Question 1

GDP can measure either the total income of everyone in the economy or the total expenditure on the economy's output of goods and services, but GDP cannot measure both at the same time.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following items is counted as part of government purchases?

Accepted Answer

A)  The federal government pays $2,000 in Social Security benefits to a retired person.
B)  The city of Athens, Ohio pays $10,000 to a tree-trimming firm to trim trees along city boulevards.
C)  The state of Nebraska pays $1,000 to help a low-income family pay its medical bills.
D)  All of the above are correct.E) All of the above
F) A) and B)

Question 3

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

Accepted Answer

A) True 
 B)False

Question 4

Consumer goods that are produced, go into inventory, and are not sold during the current period are

Accepted Answer

A)  counted as intermediate goods and so are not included in current period GDP.
B)  counted in current period GDP only if the firm that produced them sells them to another firm.
C)  included in current period GDP as inventory investment.
D)  included in current period GDP as consumption.E) None of the above
F) All of the above

Question 5

Table 23-3
The table below contains data for the country of Crete for the year 2010. 
-Refer to Table 23-3. What were Crete's government purchases in 2010?

Accepted Answer

A)  ​$1130
B)  ​$1601
C)  ​$1837
D)  ​$2544E) A) and B)
F) C) and D)

Question 6

Periods during which real GDP rises are called recessions.

Accepted Answer

A) True 
 B)False

Question 7

Changes in real GDP reflect only changes in the amounts being produced.

Accepted Answer

A) True 
 B)False

Question 8

GDP does not reflect

Accepted Answer

A)  the value of leisure.
B)  the value of goods and services produced at home.
C)  the quality of the environment.
D)  All of the above are correct.E) B) and C)
F) C) and D)

Question 9

In the national income accounts, depreciation is called

Accepted Answer

A)  "consumption of fixed capital."
B)  "negative investment."
C)  "diminished value."
D)  "loss due to wear."E) A) and B)
F) A) and D)

Question 10

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) B) and C)

Question 11

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 12

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

Question 13

If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?

Accepted Answer

A)  $6.7 billion.
B)  $15 billion.
C)  $21.6 billion.
D)  $38 billion.E) B) and C)
F) A) and D)

Question 14

A good is produced by a firm in 2009, added to the firm's inventory in 2010, and sold to a household in 2010. As a result, on net,

Accepted Answer

A)  2009 GDP increased and 2010 GDP decreased.
B)  2009 GDP decreased and 2010 GDP increased.
C)  2009 GDP did not change and 2010 GDP increased.
D)  2009 GDP increased and 2010 GDP did not change.E) A) and B)
F) None of the above

Question 15

In the United States in 2015, 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) A) and D)
F) None of the above

Question 16

A country reported nominal GDP of $200 billion in 2010 and $180 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 105 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) A) and D)
F) None of the above

Question 17

A macroeconomist is interested in

Accepted Answer

A)  explaining how changes in sellers' behavior affect prices of a particular good.
B)  explaining price changes in a particular market.
C)  explaining why the unemployment rate is higher.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 18

Suppose an economy produces only burgers and bags of fries. In 2010, 4000 burgers are sold at $3 each and 6000 bags of fries are sold at $1.50 each. In 2008, the base year, burgers sold for $2.50 each and bags of fries sold for $2 each.

Accepted Answer

A)  nominal GDP is $22,000, real GDP is $21,000, and the GDP deflator is 95.45.
B)  nominal GDP is $22,000, real GDP is $21,000, and the GDP deflator is 104.77.
C)  nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 95.45.
D)  nominal GDP is $21,000, real GDP is $22,000, and the GDP deflator is 104.77.E) A) and B)
F) B) and D)

Question 19

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

Accepted Answer

A)  spending on new residential construction and spending on stocks and bonds
B)  spending on new residential construction but not spending on stocks and bonds
C)  spending on stocks and bonds but not spending on new residential construction
D)  neither spending on stocks and bonds nor spending on new residential constructionE) All of the above
F) A) and B)

Question 20

The residents of Ireland earn $200 million of income from abroad. Residents of other countries earn $300 million in Ireland. Therefore, Ireland's

Accepted Answer

A)  net factor payments from abroad are positive, and its GDP is larger than its GNP.
B)  net factor payments from abroad are positive, and its GNP is larger than its GDP.
C)  net factor payments from abroad are negative, and its GDP is larger than its GNP.
D)  net factor payments from abroad are negative, and its GNP is larger than its GDP.E) All of the above
F) B) and C)

Exam 23: Measuring a Nation S Income

The residents of Ireland earn $200 million of income from abroad. Residents of other countries earn $300 million in Ireland. Therefore, Ireland's

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Changes in real GDP reflect only changes in the amounts being produced.

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Suppose an economy produces only burgers and bags of fries. In 2010, 4000 burgers are sold at $3 each and 6000 bags of fries are sold at $1.50 each. In 2008, the base year, burgers sold for $2.50 each and bags of fries sold for $2 each.

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Periods during which real GDP rises are called recessions.

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If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?

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If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

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Table 23-3 The table below contains data for the country of Crete for the year 2010. -Refer to Table 23-3. What were Crete's government purchases in 2010?

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In the national income accounts, depreciation is called

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

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In the United States in 2015, government purchases of goods and services were

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A macroeconomist is interested in

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A good is produced by a firm in 2009, added to the firm's inventory in 2010, and sold to a household in 2010. As a result, on net,

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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?

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

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GDP does not reflect

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A country reported nominal GDP of $200 billion in 2010 and $180 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 105 in 2009. Between 2009 and 2010,

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Which of the following items is counted as part of government purchases?

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Consumer goods that are produced, go into inventory, and are not sold during the current period are

Correct AnswerverifiedShow Answer

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

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GDP can measure either the total income of everyone in the economy or the total expenditure on the economy's output of goods and services, but GDP cannot measure both at the same time.

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