Question 1

onsumer goods that are produced, go into inventory, and are not sold during the current period are

Accepted Answer

A)   counted as intermediate goods and so are not included in current period GDP.
B)   counted in current period GDP only if the firm that produced them sells them to another firm.
C)   included in current period GDP as inventory investment.
D)   included in current period GDP as consumption.E) None of the above
F) B) and D)

Question 2

In the equation Y = C + I + G + NX,

Accepted Answer

A)   Y represents the economy's total expenditure.
B)   C represents household expenditures on services and durable goods.
C)   all of the variables are always positive numbers.
D)   All of the above are correct.E) B) and D)
F) All of the above

Question 3

A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009. It also reported a GDP deflator of 85 in 2010 and 100 in 2009. Between 2009 and 2010,

Accepted Answer

A)   real output and the price level both rose.
B)   real output rose and the price level fell.
C)   real output fell and the price level rose.
D)   real output and the price level both fell.E) None of the above
F) A) and C)

Question 4

GDP is defined as the

Accepted Answer

A)   value of all goods and services produced within a country in a given period of time.
B)   value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.
C)   value of all final goods and services produced within a country in a given period of time.
D)   value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.E) A) and B)
F) A) and C)

Question 5

Which of the following is a way to compute GDP?

Accepted Answer

A)   total income earned.
B)   total expenditures on final goods.
C)   add up the market values of all final goods and services.
D)   All of the above are correct.E) A) and C)
F) B) and D)

Question 6

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

Accepted Answer

A)   market prices.
B)   statistical estimates of the value of goods and services to consumers.
C)   prices based on the assumption that producers make no profits.
D)   the maximum amount consumers would be willing to pay.E) A) and B)
F) A) and C)

Question 7

GDP excludes the value of intermediate goods because their value is included in the value of final goods.

Accepted Answer

A) True 
 B)False

Question 8

A farmer sells five pounds of pecans to a Smith's Fresh Pecans for $10. Smith's Fresh Pecans resells three pounds for $4.50 per pound. The remaining pecans are shelled and canned and sold for a total of $8.00 Taking these transactions into account, how much is added to GDP?

Accepted Answer

A)   $22.50
B)   $29.50
C)   $21.50
D)   $31.50E) None of the above
F) A) and B)

Question 9

GDP is not a perfect measure of well-being; for example,

Accepted Answer

A)   GDP incorporates a large number of non-market goods and services that are of little value to society.
B)   GDP places too much emphasis on the value of leisure.
C)   GDP fails to account for the quality of the environment.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 10

For monitoring fluctuations in the national economy, which measure of income is best?

Accepted Answer

A)   GDP
B)   GNP
C)   NNP
D)   It does not matter very much which measure we use.E) A) and B)
F) A) and C)

Question 11

An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services.

Accepted Answer

A) True 
 B)False

Question 12

Real GDP per person tells us the income and expenditure of the average person in the economy.

Accepted Answer

A) True 
 B)False

Question 13

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 D)
F) A) and C)

Question 14

What are exports, and how are they different from imports?

Accepted Answer

Exports are domestically produ...

Question 15

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. 
-Refer to Table 23-6. In 2012, this country's real GDP was

Accepted Answer

A)   $510.
B)   $690.
C)   $930.
D)   $780.E) A) and D)
F) B) and D)

Question 16

If the U.S. government reports that GDP in the third quarter was $16 trillion at an annual rate, then the amount of income and expenditure during quarter three was $4 trillion.

Accepted Answer

A) True 
 B)False

Question 17

The GDP deflator can be used to take inflation out of nominal GDP.

Accepted Answer

A) True 
 B)False

Question 18

For an economy as a whole, income must equal expenditure because

Accepted Answer

A)   the number of firms is equal to the number of households in an economy.
B)   individuals can only spend what they earn each period.
C)   every dollar of spending by some buyer is a dollar of income for some seller.
D)   every dollar of saving by some consumer is a dollar of spending by some other consumer.E) A) and D)
F) None of the above

Question 19

A manufacturer produces 1 million televisions in the first quarter of the year. It sells 900,000 of them before the end of the first quarter, and holds the others in its warehouse. How will the 100,000 unsold televisions be treated in the GDP statistics?

Accepted Answer

A)   Since the televisions eventually will be bought by consumers, they will be included as consumption in the first quarter.
B)   Since the televisions were not purchased in the first quarter, they will be counted as an increase in second- quarter GDP.
C)   The televisions will be counted as a change in inventory in the first quarter and so will be included in first- quarter GDP.
D)   The televisions will be counted as a change in inventory in the first quarter, and when sold in the second quarter will raise second-quarter GDP.E) A) and D)
F) C) and D)

Question 20

Because every transaction has a buyer and a seller,

Accepted Answer

A)   GDP is more closely associated with an economy's income than it is with an economy's expenditure.
B)   every transaction contributes equally to an economy's income and to its expenditure.
C)   the number of firms must be equal to the number of households in a simple circular-flow diagram.
D)   firms' profits are necessarily zero in a simple circular­flow diagram.E) C) and D)
F) A) and B)

Exam 23: Measuring a Nations Income

In the equation Y = C + I + G + NX,

Correct Answer
verified

The GDP deflator can be used to take inflation out of nominal GDP.

Correct Answer
verified

A farmer sells five pounds of pecans to a Smith's Fresh Pecans for $10. Smith's Fresh Pecans resells three pounds for $4.50 per pound. The remaining pecans are shelled and canned and sold for a total of $8.00 Taking these transactions into account, how much is added to GDP?

Correct Answer
verified

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

Correct Answer
verified

Correct Answer
verified

A manufacturer produces 1 million televisions in the first quarter of the year. It sells 900,000 of them before the end of the first quarter, and holds the others in its warehouse. How will the 100,000 unsold televisions be treated in the GDP statistics?

Correct Answer
verified

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2012, this country's real GDP was

Correct Answer
verified

What are exports, and how are they different from imports?

Correct Answer
verified
Exports are domestically produ...
View Answer

For monitoring fluctuations in the national economy, which measure of income is best?

Correct Answer
verified

If the U.S. government reports that GDP in the third quarter was $16 trillion at an annual rate, then the amount of income and expenditure during quarter three was $4 trillion.

Correct Answer
verified

Real GDP per person tells us the income and expenditure of the average person in the economy.

Correct Answer
verified

Which of the following is a way to compute GDP?

Correct Answer
verified

GDP excludes the value of intermediate goods because their value is included in the value of final goods.

Correct Answer
verified

Because every transaction has a buyer and a seller,

Correct Answer
verified

GDP is defined as the

Correct Answer
verified

GDP is not a perfect measure of well-being; for example,

Correct Answer
verified

For an economy as a whole, income must equal expenditure because

Correct Answer
verified

A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009. It also reported a GDP deflator of 85 in 2010 and 100 in 2009. Between 2009 and 2010,

Correct Answer
verified

An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services.

Correct Answer
verified

onsumer goods that are produced, go into inventory, and are not sold during the current period are

Correct Answer
verified

Exam 23: Measuring a Nations Income

In the equation Y = C + I + G + NX,

Correct AnswerverifiedShow Answer

The GDP deflator can be used to take inflation out of nominal GDP.

Correct AnswerverifiedShow Answer

A farmer sells five pounds of pecans to a Smith's Fresh Pecans for $10. Smith's Fresh Pecans resells three pounds for $4.50 per pound. The remaining pecans are shelled and canned and sold for a total of $8.00 Taking these transactions into account, how much is added to GDP?

Correct AnswerverifiedShow Answer

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A manufacturer produces 1 million televisions in the first quarter of the year. It sells 900,000 of them before the end of the first quarter, and holds the others in its warehouse. How will the 100,000 unsold televisions be treated in the GDP statistics?

Correct AnswerverifiedShow Answer

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2012, this country's real GDP was

Correct AnswerverifiedShow Answer

What are exports, and how are they different from imports?

Correct AnswerverifiedExports are domestically produ...View AnswerShow Answer

For monitoring fluctuations in the national economy, which measure of income is best?

Correct AnswerverifiedShow Answer

If the U.S. government reports that GDP in the third quarter was $16 trillion at an annual rate, then the amount of income and expenditure during quarter three was $4 trillion.

Correct AnswerverifiedShow Answer

Real GDP per person tells us the income and expenditure of the average person in the economy.

Correct AnswerverifiedShow Answer

Which of the following is a way to compute GDP?

Correct AnswerverifiedShow Answer

GDP excludes the value of intermediate goods because their value is included in the value of final goods.

Correct AnswerverifiedShow Answer

Because every transaction has a buyer and a seller,

Correct AnswerverifiedShow Answer

GDP is defined as the

Correct AnswerverifiedShow Answer

GDP is not a perfect measure of well-being; for example,

Correct AnswerverifiedShow Answer

For an economy as a whole, income must equal expenditure because

Correct AnswerverifiedShow Answer

A country reported nominal GDP of $115 billion in 2010 and $125 billion in 2009. It also reported a GDP deflator of 85 in 2010 and 100 in 2009. Between 2009 and 2010,

Correct AnswerverifiedShow Answer

An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services.

Correct AnswerverifiedShow Answer

onsumer goods that are produced, go into inventory, and are not sold during the current period are

Correct AnswerverifiedShow Answer

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Exports are domestically produ...
View Answer

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