Question 1

A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009. It also reported a GDP deflator of 85 in 2010 and 100 in 2009. Between 2009 and 2010,

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) None of the above
F) C) and D)

Question 2

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Accepted Answer

A) True 
 B)False

Question 3

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Accepted Answer

A) True 
 B)False

Question 4

In years of economic contraction, firms throughout the economy increase their production of goods and services, employment rises, and jobs are easy to find.

Accepted Answer

A) True 
 B)False

Question 5

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

Accepted Answer

A) True 
 B)False

Question 6

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

Accepted Answer

A) True 
 B)False

Question 7

For the purpose of calculating GDP, investment is spending on

Accepted Answer

A)  stocks, bonds, and other financial assets.
B)  real estate and financial assets such as stocks and bonds.
C)  capital equipment, inventories, and structures, including household purchases of new housing.
D)  capital equipment, inventories, and structures, excluding household purchases of new housing.E) A) and B)
F) A) and C)

Question 8

If the U.S. government reports that GDP in the third quarter was $14 trillion at an annual rate, then the amount of income and expenditure during quarter three was $4 trillion.

Accepted Answer

A) True 
 B)False

Question 9

In the actual economy, goods and services are purchased by

Accepted Answer

A)  households, but not firms or the government.
B)  households and firms, but not the government.
C)  households and the government, but not firms.
D)  households, firms, and the government.E) A) and B)
F) All of the above

Question 10

Suppose an economy produces only cranberries and maple syrup. In 2010, 50 units of cranberries are sold at $20 per unit and 100 units of maple syrup are sold at $8 per unit. In 2009, the base year, the price of cranberries was $10 per unit and the price of maple syrup was $15 per unit. For 2010,

Accepted Answer

A)  nominal GDP is $1800, real GDP is $2000, and the GDP deflator is 90.
B)  nominal GDP is $1800, real GDP is $2000, and the GDP deflator is 111.1.
C)  nominal GDP is $2000, real GDP is $1800, and the GDP deflator is 90.
D)  nominal GDP is $2000, real GDP is $1800, and the GDP deflator is 111.1.E) A) and D)
F) A) and C)

Question 11

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

Question 12

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

Question 13

Table 10-7
The table below contains data for the country of Togogo. The base year is 1974.   Year  Nomintal  GDP  CDP  Deflatar 1974$20001001975$30001201976$37501501977$6000200\begin{array} { c c c } 	ext { Year } & \begin{array} { c } 	ext { Nomintal } \	ext { GDP }\end{array} & \begin{array} { c } 	ext { CDP } \	ext { Deflatar }\end{array} \\hline 1974 & \mathbf { \$ 20 0 0 } & 100 \1975 & \$ 3000 & 120 \1976 & \mathbf { \$37 5 0 } & 150 \1977 & \mathbf { \$ 6 0 0 0 } & 200\end{array} Year 1974197519761977​ Nomintal  GDP ​$2000$3000$3750$6000​ CDP  Deflatar ​100120150200​​ 
-Refer to Table 10-7. From 1976 to 1977,

Accepted Answer

A)  inflation was 33.3% and output grew at a rate of 20%.
B)  inflation was 33.3% and output grew at a rate of 60%.
C)  inflation was 50% and output grew at a rate of 20%.
D)  inflation was 50% and output grew at a rate of 60%. E) All of the above
F) A) and D)

Question 14

The output of goods and services produced in the United States has grown on average 3 percent per year since 1965.

Accepted Answer

A) True 
 B)False

Question 15

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Accepted Answer

A)  GDP would definitely increase, despite the fact that GDP includes environmental quality.
B)  GDP would definitely decrease because GDP includes environmental quality.
C)  GDP would definitely increase because GDP excludes environmental quality.
D)  GDP could either increase or decrease because GDP excludes environmental quality.E) A) and B)
F) A) and C)

Question 16

Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard?

Accepted Answer

A)  $1
B)  $19
C)  $20
D)  $21E) A) and B)
F) A) and C)

Question 17

If a good produced this quarter goes into inventory, then it is included in this period's GDP. If it is sold in the next quarter, it will have no effect on GDP.

Accepted Answer

A) True 
 B)False

Question 18

Changes in the GDP deflator reflect

Accepted Answer

A)  only changes in prices.
B)  only changes in the amounts being produced.
C)  both changes in prices and changes in the amounts being produced.
D)  neither changes in prices nor changes in the amounts being produced.E) A) and C)
F) None of the above

Question 19

When an Egyptian firm purchases a cement mixer from Slovakia,

Accepted Answer

A)  Egyptian investment does not change, Egyptian net exports decrease, Egyptian GDP decreases, Slovakian net exports increase, and Slovakian GDP increases.
B)  Egyptian investment increases, Egyptian net exports decrease, Egyptian GDP is unaffected, Slovakian net exports increase, and Slovakian GDP increases.
C)  Egyptian investment decreases, Egyptian net exports increase, Egyptian GDP is unaffected, Slovakian net exports decrease, and Slovakian GDP decreases.
D)  Egyptian investment increases, Egyptian net exports do not change, Egyptian GDP increases, Slovakian net exports do not change, and Slovakian GDP is unaffected.E) A) and B)
F) A) and C)

Question 20

Which of the following is not a correct statement about the growth of real GDP in the U.S. economy?

Accepted Answer

A)  Real GDP in 2009 was almost four times its 1965 level.
B)  Growth was steady between 1965 and 2009.
C)  Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did.
D)  The output of goods and services produced grew on average about 3 percent per year between 1965 and 2009.E) B) and D)
F) C) and D)

Exam 10: Measuring a Nations Income

Suppose an economy produces only cranberries and maple syrup. In 2010, 50 units of cranberries are sold at $20 per unit and 100 units of maple syrup are sold at $8 per unit. In 2009, the base year, the price of cranberries was $10 per unit and the price of maple syrup was $15 per unit. For 2010,

Correct Answer
verified

If the U.S. government reports that GDP in the third quarter was $14 trillion at an annual rate, then the amount of income and expenditure during quarter three was $4 trillion.

Correct Answer
verified

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

Correct Answer
verified

For the purpose of calculating GDP, investment is spending on

Correct Answer
verified

The output of goods and services produced in the United States has grown on average 3 percent per year since 1965.

Correct Answer
verified

Which of the following is not a correct statement about the growth of real GDP in the U.S. economy?

Correct Answer
verified

In the actual economy, goods and services are purchased by

Correct Answer
verified

In years of economic contraction, firms throughout the economy increase their production of goods and services, employment rises, and jobs are easy to find.

Correct Answer
verified

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

Correct Answer
verified

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Correct Answer
verified

Changes in the GDP deflator reflect

Correct Answer
verified

Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Correct Answer
verified

When an Egyptian firm purchases a cement mixer from Slovakia,

Correct Answer
verified

A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009. It also reported a GDP deflator of 85 in 2010 and 100 in 2009. Between 2009 and 2010,

Correct Answer
verified

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Correct Answer
verified

If a good produced this quarter goes into inventory, then it is included in this period's GDP. If it is sold in the next quarter, it will have no effect on GDP.

Correct Answer
verified

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

Correct Answer
verified

Exam 10: Measuring a Nations Income

Suppose an economy produces only cranberries and maple syrup. In 2010, 50 units of cranberries are sold at $20 per unit and 100 units of maple syrup are sold at $8 per unit. In 2009, the base year, the price of cranberries was $10 per unit and the price of maple syrup was $15 per unit. For 2010,

Correct AnswerverifiedShow Answer

If the U.S. government reports that GDP in the third quarter was $14 trillion at an annual rate, then the amount of income and expenditure during quarter three was $4 trillion.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For the purpose of calculating GDP, investment is spending on

Correct AnswerverifiedShow Answer

The output of goods and services produced in the United States has grown on average 3 percent per year since 1965.

Correct AnswerverifiedShow Answer

Which of the following is not a correct statement about the growth of real GDP in the U.S. economy?

Correct AnswerverifiedShow Answer

In the actual economy, goods and services are purchased by

Correct AnswerverifiedShow Answer

In years of economic contraction, firms throughout the economy increase their production of goods and services, employment rises, and jobs are easy to find.

Correct AnswerverifiedShow Answer

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

Correct AnswerverifiedShow Answer

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Correct AnswerverifiedShow Answer

Changes in the GDP deflator reflect

Correct AnswerverifiedShow Answer

Tim mows the yard for his neighbors. He spends $1 on gas and charges them $20 for each lawn he mows. What's the total contribution to GDP each time Tim mows a yard?

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

Correct AnswerverifiedShow Answer

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Correct AnswerverifiedShow Answer

When an Egyptian firm purchases a cement mixer from Slovakia,

Correct AnswerverifiedShow Answer

A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009. It also reported a GDP deflator of 85 in 2010 and 100 in 2009. Between 2009 and 2010,

Correct AnswerverifiedShow Answer

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Correct AnswerverifiedShow Answer

If a good produced this quarter goes into inventory, then it is included in this period's GDP. If it is sold in the next quarter, it will have no effect on GDP.

Correct AnswerverifiedShow Answer

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

Correct AnswerverifiedShow Answer

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