Question 1

Expenditures by households on education are included in the consumption component of GDP.

Accepted Answer

A) True 
 B)False

Question 2

The government purchases component of GDP includes salaries paid to soldiers but not Social Security benefits paid to the elderly.

Accepted Answer

A) True 
 B)False

Question 3

GDP is defined as the

Accepted Answer

A)   value of all goods and services produced within a country in a given period of time.
B)   value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.
C)   value of all final goods and services produced within a country in a given period of time.
D)   value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.E) A) and D)
F) A) and B)

Question 4

Consider the following three items of spending by the government: i)  the federal government pays a $500 unemployment benefit to an unemployed person; ii)  the federal government makes a $2,000 salary payment to a Navy lieutenant; iii)  the city of Bozeman, Montana makes a $10,000 payment to ABC Lighting Company for street lights in Bozeman. Which of these payments contributes directly to government purchases in the national income accounts?

Accepted Answer

A)   only item i) 
B)   only item ii) 
C)   only items i)  and ii) 
D)   only items ii)  and iii) E) None of the above
F) A) and D)

Question 5

Transfer payments are

Accepted Answer

A)   included in GDP because they represent income to individuals.
B)   included in GDP because they eventually will be spent on consumption.
C)   not included in GDP because they are not payments for currently produced goods or services.
D)   not included in GDP because taxes will have to be raised to pay for them.E) All of the above
F) C) and D)

Question 6

Tom and Lilly rented a house for $12,000 last year. At the start of the year they bought the house they had been renting directly from the owner for $250,000. They believe they could rent it for $12,000 this year, but stay in the house. How much does Tom and Lilly's decision to buy the house change GDP?

Accepted Answer

A)   it reduces GDP by $12,000
B)   it does not change GDP
C)   it raises GDP by $238,000
D)   it raises GDP by $250,000E) B) and C)
F) All of the above

Question 7

Thomas, a U.S. citizen, works only in Canada. The value of the output he produces is

Accepted Answer

A)   included in both U.S. GDP and U.S. GNP.
B)   included in U.S. GDP, but it is not included in U.S. GNP.
C)   included in U.S. GNP, but it is not included in U.S. GDP.
D)   included in neither U.S. GDP nor U.S. GNP.E) A) and B)
F) B) and D)

Question 8

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

Accepted Answer

A)   investment.
B)   government spending.
C)   consumption of services.
D)   consumption of durable goods.E) A) and B)
F) A) and C)

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) All of the above
F) B) and D)

Question 10

Gasoline is considered a final good if it is sold by a

Accepted Answer

A)   gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles.
B)   pipeline operator to a gasoline station in San Francisco.
C)   gasoline station to a motorist in Los Angeles.
D)   All of the above are correct.E) All of the above
F) B) and C)

Question 11

Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2008, Quality Motors produced $25 million worth of automobiles and sold $12 million in the U.S. and $13 million in Mexico. In addition, it sold $2 million from the previous year's inventory in the U.S. The transactions just described contribute how much to U.S. GDP for 2008?

Accepted Answer

A)   $12 million
B)   $14 million
C)   $25 million
D)   $27 millionE) B) and D)
F) A) and D)

Question 12

Disposable personal income is the income that households and noncorporate businesses have left after satisfying all their obligations to the government.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is included in Singapore's GDP?

Accepted Answer

A)   The value of production by a Singaporean working in the U.S.
B)   The value of production by an American working in Singapore
C)   The value of production by a Singaporean that crosses the border to work in Malaysia.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 14

Suppose an apartment complex converts to a condominium, so that the former renters are now owners of their housing units. Suppose further that a current estimate of the value of the condominium owners' housing services is the same as the rent they previously paid. What happens to GDP as a result of this conversion?

Accepted Answer

A)   GDP necessarily increases.
B)   GDP necessarily decreases.
C)   GDP is unaffected because neither the rent nor the estimate of the value owner-occupied housing services is included in GDP.
D)   GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services.E) C) and D)
F) All of the above

Question 15

One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP?

Accepted Answer

A)   GDP increases by $3.00.
B)   GDP increases by $5.00.
C)   GDP increases by $6.00.
D)   GDP increases by $7.00.E) B) and C)
F) A) and B)

Question 16

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

Accepted Answer

A)   goods produced by foreign citizens working in the United States
B)   the difference in the price of the sale of an existing home and its original purchase price
C)   known illegal activities
D)   None of the above is included in U.S. GDP.E) C) and D)
F) A) and B)

Question 17

Which of the following is not included in U.S. GDP?

Accepted Answer

A)   additions of newly produced output to inventory
B)   production of U.S citizens working in foreign countries.
C)   the estimated rental value of owner-occupied housing
D)   the value of food purchased from a grocery store to make meals at home without payE) C) and D)
F) A) and B)

Question 18

James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to GDP?

Accepted Answer

A)   $0
B)   $10,000
C)   $12,000
D)   $22,000E) All of the above
F) B) and D)

Question 19

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million.
Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Accepted Answer

A)   Country A because it had the higher nominal GDP per person.
B)   Country B because it had the higher nominal GDP per person.
C)   Country A because it had the higher real GDP per person.
D)   Country B because it had the higher real GDP per person.E) All of the above
F) C) and D)

Question 20

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 2011? Show your work.

Accepted Answer

Nominal GDP was $6x80 + $65x12...

Exam 5: Measuring a Nations Income

James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to 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

Gasoline is considered a final good if it is sold by a

Correct Answer
verified

Thomas, a U.S. citizen, works only in Canada. The value of the output he produces is

Correct Answer
verified

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 2011? Show your work.

Correct Answer
verified
Nominal GDP was $6x80 + $65x12...
View Answer

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

Correct Answer
verified

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Correct Answer
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Which of the following is included in Singapore's GDP?

Correct Answer
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Disposable personal income is the income that households and noncorporate businesses have left after satisfying all their obligations to the government.

Correct Answer
verified

The government purchases component of GDP includes salaries paid to soldiers but not Social Security benefits paid to the elderly.

Correct Answer
verified

Transfer payments are

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

Correct Answer
verified

Correct Answer
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GDP is defined as the

Correct Answer
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One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP?

Correct Answer
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Correct Answer
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Correct Answer
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Which of the following is not included in U.S. GDP?

Correct Answer
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Expenditures by households on education are included in the consumption component of GDP.

Correct Answer
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Correct Answer
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Exam 5: Measuring a Nations Income

James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to 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

Gasoline is considered a final good if it is sold by a

Correct AnswerverifiedShow Answer

Thomas, a U.S. citizen, works only in Canada. The value of the output he produces is

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 2011? Show your work.

Correct AnswerverifiedNominal GDP was $6x80 + $65x12...View AnswerShow Answer

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

Correct AnswerverifiedShow Answer

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Correct AnswerverifiedShow Answer

Which of the following is included in Singapore's GDP?

Correct AnswerverifiedShow Answer

Disposable personal income is the income that households and noncorporate businesses have left after satisfying all their obligations to the government.

Correct AnswerverifiedShow Answer

The government purchases component of GDP includes salaries paid to soldiers but not Social Security benefits paid to the elderly.

Correct AnswerverifiedShow Answer

Transfer payments are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

GDP is defined as the

Correct AnswerverifiedShow Answer

One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold for $1 to a grocery store who sells it to a consumer for $2.00. Taking these four transactions into account, what is the effect on GDP?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not included in U.S. GDP?

Correct AnswerverifiedShow Answer

Expenditures by households on education are included in the consumption component of GDP.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Nominal GDP was $6x80 + $65x12...
View Answer

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