Question 1

Which of the following is not a question addressed by macroeconomists?

Accepted Answer

A)   Why is average income high in some nations but low in others?
B)   What, if anything, can the government do to promote growth in incomes, low inflation, and stable employment?
C)   What is the impact of foreign competition on the U.S. auto industry?
D)   Why do production and employment expand in some years and contract in others?E) All of the above
F) A) and B)

Question 2

In computing GDP, market prices are used to value final goods and services because

Accepted Answer

A)   market prices do not change much over time, so it is easy to make comparisons between years.
B)   market prices reflect the values of goods and services.
C)   market prices reflect the quantity sold.
D)   None of the above is correct; market prices are not used in computing GDP.E) A) and D)
F) A) and C)

Question 3

A form of government spending that is not made in exchange for a currently produced good or service is called

Accepted Answer

A)   a transfer payment.
B)   consumption.
C)   investment.
D)   None of the above is correct.E) B) and C)
F) All of the above

Question 4

Michigan Cranberry Company sold $10 million worth of cranberries it produced. In producing cranberries, it purchased $1 million dollars worth of supplies from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?

Accepted Answer

A)   $12 million
B)   $11 million
C)   $10 million
D)   $9 millionE) A) and B)
F) B) and D)

Question 5

Which of the following is not included in the investment component of GDP?

Accepted Answer

A)   The purchase of 100 shares of stock.
B)   The purchase of a $1000 bond.
C)   A firm's purchase of a used van to use for deliveries.
D)   None of the above are included in the investment component of GDP.E) A) and B)
F) None of the above

Question 6

If an economy's GDP rises, then it must be the case that the economy's

Accepted Answer

A)   income rises and saving falls.
B)   income and saving both rise.
C)   income rises and expenditure falls.
D)   income and expenditure both rise.E) A) and D)
F) None of the above

Question 7

Which of the following examples of household spending is categorized as investment rather than consumption?

Accepted Answer

A)   expenditures on durable goods such as automobiles and refrigerators
B)   expenditures on intangibles items such as medical care
C)   expenditures on new housing
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 8

If nominal GDP doubles and the GDP deflator doubles, then real GDP

Accepted Answer

A)   remains constant.
B)   doubles.
C)   triples.
D)   quadruples.E) A) and B)
F) C) and D)

Question 9

A statistical discrepancy

Accepted Answer

A)   exists because data sources are not perfect, so measures of expenditures and income are not equal.
B)   insures that GDP will approximately equal GNP.
C)   explains the close association between GDP and quality of life measures such as literacy and life expectancy.
D)   explains the inadequacy of GDP in capturing the value of leisure and the value of a clean environment.E) A) and D)
F) B) and C)

Question 10

A U.S. citizen buys a tea kettle manufactured in China by a company that is owned and operated by U.S citizens. In which of the following components of U.S. GDP is this transaction accounted for?

Accepted Answer

A)   consumption and imports
B)   consumption but not imports
C)   imports but not consumption
D)   neither consumption nor importsE) C) and D)
F) A) and C)

Question 11

The output of goods and services produced in the United States has grown on average 3 percent per year since 1965.

Accepted Answer

A) True 
 B)False

Question 12

In a simple circular-flow diagram, households buy goods and services with the income they get from

Accepted Answer

A)   wages.
B)   rents.
C)   profits.
D)   All of the above are correct.E) None of the above
F) C) and D)

Question 13

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarters)  doesdo)  these transactions raise consumption?

Accepted Answer

A)   the first and the second
B)   the first but not the second
C)   the second but not the first
D)   neither the first nor the secondE) A) and D)
F) A) and B)

Question 14

In a simple circular-flow diagram, firms

Accepted Answer

A)   purchase resources from households.
B)   purchase the output produced by households.
C)   receive income by selling resources to households.
D)   All of the above are correct.E) None of the above
F) B) and D)

Question 15

Nominal GDP is $15 trillion and real GDP is $10 trillion. What is the GDP deflator? Show your work.

Accepted Answer

The GDP Deflator = N...

Question 16

GDP is a good measure of economic well-being for all purposes.

Accepted Answer

A) True 
 B)False

Question 17

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

Question 18

Disposable personal income is the income that

Accepted Answer

A)   households have left after paying taxes and non-tax payments to the government.
B)   businesses have left after paying taxes and non-tax payments to the government.
C)   households and noncorporate businesses have left after paying taxes and non-tax payments to the government.
D)   households and businesses have left after paying taxes and non-tax payments to the government.E) All of the above
F) B) and C)

Question 19

Write the formula for calculating a GDP deflator using only nominal and real GDP.

Accepted Answer

The answer of Write the formula for calculating a GDP...

Question 20

Which of the following items is included in GDP?

Accepted Answer

A)   the sale of stocks and bonds
B)   the sale of used goods
C)   the sale of services such as those performed by a doctor
D)   All of the above are included in GDP.E) None of the above
F) B) and C)

Exam 15: Measuring a Nations Income

In a simple circular-flow diagram, households buy goods and services with the income they get from

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In a simple circular-flow diagram, firms

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Which of the following examples of household spending is categorized as investment rather than consumption?

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Michigan Cranberry Company sold $10 million worth of cranberries it produced. In producing cranberries, it purchased $1 million dollars worth of supplies from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?

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A statistical discrepancy

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If an economy's GDP rises, then it must be the case that the economy's

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A U.S. citizen buys a tea kettle manufactured in China by a company that is owned and operated by U.S citizens. In which of the following components of U.S. GDP is this transaction accounted for?

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Which of the following is not included in the investment component of GDP?

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Which of the following items is included in GDP?

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Nominal GDP is $15 trillion and real GDP is $10 trillion. What is the GDP deflator? Show your work.

Correct AnswerverifiedThe GDP Deflator = N...View AnswerShow Answer

Which of the following is not a question addressed by macroeconomists?

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Write the formula for calculating a GDP deflator using only nominal and real GDP.

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A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarters) doesdo) these transactions raise consumption?

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The output of goods and services produced in the United States has grown on average 3 percent per year since 1965.

Correct AnswerverifiedShow Answer

In computing GDP, market prices are used to value final goods and services because

Correct AnswerverifiedShow Answer

GDP is a good measure of economic well-being for all purposes.

Correct AnswerverifiedShow Answer

Disposable personal income is the income that

Correct AnswerverifiedShow Answer

In the national income accounts, depreciation is called

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If nominal GDP doubles and the GDP deflator doubles, then real GDP

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A form of government spending that is not made in exchange for a currently produced good or service is called

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The GDP Deflator = N...
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