Question 1

An American soldier stationed in North Carolina receives a paycheck from the federal government for $300, which she uses to purchase a $100 MP3 player made in China by a Chinese firm and $200 for fruit and vegetables from a local farmers market. As a result, U.S. GDP increases by

Accepted Answer

A)   $200.
B)   $300.
C)   $500.
D)   $600.E) A) and D)
F) A) and C)

Question 2

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) None of the above
F) A) and B)

Question 3

The local Chevrolet dealership has an increase in inventory of 25 newly produced cars in 2006. In 2007, it sells all 25 cars. Which of the following statements is correct?

Accepted Answer

A)   The value of the cars in inventory will be counted as part of 2006 GDP, and the value of the cars sold in 2007 will not increase 2007 GDP.
B)   The value of the cars in inventory will not affect 2006 GDP, and the value of the cars sold in 2007 will increase 2007 GDP.
C)   The value of the cars in inventory will be counted as part of 2006 GDP, and the value of the cars sold in 2007 will increase 2007 GDP.
D)   The value of the cars in inventory will not affect 2006 GDP, and the value of the cars sold in 2007 will not increase 2007 GDP.E) None of the above
F) B) and C)

Question 4

According to the circular-flow diagram GDP

Accepted Answer

A)   can be computed as the total income paid by firms or as expenditures on final goods and services.
B)   can be computed as the total income paid by firms, but not as expenditures on final goods and services.
C)   can be computed as expenditures on final goods and services, but not as the total income paid by firms.
D)   cannot be computed as either total income paid by firms or expenditures on final goods and services.E) A) and B)
F) A) and C)

Question 5

Which of the following is not included in GDP?

Accepted Answer

A)   carrots grown in your garden and eaten by your family
B)   carrots purchased at a farmer's market and eaten by your family
C)   carrots purchased at a grocery store and eaten by your family
D)   None of the above are included in GDP.E) A) and B)
F) A) and C)

Question 6

Which of the following is correct?

Accepted Answer

A)   Nominal GDP is always less than real GDP.
B)   Nominal GDP is always greater than real GDP.
C)   Nominal GDP equals real GDP in the base year.
D)   Nominal GDP equals real GDP in all years but the base year.E) B) and D)
F) B) and C)

Question 7

International data on GDP and socioeconomic variables

Accepted Answer

A)   are inconclusive about the relationship between GDP and the economic well-being of citizens.
B)   suggest that poor nations actually might enjoy a higher standard of living than do rich nations.
C)   leave no doubt that a nation's GDP is closely associated with its citizens' standard of living.
D)   indicate that there are few real differences in living standards around the world, in spite of the large differences in GDP between nations.E) A) and B)
F) All of the above

Question 8

During a presidential campaign, the incumbent argues that he should be reelected because nominal GDP grew by 12 percent during his 4-year term in office. You know that population grew by 4 percent over the period and that the GDP deflator increased by 6 percent during the past 4 years. You should conclude that real GDP per person

Accepted Answer

A)   grew by more than 12 percent.
B)   grew, but by less than 12 percent.
C)   was unchanged.
D)   decreased.E) A) and B)
F) All of the above

Question 9

Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person.

Accepted Answer

A) True 
 B)False

Question 10

Changes in nominal GDP 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 B)
F) A) and C)

Question 11

An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services.

Accepted Answer

A) True 
 B)False

Question 12

According to the circular-flow diagram GDP

Accepted Answer

A)   can be computed as either the revenue firms receive from the sales of goods and services or the payments they make to factors of production.
B)   can be computed as the revenue firms receive from the sales of goods and services but not as the payments they make to factors of production.
C)   can be computed as payments firms make to factors of production but not as revenues they receive from the sales of goods and services.
D)   cannot be computed as either the revenue firms receive or the payments they make to factors of production.E) A) and B)
F) A) and C)

Question 13

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

Question 14

In the economy of Ukzten in 2010, consumption was $5300, GDP was $8800, government purchases were $1800, imports were $500, and investment was $2000. What were Ukzten's exports in 2010?

Accepted Answer

A)   -$800
B)   -$300
C)   $200
D)   $300E) None of the above
F) A) and B)

Question 15

Table 5-1
The table below contains data for country A for the year 2010.
 
-Refer to Table 5-1. What was country A's investment in 2010?

Accepted Answer

A)   $1178
B)   $1295
C)   $1882
D)   $1999E) C) and D)
F) None of the above

Question 16

Suppose an economy produces only cheese and fish. In 2010, 20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each. In 2009, the base year, the price of cheese was $10 per unit and the price of fish was $75 per unit. For 2010,

Accepted Answer

A)   nominal GDP is $500, real GDP is $800, and the GDP deflator is 62.5.
B)   nominal GDP is $500, real GDP is $800, and the GDP deflator is 160.
C)   nominal GDP is $800, real GDP is $500, and the GDP deflator is 62.5.
D)   nominal GDP is $800, real GDP is $500, and the GDP deflator is 160.E) None of the above
F) All of the above

Question 17

Underground economic activity as a percentage of GDP was highest in

Accepted Answer

A)   Bolivia.
B)   Mexico.
C)   Australia.
D)   the United States.E) A) and D)
F) A) and C)

Question 18

Jackie, a Canadian citizen, works only in the United States. The value of the output she 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) All of the above
F) None of the above

Question 19

Nominal GDP uses constant base-year prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 5: Measuring a Nations Income

Suppose an economy produces only cheese and fish. In 2010, 20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each. In 2009, the base year, the price of cheese was $10 per unit and the price of fish was $75 per unit. For 2010,

Correct Answer
verified

International data on GDP and socioeconomic variables

Correct Answer
verified

Which of the following is not included in GDP?

Correct Answer
verified

An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services.

Correct Answer
verified

Table 5-1 The table below contains data for country A for the year 2010. -Refer to Table 5-1. What was country A's investment in 2010?

Correct Answer
verified

Changes in nominal GDP reflect

Correct Answer
verified

According to the circular-flow diagram GDP

Correct Answer
verified

Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person.

Correct Answer
verified

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

In the economy of Ukzten in 2010, consumption was $5300, GDP was $8800, government purchases were $1800, imports were $500, and investment was $2000. What were Ukzten's exports in 2010?

Correct Answer
verified

The local Chevrolet dealership has an increase in inventory of 25 newly produced cars in 2006. In 2007, it sells all 25 cars. Which of the following statements is correct?

Correct Answer
verified

Changes in the GDP deflator reflect

Correct Answer
verified

Nominal GDP uses constant base-year prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.

Correct Answer
verified

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

Correct Answer
verified

According to the circular-flow diagram GDP

Correct Answer
verified

Which of the following is correct?

Correct Answer
verified

An American soldier stationed in North Carolina receives a paycheck from the federal government for $300, which she uses to purchase a $100 MP3 player made in China by a Chinese firm and $200 for fruit and vegetables from a local farmers market. As a result, U.S. GDP increases by

Correct Answer
verified

Underground economic activity as a percentage of GDP was highest in

Correct Answer
verified

Correct Answer
verified

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
verified

Exam 5: Measuring a Nations Income

Suppose an economy produces only cheese and fish. In 2010, 20 units of cheese are sold at $5 each and 8 units of fish are sold at $50 each. In 2009, the base year, the price of cheese was $10 per unit and the price of fish was $75 per unit. For 2010,

Correct AnswerverifiedShow Answer

International data on GDP and socioeconomic variables

Correct AnswerverifiedShow Answer

Which of the following is not included in GDP?

Correct AnswerverifiedShow Answer

An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services.

Correct AnswerverifiedShow Answer

Table 5-1 The table below contains data for country A for the year 2010. -Refer to Table 5-1. What was country A's investment in 2010?

Correct AnswerverifiedShow Answer

Changes in nominal GDP reflect

Correct AnswerverifiedShow Answer

According to the circular-flow diagram GDP

Correct AnswerverifiedShow Answer

Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person.

Correct AnswerverifiedShow Answer

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

In the economy of Ukzten in 2010, consumption was $5300, GDP was $8800, government purchases were $1800, imports were $500, and investment was $2000. What were Ukzten's exports in 2010?

Correct AnswerverifiedShow Answer

The local Chevrolet dealership has an increase in inventory of 25 newly produced cars in 2006. In 2007, it sells all 25 cars. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Changes in the GDP deflator reflect

Correct AnswerverifiedShow Answer

Nominal GDP uses constant base-year prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.

Correct AnswerverifiedShow Answer

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

Correct AnswerverifiedShow Answer

According to the circular-flow diagram GDP

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

An American soldier stationed in North Carolina receives a paycheck from the federal government for $300, which she uses to purchase a $100 MP3 player made in China by a Chinese firm and $200 for fruit and vegetables from a local farmers market. As a result, U.S. GDP increases by

Correct AnswerverifiedShow Answer

Underground economic activity as a percentage of GDP was highest in

Correct AnswerverifiedShow Answer

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

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