Question 1

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

Accepted Answer

A)  investment.
B)  government spending.
C)  consumption of services.
D)  consumption of durable goods.E) A) and D)
F) B) and D)

Question 2

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

Accepted Answer

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

Question 3

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Accepted Answer

A)  U.S. consumption falls by $500, U.S. net exports decline by $500, and U.S. GDP declines by $1000.
B)  U.S. consumption does not change, U.S. net exports decline by $500, and U.S. GDP declines by $500.
C)  U.S. consumption increases by $500, U.S. net exports remain the same, and U.S. GDP increases by $500.
D)  U.S. consumption increases by $500, U.S. net exports decline by $500, and U.S. GDP remains the same.E) None of the above
F) B) and D)

Question 4

A country's real GDP rose from 500 to 550 while its nominal GDP rose from 600 to 770. What was this country's inflation rate?

Accepted Answer

A)  16.7%
B)  20%
C)  -14.3%
D)  -20%E) C) and D)
F) A) and C)

Question 5

In the economy of Ukzten in 2010, consumption was $1000, exports were $100, government purchases were $450, imports were $150, and investment was $350. What was Ukzten's GDP in 2010?

Accepted Answer

A)  $1750
B)  $1850
C)  $1900
D)  $2050E) All of the above
F) C) and D)

Question 6

If real GDP is 5,100 and nominal GDP is 4,900, then the GDP deflator is

Accepted Answer

A)  104.1 so prices are higher than in the base year.
B)  104.1 so prices are lower than in the base year.
C)  96.1 so prices are higher than in the base year.
D)  96.1 so prices are lower than in the base year.E) B) and C)
F) C) and D)

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

An identity is an equation that

Accepted Answer

A)  describes an equilibrium.
B)  pertains to macroeconomics, not to microeconomics.
C)  must be true because of how the variables in the equation are defined.
D)  involves final goods, not intermediate goods.E) A) and B)
F) B) and D)

Question 9

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

Question 10

How is net national product (NNP)  calculated?

Accepted Answer

A)  Saving is added to the total income of a nation's citizens.
B)  Saving is added to the total income earned within a nation.
C)  Depreciation losses are subtracted from the total income of a nation's citizens.
D)  Depreciation losses are subtracted from the total income earned within a nation.E) None of the above
F) B) and D)

Question 11

If consumption is $7000, exports are $600, government purchases are $2000, government transfers are $900, imports are $800, and investment is $1000, then GDP is $9,800.

Accepted Answer

A) True 
 B)False

Question 12

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely

Accepted Answer

A)  increased.
B)  decreased.
C)  stayed the same.
D)  may have increased, decreased, or stayed the same.E) C) and D)
F) B) and C)

Question 13

According to the circular-flow diagram GDP

Accepted Answer

A)  can be computed as either the revenue firms receive from the sales of goods and services or the payments they make to factors of production.
B)  can be computed as the revenue firms receive from the sales of goods and services but not as the payments they make to factors of production.
C)  can be computed as payments firms make to factors of production but not as revenues they receive from the sales of goods and services.
D)  cannot be computed as either the revenue firms receive or the payments they make to factors of production.E) B) and D)
F) C) and D)

Question 14

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

Accepted Answer

A) True 
 B)False

Question 15

Expenditures by households on education are included in the investment component of GDP.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

Accepted Answer

A)  spending on education
B)  the purchase of stocks and bonds
C)  the purchase of a new house
D)  the purchase of durable goods such as stoves and washing machinesE) A) and B)
F) A) and C)

Question 17

A consumer buys toys made in China. The value of the toys is included only in the net exports component of GDP.

Accepted Answer

A) True 
 B)False

Question 18

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

Accepted Answer

A)  values of goods and services based on surveys of consumers.
B)  market prices.
C)  quantities purchased by a typical urban household.
D)  profits from producing goods and services.E) None of the above
F) B) and C)

Question 19

A recession is always associated with

Accepted Answer

A)  the end of a war.
B)  slowly growing real GDP.
C)  rising inflation.
D)  declining real GDP.E) A) and D)
F) None of the above

Question 20

Gina, a U.S. citizen, works only in Bermuda. The value of Gina's production is included in

Accepted Answer

A)  U.S. GDP and Bermudan GDP.
B)  U.S. GDP and Bermudan GNP.
C)  U.S. GNP and Bermudan GDP.
D)  U.S. GNP and Bermudan GNP.E) All of the above
F) None of the above

Exam 10: Measuring a Nations Income

A consumer buys toys made in China. The value of the toys is included only in the net exports component of GDP.

Correct AnswerverifiedShow Answer

A country's real GDP rose from 500 to 550 while its nominal GDP rose from 600 to 770. What was this country's inflation rate?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

Correct AnswerverifiedShow Answer

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

Correct AnswerverifiedShow Answer

An identity is an equation that

Correct AnswerverifiedShow Answer

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A newspaper article informs you that most businesses reduced production in the last quarter but also sold from their inventories during the last quarter. Based on this information GDP likely

Correct AnswerverifiedShow Answer

According to the circular-flow diagram GDP

Correct AnswerverifiedShow Answer

If consumption is $7000, exports are $600, government purchases are $2000, government transfers are $900, imports are $800, and investment is $1000, then GDP is $9,800.

Correct AnswerverifiedShow Answer

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How is net national product (NNP) calculated?

Correct AnswerverifiedShow Answer

Gina, a U.S. citizen, works only in Bermuda. The value of Gina's production is included in

Correct AnswerverifiedShow Answer

If real GDP is 5,100 and nominal GDP is 4,900, then the GDP deflator is

Correct AnswerverifiedShow Answer

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Correct AnswerverifiedShow Answer

Expenditures by households on education are included in the investment component of GDP.

Correct AnswerverifiedShow Answer

A recession is always associated with

Correct AnswerverifiedShow Answer

In the economy of Ukzten in 2010, consumption was $1000, exports were $100, government purchases were $450, imports were $150, and investment was $350. What was Ukzten's GDP in 2010?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified