswerverifiedShow Answer

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition,some production is left out of GDP.Explain why some final goods and services are not included.

Correct AnswerverifiedGDP excludes some products because they ...View AnswerShow Answer

Consumption consists of spending by households on goods and services,with the exception of

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If a U.S.citizen buys a television made in Korea by a Korean firm,

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

Grapes are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Ralph pays someone to mow his lawn,while Mike mows his own lawn.Regarding these two practices,which of the following statements is correct?

Correct AnswerverifiedShow Answer

Identify the immediate effect of each of the following events on U.S.GDP and its components. a.James receives a Social Security check. b.John buys an Italian sports car. c.Henry buys domestically produced tools for his construction company.

Correct Answerverifieda. Since this is a transfer payment,ther...View AnswerShow Answer

Table 23-1. The data pertain to the nation of Simplia for the year 2006. -Refer to Table 23-1.Disposable personal income for this economy is

Correct AnswerverifiedShow Answer

If a small country has current nominal GDP of $25 billion and the GDP deflator is 125,what is real GDP?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In computing GDP,market prices are used to value final goods and services because

Correct AnswerverifiedShow Answer

If a small country has current nominal GDP of $20 billion and a GDP deflator of 50,what is its real GDP?

Correct AnswerverifiedShow Answer

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GDP excludes some products because they ...
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a. Since this is a transfer payment,ther...
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