Question 1

The residents of country A earn $500 million of income from abroad. Residents of other countries earn $200 million in country A. These earnings are accounted for in country A's

Accepted Answer

A)   country A's net factor payments from abroad are positive, and its GDP is larger than its GNP.
B)   country A's net factor payments from abroad are positive, and its GNP is larger than its GDP.
C)   country A's net factor payments from abroad are negative, and its GDP is larger than its GNP.
D)   country A's net factor payments from abroad are negative, and its GNP is larger than its GDP.E) A) and B)
F) A) and C)

Question 2

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 D)
F) B) and C)

Question 3

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

Question 4

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)   The 2006 payment is included in 2006 GDP as government purchases, and the 2007 payment is included in 2007 GDP as government purchases.
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) All of the above
F) A) and B)

Question 5

Real GDP per person tells us the income and expenditure of the average person in the economy.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following transactions adds to U.S. GDP for 2010?

Accepted Answer

A)   In 2010, Ashley sells a car that she bought in 2006 to William for $5,000.
B)   An American management consultant works in Mexico during the summer of 2010 and earns the equivalent of $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 2010 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for $1,600 per month.
D)   None of the above transactions adds to U.S. GDP for 2010.E) B) and D)
F) None of the above

Question 7

Disposable personal income is the income that

Accepted Answer

A)   households have left after paying taxes and non-tax payments to the government.
B)   businesses have left after paying taxes and non-tax payments to the government.
C)   households and noncorporate businesses have left after paying taxes and non-tax payments to the government.
D)   households and businesses have left after paying taxes and non-tax payments to the government.E) A) and D)
F) B) and D)

Question 8

Table 5-1
The table below contains data for Bahkan for the year 2010.
 
-Refer to Table 5-1. Gross national product for Bahkan in 2010 is

Accepted Answer

A)   $95.
B)   $100.
C)   $110.
D)   $115.E) A) and B)
F) B) and D)

Question 9

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

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

Question 10

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 D)
F) A) and C)

Question 11

In 2009, government purchases was the largest component of U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following items is included 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 that 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) C) and D)
F) All of the above

Question 13

The inflation rate is the

Accepted Answer

A)   absolute change in real GDP from one period to another.
B)   percentage change in real GDP from one period to another.
C)   absolute change in the price level from one period to another.
D)   percentage change in the price level from one period to another.E) A) and C)
F) A) and B)

Question 14

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 15

GDP excludes the value of intermediate goods because their value is included in the value of final goods.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Table 5-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009.
Prices and Quantities
 
-Refer to Table 5-6. In 2011, this country's real GDP was

Accepted Answer

A)   $540.
B)   $800.
C)   $930.
D)   $1380.E) C) and D)
F) None of the above

Question 18

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s)  does(do)  these transactions raise consumption?

Accepted Answer

A)   the first and the second
B)   the first but not the second
C)   the second but not the first
D)   neither the first nor the secondE) B) and D)
F) A) and B)

Question 19

In the economy of Ukzten in 2010, consumption was $3000, exports were $200, GDP was $8000, government purchases were $1000, and imports were $600. What was Ukzten's investment in 2010?

Accepted Answer

A)   $3200
B)   $3600
C)   $3800
D)   $4400E) A) and D)
F) B) and C)

Question 20

Table 5-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.
 
-Refer to Table 5-3. What is the GDP deflator and the inflation rate for 1931?

Accepted Answer

A)   9.16, -11.5
B)   9.16, -10.3
C)   1091.37, 10.3
D)   1091.37, 11.5E) All of the above
F) B) and D)

Exam 5: Measuring a Nations Income

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?

Correct AnswerverifiedShow Answer

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

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

Disposable personal income is the income that

Correct AnswerverifiedShow Answer

In the economy of Ukzten in 2010, consumption was $3000, exports were $200, GDP was $8000, government purchases were $1000, and imports were $600. What was Ukzten's investment in 2010?

Correct AnswerverifiedShow Answer

The inflation rate is the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements about GDP is correct?

Correct AnswerverifiedShow Answer

Which of the following transactions adds to U.S. GDP for 2010?

Correct AnswerverifiedShow Answer

GDP excludes the value of intermediate goods because their value is included in the value of final goods.

Correct AnswerverifiedShow Answer

Table 5-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 5-3. What is the GDP deflator and the inflation rate for 1931?

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

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In 2009, government purchases was the largest component of U.S. GDP.

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The residents of country A earn $500 million of income from abroad. Residents of other countries earn $200 million in country A. These earnings are accounted for in country A's

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

U.S. GDP

Correct AnswerverifiedShow Answer

Real GDP per person tells us the income and expenditure of the average person in the economy.

Correct AnswerverifiedShow Answer

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarter(s) does(do) these transactions raise consumption?

Correct AnswerverifiedShow Answer

Table 5-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009. Prices and Quantities -Refer to Table 5-6. In 2011, this country's real GDP was

Correct AnswerverifiedShow Answer

Table 5-1 The table below contains data for Bahkan for the year 2010. -Refer to Table 5-1. Gross national product for Bahkan in 2010 is

Correct AnswerverifiedShow Answer

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