Question 1

Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Accepted Answer

A)   Both item (1) and item (2) are included in the consumption component of GDP.
B)   Item (1) is included in the consumption component of GDP,while item (2) is included in the investment component of GDP.
C)   Item (1) is included in the investment component of GDP,while item (2) is included in the consumption component of GDP.
D)   Only item (2) is included in GDP,and it is included in the investment component.E) A) and C)
F) B) and C)

Question 2

The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

Accepted Answer

A) True 
 B)False

Question 3

A steel company sells some steel to a bicycle company for $150.The bicycle company uses the steel to produce a bicycle,which it sells for $250.Taken together,these two transactions contribute

Accepted Answer

A)   $150 to GDP.
B)   $250 to GDP.
C)   between $250 and $400 to GDP,depending on the profit earned by the bicycle company when it sold the bicycle.
D)   $400 to GDP.E) C) and D)
F) A) and C)

Question 4

The GDP deflator is the ratio of

Accepted Answer

A)   real GDP to nominal GDP multiplied by 100.
B)   real GDP to the inflation rate multiplied by 100.
C)   nominal GDP to real GDP multiplied by 100.
D)   nominal GDP to the inflation rate multiplied by 100.E) C) and D)
F) A) and B)

Question 5

For an economy as a whole,income must exceed expenditure.

Accepted Answer

A) True 
 B)False

Question 6

Estimates of the values of which of the following non-market goods or services are included in GDP?

Accepted Answer

A)   unpaid housework but not the rental value of owner-occupied homes.
B)   the rental value of owner-occupied homes but not unpaid housework.
C)   unpaid housework and the rental value of owner-occupied homes.
D)   Neither unpaid housework nor the rental value of owner-occupied homes.E) B) and C)
F) A) and C)

Question 7

Table 10-4
The country of Caspir produces only cereal and milk.Quantities and prices of these goods for the last several years are shown below.The base year is 2008.
Prices and Quantities
 
-Refer to Table 10-4.In 2010,this country's

Accepted Answer

A)   real GDP was $780,and the GDP deflator was 141.0.
B)   real GDP was $825,and the GDP deflator was 133.3.
C)   real GDP was $780,and the GDP deflator was 133.3
D)   real GDP was $825,and the GDP deflator was 141.0E) B) and D)
F) B) and C)

Question 8

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 9

Which of the following correctly orders U.S.income measures from largest to smallest?

Accepted Answer

A)   disposable personal income,gross national product,national income,net national product,personal income
B)   personal income,net national product,national income,gross national product,disposable personal income
C)   gross national product,net national product,national income,personal income,disposable personal income
D)   disposable personal income,personal income,national income,net national product,gross national productE) All of the above
F) C) and D)

Question 10

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 11

The U.S.Air Force pays a Turkish citizen $30,000 to work on a U.S.base in Turkey.As a result,

Accepted Answer

A)   U.S.government purchases increase by $30,000;U.S.net exports decrease by $30,000;and U.S.GDP is unaffected.
B)   U.S.government purchases increase by $30,000;U.S.net exports are unaffected;and U.S.GDP increases by $30,000.
C)   U.S.government purchases,net exports,and GDP are unaffected.
D)   U.S.government purchases are unaffected;U.S.net exports decrease by $30,000;and U.S.GDP decreases by $30,000.E) A) and C)
F) None of the above

Question 12

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 13

Consider two cars manufactured by Chevrolet in 2009.During 2009,Chevrolet sells one of the two cars to Sean for $24,000.Later in the same year,Sean sells the car to Kati for $19,000.The second automobile,with a market value of $30,000,is unsold at the end of 2010 and it remains in Chevrolet's inventory.The transactions just described contribute how much to GDP for 2009?

Accepted Answer

A)   $24,000
B)   $43,000
C)   $54,000
D)   $73,000E) B) and C)
F) B) and D)

Question 14

Suppose an economy produces only burgers and bags of fries.In 2010,4000 burgers are sold at $3 each and 6000 bags of fires 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 $21,00,real GDP is $22,000,and the GDP deflator is 104.77.E) A) and C)
F) None of the above

Question 15

Suppose an economy's production consists only of corn and soybeans.In 2010,20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel.In 2009,the price of corn was $2 per bushel and the price of soybeans was $1 per bushel.Using 2009 as the base year,it follows that,for 2010,

Accepted Answer

A)   nominal GDP is $50,real GDP is $100,and the GDP deflator is 50.
B)   nominal GDP is $50,real GDP is $100,and the GDP deflator is 200.
C)   nominal GDP is $100,real GDP is $50,and the GDP deflator is 50.
D)   nominal GDP is $100,real GDP is $50,and the GDP deflator is 200.E) A) and B)
F) B) and C)

Question 16

Table 23-1
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 23-1.
What was the inflation rate for 2010? Show your work.

Accepted Answer

2009 is the base year so the GDP Deflato...

Question 17

New home construction is included in the consumption component of GDP.

Accepted Answer

A) True 
 B)False

Question 18

In the economy of Ukzten in 2010,consumption was 60% of GDP,government purchases were $212,imports were $67 and 67% of the value of exports,investment was one-half of the value of consumption.What was Ukzten's GDP in 2010?

Accepted Answer

A)   $1450
B)   $1790
C)   $2450
D)   $2790E) All of the above
F) C) and D)

Question 19

GDP is the market value of all final goods and services produced within a country in a given period of time.

Accepted Answer

A) True 
 B)False

Question 20

While GDP includes tangible goods such as books and bug spray,it excludes intangible services such as the services provided by teachers and exterminators.

Accepted Answer

A) True 
 B)False

Exam 23: Measuring a Nations Income

Suppose an economy produces only burgers and bags of fries.In 2010,4000 burgers are sold at $3 each and 6000 bags of fires 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.

Correct Answer
verified

While GDP includes tangible goods such as books and bug spray,it excludes intangible services such as the services provided by teachers and exterminators.

Correct Answer
verified

In the economy of Ukzten in 2010,consumption was 60% of GDP,government purchases were $212,imports were $67 and 67% of the value of exports,investment was one-half of the value of consumption.What was Ukzten's GDP in 2010?

Correct Answer
verified

New home construction is included in the consumption component of GDP.

Correct Answer
verified

A steel company sells some steel to a bicycle company for $150.The bicycle company uses the steel to produce a bicycle,which it sells for $250.Taken together,these two transactions contribute

Correct Answer
verified

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

Correct Answer
verified

GDP is the market value of all final goods and services produced within a country in a given period of time.

Correct Answer
verified

Estimates of the values of which of the following non-market goods or services are included in GDP?

Correct Answer
verified

Correct Answer
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Table 23-1 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 23-1. What was the inflation rate for 2010? Show your work.

Correct Answer
verified
2009 is the base year so the GDP Deflato...
View Answer

The U.S.Air Force pays a Turkish citizen $30,000 to work on a U.S.base in Turkey.As a result,

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

Which of the following correctly orders U.S.income measures from largest to smallest?

Correct Answer
verified

The GDP deflator is the ratio of

Correct Answer
verified

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 Answer
verified
Since this is in real terms,it tells us ...
View Answer

Table 10-4 The country of Caspir produces only cereal and milk.Quantities and prices of these goods for the last several years are shown below.The base year is 2008. Prices and Quantities -Refer to Table 10-4.In 2010,this country's

Correct Answer
verified

For an economy as a whole,income must exceed expenditure.

Correct Answer
verified

Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Correct Answer
verified

The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

Correct Answer
verified

Correct Answer
verified

Exam 23: Measuring a Nations Income

Suppose an economy produces only burgers and bags of fries.In 2010,4000 burgers are sold at $3 each and 6000 bags of fires 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.

Correct AnswerverifiedShow Answer

While GDP includes tangible goods such as books and bug spray,it excludes intangible services such as the services provided by teachers and exterminators.

Correct AnswerverifiedShow Answer

In the economy of Ukzten in 2010,consumption was 60% of GDP,government purchases were $212,imports were $67 and 67% of the value of exports,investment was one-half of the value of consumption.What was Ukzten's GDP in 2010?

Correct AnswerverifiedShow Answer

New home construction is included in the consumption component of GDP.

Correct AnswerverifiedShow Answer

A steel company sells some steel to a bicycle company for $150.The bicycle company uses the steel to produce a bicycle,which it sells for $250.Taken together,these two transactions contribute

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

GDP is the market value of all final goods and services produced within a country in a given period of time.

Correct AnswerverifiedShow Answer

Estimates of the values of which of the following non-market goods or services are included in GDP?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 23-1 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 23-1. What was the inflation rate for 2010? Show your work.

Correct Answerverified2009 is the base year so the GDP Deflato...View AnswerShow Answer

The U.S.Air Force pays a Turkish citizen $30,000 to work on a U.S.base in Turkey.As a result,

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

Which of the following correctly orders U.S.income measures from largest to smallest?

Correct AnswerverifiedShow Answer

The GDP deflator is the ratio of

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

Table 10-4 The country of Caspir produces only cereal and milk.Quantities and prices of these goods for the last several years are shown below.The base year is 2008. Prices and Quantities -Refer to Table 10-4.In 2010,this country's

Correct AnswerverifiedShow Answer

For an economy as a whole,income must exceed expenditure.

Correct AnswerverifiedShow Answer

Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Correct AnswerverifiedShow Answer

The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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2009 is the base year so the GDP Deflato...
View Answer

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verified
Since this is in real terms,it tells us ...
View Answer

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