Question 1

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Accepted Answer

A)   would be included in GDP because they are part of government purchases.
B)   would be included in GDP because they are part of investment expenditures.
C)   would not be included in GDP because they are transfer payments.
D)   would not be included in GDP because the government raises taxes to pay for them.E) A) and B)
F) B) and C)

Question 2

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Accepted Answer

A)   80, and this indicates that the price level has decreased by 20 percent since the base year.
B)   80, and this indicates that the price level has increased by 80 percent since the base year.
C)   125, and this indicates that the price level has increased by 25 percent since the base year.
D)   125, and this indicates that the price level has increased by 125 percent since the base year.E) C) and D)
F) A) and B)

Question 3

GDP adds together many different kinds of products into a single measure of the value of economic activity by using market prices.

Accepted Answer

A) True 
 B)False

Question 4

Alexandria, a British citizen, owns and manages a fish and chips shop in Washington, D.C.
She buys fresh food produced by U.S. workers, pays utilities to a U.S. company, and employs only U.S. citizens. What part, if any, of the restaurant's production is included in U.S. GDP? What part, if any, of the restaurant's production is included in U.S. GNP?

Accepted Answer

All of the output is included ...

Question 5

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

Accepted Answer

The GDP Deflator = 1...

Question 6

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

Question 7

If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

Accepted Answer

A)   83.33, and this indicates that the price level has decreased by 16.67 percent since the base year.
B)   83.33, and this indicates that the price level has increased by 83.33 percent since the base year.
C)   120, and this indicates that the price level has increased by 20 percent since the base year.
D)   120, and this indicates that the price level has increased by 120 percent since the base year.E) A) and B)
F) A) and C)

Question 8

Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread. Wholesome Wheat sells the bread to the public for $22.00. Taking these two transactions into account, what is the effect on GDP?

Accepted Answer

A)   GDP increases by $10.00
B)   GDP increases by $12.00
C)   GDP increases by $22.00
D)   GDP increases by $32.00E) A) and B)
F) B) and C)

Question 9

In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?

Accepted Answer

A)   -$75
B)   -$225
C)   $225
D)   $75E) A) and D)
F) A) and C)

Question 10

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

Question 11

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Accepted Answer

A)   Country A because it had the higher nominal GDP per person.
B)   Country B because it had the higher nominal GDP per person.
C)   Country A because it had the higher real GDP per person.
D)   Country B because it had the higher real GDP per person.E) B) and C)
F) A) and D)

Question 12

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

Accepted Answer

A) True 
 B)False

Question 13

In 2012, U.S. GDP was almost

Accepted Answer

A)   $16 trillion.
B)   $12 trillion.
C)   $15 trillion.
D)   $14 trillion.E) A) and C)
F) None of the above

Question 14

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) A) and C)
F) C) and D)

Question 15

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

Accepted Answer

Real income is nominal income adjusted f...

Question 16

Java Hut, a U.S. coffee retailer, buys $10 million worth of coffee beans from Colombia. It also pays $5 million for paper cups and utilities, all produced in the U.S. It sells the coffee it produces using the above inputs to U.S. consumers for $50 million. Overall how do these expenditure affect net exports? How do these expenditures effect U.S. consumption?

Accepted Answer

Net exports are $10 million le...

Question 17

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

Accepted Answer

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

Question 18

Additions to inventory subtract from GDP, and when the goods in inventory are sold, the reductions in inventory add to GDP.

Accepted Answer

A) True 
 B)False

Question 19

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Accepted Answer

A) True 
 B)False

Question 20

In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200. What was Talikastan's GDP in 2015?

Accepted Answer

A)   $6200
B)   $6400
C)   $7000
D)   $8200E) A) and B)
F) B) and C)

Exam 15: Measuring a Nations Income

Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread. Wholesome Wheat sells the bread to the public for $22.00. Taking these two transactions into account, what is the effect on GDP?

Correct Answer
verified

Additions to inventory subtract from GDP, and when the goods in inventory are sold, the reductions in inventory add to GDP.

Correct Answer
verified

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Correct Answer
verified

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Correct Answer
verified

Correct Answer
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Net exports are $10 million le...
View Answer

In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200. What was Talikastan's GDP in 2015?

Correct Answer
verified

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

Correct Answer
verified
Real income is nominal income adjusted f...
View Answer

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

Correct Answer
verified
The GDP Deflator = 1...
View Answer

GDP adds together many different kinds of products into a single measure of the value of economic activity by using market prices.

Correct Answer
verified

In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?

Correct Answer
verified

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Correct Answer
verified

Correct Answer
verified
All of the output is included ...
View Answer

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

Correct Answer
verified

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified

If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

Correct Answer
verified

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Correct Answer
verified

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

Correct Answer
verified

In 2012, U.S. GDP was almost

Correct Answer
verified

Exam 15: Measuring a Nations Income

Wholesome Wheat Bakery buys $10.00 worth of flour from Mikes' Mill and uses the flour to make bread. Wholesome Wheat sells the bread to the public for $22.00. Taking these two transactions into account, what is the effect on GDP?

Correct AnswerverifiedShow Answer

Additions to inventory subtract from GDP, and when the goods in inventory are sold, the reductions in inventory add to GDP.

Correct AnswerverifiedShow Answer

If nominal GDP is $8 trillion and real GDP is $10 trillion, then the GDP deflator is

Correct AnswerverifiedShow Answer

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedNet exports are $10 million le...View AnswerShow Answer

In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200. What was Talikastan's GDP in 2015?

Correct AnswerverifiedShow Answer

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

Correct AnswerverifiedReal income is nominal income adjusted f...View AnswerShow Answer

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

Correct AnswerverifiedThe GDP Deflator = 1...View AnswerShow Answer

GDP adds together many different kinds of products into a single measure of the value of economic activity by using market prices.

Correct AnswerverifiedShow Answer

In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100. What were Talikastan's net exports in 2015?

Correct AnswerverifiedShow Answer

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAll of the output is included ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

Correct AnswerverifiedShow Answer

Last year country A had a nominal GDP of $600 billion, a GDP deflator of 150 and a population of 40 million. Country B had a nominal GDP of $720 billion, a GDP deflator of 120 and a population of 50 million. From these numbers which country is likely to have had the higher standard of living?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In 2012, U.S. GDP was almost

Correct AnswerverifiedShow Answer

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Net exports are $10 million le...
View Answer

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Real income is nominal income adjusted f...
View Answer

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verified
The GDP Deflator = 1...
View Answer

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All of the output is included ...
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