Question 1

Suppose that an economy produces 40,000 units of good A which sells at $4 a unit and 20,000 units of good B which sells at $5 per unit. Production of good A contributes

Accepted Answer

A)   2 times as much to GDP as the production of good B.
B)   8/5 times as much to GDP as the production of good B.
C)   5/4 times as much to GDP as the production of good B.
D)   4/5 times as much to GDP as production of good B.E) A) and D)
F) A) and C)

Question 2

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

Accepted Answer

A)   the estimated value of production accomplished at home, such as backyard production of fruits and vegetables
B)   the value of illegally-produced goods and services
C)   the value of cars and trucks produced in foreign countries and sold in the U.S.
D)   None of the above is included in U.S. GDP.E) None of the above
F) B) and D)

Question 3

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

Question 4

Real GDP is a better gauge of economic well-being than is nominal GDP.

Accepted Answer

A) True 
 B)False

Question 5

The Patersons bought a home that was newly constructed in 2007 for $275,000. They sold the home in 2009 for $205,000. Which of the following statements is correct regarding the sale of the house?

Accepted Answer

A)   The 2009 sale increased 2009 GDP by $205,000 and had no effect on 2007 GDP.
B)   The 2009 sale reduced 2009 GDP by $70,000 and had no effect on 2007 GDP.
C)   The 2009 sale increased 2009 GDP by $205,000; and caused 2007 GDP to be revised downward by $70,000.
D)   The 2009 sale affected neither 2007 GDP nor 2009 GDP.E) C) and D)
F) B) and C)

Question 6

Table 5-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009.
Prices and Quantities
 
-Refer to Table 5-6. In 2008, this country's nominal GDP was

Accepted Answer

A)   $300.
B)   $390.
C)   $400.
D)   $540.E) C) and D)
F) A) and B)

Question 7

Which of the following transactions would be included in GDP for 2010?

Accepted Answer

A)   In February 2010, Amanda sells a 1996 Honda Accord to Isabella.
B)   In February 2010, Amanda buys a ticket to visit a zoo in Florida. She visits the zoo in April 2011.
C)   In December 2010, Isabella eats onions that she harvested from her backyard garden in October 2010.
D)   All of the above are correct.E) A) and D)
F) C) and D)

Question 8

If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator ?

Accepted Answer

A)   87.5
B)   114.3
C)   400
D)   896E) None of the above
F) B) and C)

Question 9

Table 5-7
The table below contains data for the country of Togogo. The base year is 1974.
 
-Refer to Table 5-7. 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) C) and D)
F) A) and B)

Question 10

Janet bought flour and used it to bake bread she ate. ABC Bakery bought flour which it used to bake bread that customers purchased. In which case will the flour be counted as a final good?

Accepted Answer

A)   Janet's purchase and ABC Bakery's purchase.
B)   ABC Bakery's purchase but not Janet's purchase.
C)   Janet's purchase but not ABC Bakery's purchase.
D)   Neither Janet's purchase nor ABC Bakery's purchase.E) A) and B)
F) A) and C)

Question 11

A recession has traditionally been defined as a period during which

Accepted Answer

A)   nominal GDP declines for two consecutive quarters.
B)   nominal GDP declines for four consecutive quarters.
C)   real GDP declines for two consecutive quarters.
D)   real GDP declines for four consecutive quarters.E) A) and B)
F) B) and D)

Question 12

The basic tools of supply and demand are

Accepted Answer

A)   useful only in the analysis of economic behavior in individual markets.
B)   useful in analyzing the overall economy, but not in analyzing individual markets.
C)   central to microeconomic analysis, but seldom used in macroeconomic analysis.
D)   central to macroeconomic analysis as well as to microeconomic analysis.E) All of the above
F) A) and B)

Question 13

Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2009,

Accepted Answer

A)   nominal GDP is $400, real GDP is $500, and the GDP deflator is 80.
B)   nominal GDP is $400, real GDP is $500, and the GDP deflator is 125.
C)   nominal GDP is $500, real GDP is $400, and the GDP deflator is 80.
D)   nominal GDP is $500, real GDP is $400, and the GDP deflator is 125.E) B) and C)
F) B) and D)

Question 14

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

Question 15

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 16

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) C) and D)

Question 17

Which of the following statements about recessions is true?

Accepted Answer

A)   An old rule of thumb defining recession is two consecutive quarters of falling nominal GDP.
B)   Recessions occur at regular intervals and last standard amounts of time.
C)   There is no ironclad rule for the declaration of recessions.
D)   Recessions are associated with low unemployment and high income.E) All of the above
F) None of the above

Question 18

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

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 5: Measuring a Nations Income

Table 5-7 The table below contains data for the country of Togogo. The base year is 1974. -Refer to Table 5-7. From 1976 to 1977,

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%.

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Janet bought flour and used it to bake bread she ate. ABC Bakery bought flour which it used to bake bread that customers purchased. In which case will the flour be counted as a final good?

Correct AnswerverifiedShow Answer

Real GDP is a better gauge of economic well-being than is nominal GDP.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator ?

Correct AnswerverifiedShow Answer

A recession has traditionally been defined as a period during which

Correct AnswerverifiedShow Answer

Suppose that an economy produces 40,000 units of good A which sells at $4 a unit and 20,000 units of good B which sells at $5 per unit. Production of good A contributes

Correct AnswerverifiedShow Answer

Which of the following statements about recessions is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

When an Egyptian firm purchases a cement mixer from Slovakia,

Correct AnswerverifiedShow Answer

The Patersons bought a home that was newly constructed in 2007 for $275,000. They sold the home in 2009 for $205,000. Which of the following statements is correct regarding the sale of the house?

Correct AnswerverifiedShow Answer

The basic tools of supply and demand are

Correct AnswerverifiedShow Answer

Table 5-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009. Prices and Quantities -Refer to Table 5-6. In 2008, this country's nominal GDP was

Correct AnswerverifiedShow Answer

Which of the following transactions would be included in GDP for 2010?

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

Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2009,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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