Question 1

The government of country A, which has adopted American GDP accounting conventions, has calculated that the seasonally-adjusted market value of all final goods and services produced within country A in quarter 1 was $5 billion. The government will report that GDP in quarter 1 was

Accepted Answer

A)  $1.25 billion at an annual rate.
B)  $4 billion at an annual rate.
C)  $5 billion at an annual rate.
D)  $20 billion at an annual rate.E) A) and D)
F) None of the above

Question 2

A stove is produced by a firm in 2014, added to the firm's inventory in 2014, and sold to a household in 2015. It follows that

Accepted Answer

A)  the value of the good is added to the investment category of 2014 GDP, added to the consumption category of 2015 GDP, and subtracted from the investment category of 2015 GDP.
B)  the value of the good is added to the investment category of 2014 GDP, added to the consumption category of 2015 GDP, and not included in the investment category of 2015 GDP.
C)  the value of the good is added to the investment category of 2014 GDP, subtracted from the consumption category of 2015 GDP, and not included in the investment category of 2015 GDP.
D)  the value of the good is added to the investment category of 2014 GDP, subtracted from the consumption category of 2015 GDP, and added to the investment category of 2015 GDP.E) B) and D)
F) All of the above

Question 3

Which of the following is not correct?

Accepted Answer

A)  GNP equals net national product plus losses from depreciation.
B)  For most countries, including the United States, GDP and GNP are nearly the same.
C)  GDP and GNP typically move in opposite directions.
D)  Personal income equals disposable personal income plus personal taxes plus certain nontax payments.E) A) and B)
F) All of the above

Question 4

The advantage of real GDP as a measure is the fact that it only increases.
​

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  household purchases of appliances.
B)  household purchases of medical care.
C)  household purchases of food.
D)  All of the above are included in the consumption component of GDP.E) B) and D)
F) B) and C)

Question 6

When real GDP increases, this implies that the production of goods and services has risen.
​

Accepted Answer

A) True 
 B)False

Question 7

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

Accepted Answer

A)  caused measured GDP to fall.
B)  not caused any change in measured GDP.
C)  caused measured GDP to rise.
D)  probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.E) A) and D)
F) All of the above

Question 8

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Accepted Answer

A)  saving per person.
B)  GDP per person.
C)  government expenditures per person.
D)  investment per business firm.E) A) and B)
F) A) and C)

Question 9

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 10

Purchases by American tourists in other countries increase GDP for both the country in which the purchase was made and for the U.S., since a U.S. citizen carried out the expenditure.
​

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a question that macroeconomists address?

Accepted Answer

A)  Why is average income high in some countries while it is low in others?
B)  Why does the price of oil rise when war erupts in the Middle East?
C)  Why do production and employment expand in some years and contract in others?
D)  Why do prices rise rapidly in some periods of time while they are more stable in other periods?E) All of the above
F) B) and D)

Question 12

Which of the following is the correct formula for the GDP deflator?

Accepted Answer

A)    .
B)    .
C)    .
D)    .E) A) and B)
F) A) and C)

Question 13

Rachel cuts her sister's hair for free. When she cuts the hair of her customers in her shop, she charges $10. When is Rachel's haircutting included in GDP?

Accepted Answer

A)  When she cuts her sister's hair or cuts her customers' hair.
B)  When she cuts her sister's hair, but not her customers' hair.
C)  When she cuts her customers' hair, but not her sister's.
D)  Never.E) A) and C)
F) B) and C)

Question 14

If total spending rises from one year to the next, then

Accepted Answer

A)  the economy must be producing a larger output of goods and services.
B)  goods and services must be selling at higher prices.
C)  either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both.
D)  employment or productivity must be rising.E) A) and D)
F) A) and C)

Question 15

Macroeconomic statistics include GDP, the inflation rate, the unemployment rate, retail sales, and the trade deficit.

Accepted Answer

A) True 
 B)False

Question 16

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $8000, government purchases were $1200, and imports were $600. What was Talikastan's investment in 2015?

Accepted Answer

A)  $3200
B)  $5600
C)  $2000
D)  $4400E) B) and D)
F) All of the above

Question 17

GDP does not make adjustments for leisure time, environmental quality, or volunteer work.

Accepted Answer

A) True 
 B)False

Question 18

U.S. GDP was almost $12 trillion in 2015.

Accepted Answer

A) True 
 B)False

Question 19

Government purchases include spending on goods and services by

Accepted Answer

A)  the federal government, but not by state or local governments.
B)  federal and state governments, but not by local governments.
C)  federal, state, and local governments.
D)  federal, state, and local governments, as well as household spending by employees of those governments.E) All of the above
F) C) and D)

Question 20

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

Exam 23: Measuring a Nation S Income

The advantage of real GDP as a measure is the fact that it only increases. ​

Correct AnswerverifiedShow Answer

The government of country A, which has adopted American GDP accounting conventions, has calculated that the seasonally-adjusted market value of all final goods and services produced within country A in quarter 1 was $5 billion. The government will report that GDP in quarter 1 was

Correct AnswerverifiedShow Answer

Purchases by American tourists in other countries increase GDP for both the country in which the purchase was made and for the U.S., since a U.S. citizen carried out the expenditure. ​

Correct AnswerverifiedShow Answer

Government purchases include spending on goods and services by

Correct AnswerverifiedShow Answer

If total spending rises from one year to the next, then

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Which of the following is not correct?

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

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

Correct AnswerverifiedShow Answer

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Correct AnswerverifiedShow Answer

GDP does not make adjustments for leisure time, environmental quality, or volunteer work.

Correct AnswerverifiedShow Answer

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $8000, government purchases were $1200, and imports were $600. What was Talikastan's investment in 2015?

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When real GDP increases, this implies that the production of goods and services has risen. ​

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Which of the following is the correct formula for the GDP deflator?

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A stove is produced by a firm in 2014, added to the firm's inventory in 2014, and sold to a household in 2015. It follows that

Correct AnswerverifiedShow Answer

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

Correct AnswerverifiedShow Answer

Rachel cuts her sister's hair for free. When she cuts the hair of her customers in her shop, she charges $10. When is Rachel's haircutting included in GDP?

Correct AnswerverifiedShow Answer

Macroeconomic statistics include GDP, the inflation rate, the unemployment rate, retail sales, and the trade deficit.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

U.S. GDP was almost $12 trillion in 2015.

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Which of the following is not a question that macroeconomists address?

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The advantage of real GDP as a measure is the fact that it only increases.

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Purchases by American tourists in other countries increase GDP for both the country in which the purchase was made and for the U.S., since a U.S. citizen carried out the expenditure.

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When real GDP increases, this implies that the production of goods and services has risen.

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