Question 1

In 2004,government purchases of goods and services were

Accepted Answer

A)  larger than consumption, but smaller than investment.
B)  larger than investment, but smaller than consumption.
C)  smaller than both consumption and investment.
D)  larger than both consumption and investment.E) B) and C)
F) C) and D)

Question 2

One bag of flour is sold for $1.50 to a bakery,which uses the flour to bake bread that is sold for $4.00 to consumers.A second bag of flour is sold to a consumer in a grocery store for $2.00.Taking these three transactions into account,what is the effect on GDP?

Accepted Answer

A)  GDP increases by $1.50.
B)  GDP increases by $3.50.
C)  GDP increases by $6.00.
D)  GDP increases by $7.50.E) None of the above
F) All of the above

Question 3

For an economy as a whole,

Accepted Answer

A)  income is greater than expenditure
B)  expenditure is greater than income.
C)  income is equal to expenditure.
D)  GDP measures income more precisely than it measures expenditure.E) All of the above
F) A) and D)

Question 4

Which of the following is included in the investment component of GDP?

Accepted Answer

A)  households' purchases of newly constructed homes
B)  net additions to firms' inventories
C)  firms' purchases of capital equipment
D)  All of the above are correct.E) A) and B)
F) A) and D)

Question 5

Changes in inventory are included in the investment component of GDP.

Accepted Answer

A) True 
 B)False

Question 6

If nominal GDP is $10 trillion and real GDP is $8 trillion,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) B) and D)
F) All of the above

Question 7

A wind farm in Iowa buys a large turbine generator from a Swedish-owned factory located in Connecticut that uses workers who live in Connecticut.As a result,

Accepted Answer

A)  U.S.investment, GDP, and GNP all increase by the same amount.
B)  U.S.investment increases, but GDP and GNP are unaffected by the purchase.
C)  U.S.investment and GDP increase by the same amount, but U.S.GNP increases by a smaller amount.
D)  U.S.investment and GNP increase by the same amount, but U.S.GDP increases by a smaller amount.E) A) and B)
F) A) and C)

Question 8

Steph buys a designer dress produced by an American-owned fashion shop in France.As a result,U.S.consumption increases,U.S.net exports

Accepted Answer

A)  decrease, U.S.GDP is unaffected, and U.S.GNP increases.
B)  decrease, U.S.GDP increases, and U.S.GNP is unaffected.
C)  decrease, U.S.GNP increases, and French GDP is unaffected.
D)  are unaffected, U.S.GDP is unaffected, and French GDP increases.E) A) and B)
F) A) and C)

Question 9

Which of the following items is counted in U.S.GDP?

Accepted Answer

A)  final goods and services that are purchased by the U.S.federal government
B)  intermediate goods that are produced in the U.S.but which are unsold at the end of the GDP accounting period
C)  goods and services produced by foreign citizens working in the U.S.
D)  All of the above are included in U.S.GDP.E) B) and D)
F) A) and B)

Question 10

A movie company makes 500,000 DVDs of one of its latest releases.It sells 300,000 of them before the end of the second quarter,and holds the others in its warehouse.How will the 200,000 unsold DVDs be treated in the GDP statistics?

Accepted Answer

A)  Since the DVDs eventually will be bought by consumers, they are included as consumption in the second quarter.
B)  Since the DVDs were not purchased this quarter, they will be counted as an increase in third-quarter GDP.
C)  The DVDs will be counted as a change in inventory in the second quarter and so will be included in second-quarter GDP.
D)  The DVDs will be counted as a change in inventory in the second quarter, and when sold in the third quarter will raise third-quarter GDP.E) None of the above
F) A) and B)

Question 11

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Accepted Answer

A)  longer life expectancy and a lower percentage of the population that is literate.
B)  longer life expectancy and a higher percentage of the population that is literate.
C)  very nearly the same life expectancy and a lower percentage of the population that is literate.
D)  very nearly the same life expectancy and a higher percentage of the population that is literate.E) B) and C)
F) None of the above

Question 12

Unlike national income,personal income

Accepted Answer

A)  includes retained earnings, corporate income taxes and social insurance contributions, and excludes interest and transfer payments received by households from government.
B)  excludes retained earnings, corporate income taxes, social insurance contributions, and interest and transfer payments received by households from government.
C)  excludes retained earnings, corporate income taxes and social insurance contributions, and includes interest and transfer payments received by households from government.
D)  includes retained earnings, corporate income taxes, social insurance contributions, and interest and transfer payments received by households from government.E) C) and D)
F) All of the above

Question 13

Suppose that the country of Samiam produces only eggs and ham.In 2005 it produced 100 dozen eggs at $3 per dozen and 50 pounds of ham at $4 per pound.In 2004,the base year,eggs sold for $1.50 per dozen and ham sold for $5 per pound.For 2005,

Accepted Answer

A)  nominal GDP is $500, real GDP is $400, and the GDP deflator is 80.
B)  nominal GDP is $500, real GDP is $400, and the GDP deflator is 125.
C)  nominal GDP is $400, real GDP is $400, and the GDP deflator is 100.
D)  nominal GDP is $400, real GDP is $500, and the GDP deflator is 125.E) A) and B)
F) None of the above

Question 14

The information below 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)  Kenya, Tanzania, Zimbabwe
B)  Kenya, Zimbabwe, Tanzania
C)  Zimbabwe, Kenya, Tanzania
D)  Zimbabwe, Tanzania, KenyaE) C) and D)
F) All of the above

Question 15

If a state made a previously-illegal activity such as gambling or prostitution legal,then,other things equal,GDP

Accepted Answer

A)  necessarily decreases.
B)  necessarily increases.
C)  doesn't change because both legal and illegal production are included in GDP.
D)  doesn't change because these activities are never included in GDP.E) None of the above
F) A) and D)

Question 16

The income that households and noncorporate businesses receive is called

Accepted Answer

A)  personal income.
B)  net national product.
C)  disposable personal income.
D)  national income.E) A) and C)
F) None of the above

Question 17

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

Accepted Answer

A)  $96.
B)  $92.
C)  $90.
D)  $88.E) B) and D)
F) None of the above

Question 18

Which of the following transactions adds to U.S.GDP for 2006?

Accepted Answer

A)  In 2006, Marvin Windows manufactures 20 windows that will eventually be installed in an office building in Minneapolis.The windows remain in Marvin's inventory at the end of 2006.
B)  An Irish marketing consultant works in Boston during the summer of 2006 and earns $30,000 during that time.
C)  When John and Jennifer were both single, they lived in separate apartments and each paid $750 in rent.John and Jennifer got married in 2006 and they bought a house that, according to reliable estimates, could be rented for $1,600 per month.
D)  All of the above transactions adds to GDP for 2006.E) C) and D)
F) All of the above

Question 19

A country reported nominal GDP of $100 billion in 2006 and $75 billion in 2005;it reported a GDP deflator of 125 in 2006 and 120 in 2005.Between 2005 and 2006,

Accepted Answer

A)  real output and the price level both rose.
B)  real output rose and the price level fell.
C)  real output fell and the price level rose.
D)  real output and the price level both fell.E) B) and C)
F) C) and D)

Question 20

When a firm sells a good or a service,the sale contributes to the nation's income

Accepted Answer

A)  only if the buyer of the good or service is a household.
B)  only if the buyer of the good or service is a household or another firm.
C)  whether the buyer of the good or a service is a household, another firm, or the government.
D)  We have to know whether the item being sold is a good or a service in order to answer the question.E) None of the above
F) A) and B)

Exam 23: Measuring a Nations Income

One bag of flour is sold for $1.50 to a bakery,which uses the flour to bake bread that is sold for $4.00 to consumers.A second bag of flour is sold to a consumer in a grocery store for $2.00.Taking these three transactions into account,what is the effect on GDP?

Correct AnswerverifiedShow Answer

Which of the following items is counted in U.S.GDP?

Correct AnswerverifiedShow Answer

Suppose that the country of Samiam produces only eggs and ham.In 2005 it produced 100 dozen eggs at $3 per dozen and 50 pounds of ham at $4 per pound.In 2004,the base year,eggs sold for $1.50 per dozen and ham sold for $5 per pound.For 2005,

Correct AnswerverifiedShow Answer

Which of the following is included in the investment component of GDP?

Correct AnswerverifiedShow Answer

If a state made a previously-illegal activity such as gambling or prostitution legal,then,other things equal,GDP

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For an economy as a whole,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A country reported nominal GDP of $100 billion in 2006 and $75 billion in 2005;it reported a GDP deflator of 125 in 2006 and 120 in 2005.Between 2005 and 2006,

Correct AnswerverifiedShow Answer

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Correct AnswerverifiedShow Answer

In 2004,government purchases of goods and services were

Correct AnswerverifiedShow Answer

A wind farm in Iowa buys a large turbine generator from a Swedish-owned factory located in Connecticut that uses workers who live in Connecticut.As a result,

Correct AnswerverifiedShow Answer

Steph buys a designer dress produced by an American-owned fashion shop in France.As a result,U.S.consumption increases,U.S.net exports

Correct AnswerverifiedShow Answer

A movie company makes 500,000 DVDs of one of its latest releases.It sells 300,000 of them before the end of the second quarter,and holds the others in its warehouse.How will the 200,000 unsold DVDs be treated in the GDP statistics?

Correct AnswerverifiedShow Answer

The information below 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?

Correct AnswerverifiedShow Answer

The income that households and noncorporate businesses receive is called

Correct AnswerverifiedShow Answer

Unlike national income,personal income

Correct AnswerverifiedShow Answer

When a firm sells a good or a service,the sale contributes to the nation's income

Correct AnswerverifiedShow Answer

Which of the following transactions adds to U.S.GDP for 2006?

Correct AnswerverifiedShow Answer

Changes in inventory are included in the investment component of GDP.

Correct AnswerverifiedShow Answer

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