Question 1

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 B)
F) B) and D)

Question 2

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

Accepted Answer

A)  The value of the goods and services produced by the restaurant is included in both French GDP and U.S. GDP.
B)  The value added by American workers and equipment in France is included in U.S. GDP and the value added by French workers and equipment is added to French GDP.
C)  The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP.
D)  The value of the goods and services produced by the restaurant is included in U.S. GDP, but not in French GDP.E) A) and D)
F) B) and D)

Question 3

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

Accepted Answer

A)  personal income and personal disposable income.
B)  estimates of GDP and actual GDP.
C)  the income and expenditure approaches to the calculation of GDP.
D)  the quarterly and annual approaches to the calculation of GDP.E) All of the above
F) A) and D)

Question 4

In the economy of Talikastan in 2015, consumption was two-thirds of GDP, government purchases were $1000 more than investment, investment was one-ninth of GDP, and the value of exports exceeded the value of imports by $500. What was Talikastan's GDP in 2015?

Accepted Answer

A)  $1688
B)  $9000
C)  $13,500
D)  $15,000E) All of the above
F) C) and D)

Question 5

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Accepted Answer

A)  would be included in GDP because they are part of government purchases.
B)  would be included in GDP because they are part of investment expenditures.
C)  would not be included in GDP because they are transfer payments.
D)  would not be included in GDP because the government raises taxes to pay for them.E) B) and D)
F) B) and C)

Question 6

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Accepted Answer

A)  80, and this indicates that the price level has decreased by 20 percent since the base year.
B)  80, and this indicates that the price level has increased by 80 percent since the base year.
C)  125, and this indicates that the price level has increased by 25 percent since the base year.
D)  125, and this indicates that the price level has increased by 125 percent since the base year.E) All of the above
F) None of the above

Question 7

Real GDP is the yearly production of final goods and services valued at

Accepted Answer

A)  current prices.
B)  constant prices.
C)  expected future prices.
D)  the ratio of current prices to constant prices.E) A) and B)
F) All of the above

Question 8

If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

Accepted Answer

A) True 
 B)False

Question 9

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP?

Accepted Answer

A)  $8,000
B)  $15,000
C)  $17,000
D)  $13,000E) B) and C)
F) C) and D)

Question 10

U.S. GDP

Accepted Answer

A)  includes production of foreigners working in the U.S. and production by U.S. residents working in foreign countries.
B)  includes production of foreigners working in the U.S. but excludes production by U.S. residents working in foreign countries.
C)  excludes production of foreigners working in the U.S. but includes production by U.S. residents working in foreign countries.
D)  excludes production of foreigners working in the U.S. and production by U.S. residents working in foreign countries.E) A) and C)
F) B) and D)

Question 11

Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2010 Quality Motors produced $30 million worth of automobiles, with $17 million in sales to Americans, $9 million in sales to Canadians, and $4 million worth of automobiles added to Quality Motors' inventory. The transactions just described contribute how much to U.S. GDP for 2010?

Accepted Answer

A)  $17 million
B)  $21 million
C)  $26 million
D)  $30 millionE) B) and C)
F) C) and D)

Question 12

Which of the following subcomponents of GDP can be either positive or negative?

Accepted Answer

A)  inventory investment
B)  exports
C)  government purchases
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 13

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013 .
Prices and Quantities 
-Refer to Table 23-6. In 2012, this country's real GDP was

Accepted Answer

A)  $510.
B)  $690.
C)  $930.
D)  $780.E) A) and C)
F) All of the above

Question 14

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 unemployment rate of the economy's labor force.
B)  Money continuously flows from households to government and then back to households, and GDP measures this flow of money.
C)  GDP is to a nation's economy as household income is to a household.
D)  All of the above are correct.E) All of the above
F) A) and D)

Question 15

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 D)
F) B) and D)

Question 16

In 2010 a country had nominal GDP of 6 trillion euro and real GDP of 5 trillion euro. In 2011 it had nominal GDP of 6.5 trillion euro and real GDP of 5.2 trillion euro. What was its inflation rate in 2011? Show your work.

Accepted Answer

The GDP deflator for 2010 was ...

Question 17

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GNP.

Accepted Answer

A) True 
 B)False

Question 18

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP?

Accepted Answer

A)  $55,000
B)  $65,000
C)  $120,000
D)  None of the above are correct.E) A) and D)
F) A) and B)

Question 19

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

Question 20

In 2015, government purchases were the largest component of U.S. GDP.

Accepted Answer

A) True 
 B)False

Exam 23: Measuring a Nation S Income

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?

Correct Answer
verified

In the economy of Talikastan in 2015, consumption was two-thirds of GDP, government purchases were $1000 more than investment, investment was one-ninth of GDP, and the value of exports exceeded the value of imports by $500. What was Talikastan's GDP in 2015?

Correct Answer
verified

In 2010 a country had nominal GDP of 6 trillion euro and real GDP of 5 trillion euro. In 2011 it had nominal GDP of 6.5 trillion euro and real GDP of 5.2 trillion euro. What was its inflation rate in 2011? Show your work.

Correct Answer
verified
The GDP deflator for 2010 was ...
View Answer

In 2015, government purchases were the largest component of U.S. GDP.

Correct Answer
verified

Which of the following subcomponents of GDP can be either positive or negative?

Correct Answer
verified

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?

Correct Answer
verified

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GNP.

Correct Answer
verified

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

Correct Answer
verified

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Correct Answer
verified

Real GDP is the yearly production of final goods and services valued at

Correct Answer
verified

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

Correct Answer
verified

Correct Answer
verified

If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

Correct Answer
verified

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Correct Answer
verified

Which of the following statements about GDP is correct?

Correct Answer
verified

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013 . Prices and Quantities -Refer to Table 23-6. In 2012, this country's real GDP was

Correct Answer
verified

U.S. GDP

Correct Answer
verified

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP?

Correct Answer
verified

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP?

Correct Answer
verified

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?

Correct Answer
verified

Exam 23: Measuring a Nation S Income

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?

Correct AnswerverifiedShow Answer

In the economy of Talikastan in 2015, consumption was two-thirds of GDP, government purchases were $1000 more than investment, investment was one-ninth of GDP, and the value of exports exceeded the value of imports by $500. What was Talikastan's GDP in 2015?

Correct AnswerverifiedShow Answer

In 2010 a country had nominal GDP of 6 trillion euro and real GDP of 5 trillion euro. In 2011 it had nominal GDP of 6.5 trillion euro and real GDP of 5.2 trillion euro. What was its inflation rate in 2011? Show your work.

Correct AnswerverifiedThe GDP deflator for 2010 was ...View AnswerShow Answer

In 2015, government purchases were the largest component of U.S. GDP.

Correct AnswerverifiedShow Answer

Which of the following subcomponents of GDP can be either positive or negative?

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?

Correct AnswerverifiedShow Answer

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GNP.

Correct AnswerverifiedShow Answer

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

Correct AnswerverifiedShow Answer

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Correct AnswerverifiedShow Answer

Real GDP is the yearly production of final goods and services valued at

Correct AnswerverifiedShow Answer

The statistical discrepancy that regularly arises in national income accounting refers to the slight difference between

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

Correct AnswerverifiedShow Answer

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Correct AnswerverifiedShow Answer

Which of the following statements about GDP is correct?

Correct AnswerverifiedShow Answer

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013 . Prices and Quantities -Refer to Table 23-6. In 2012, this country's real GDP was

Correct AnswerverifiedShow Answer

U.S. GDP

Correct AnswerverifiedShow Answer

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP?

Correct AnswerverifiedShow Answer

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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The GDP deflator for 2010 was ...
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