Question 1

An economy's income is the same as its expenditure because every transaction has a buyer and a seller.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following items is counted as part of government purchases?

Accepted Answer

A)   The federal government pays $2,000 in Social Security benefits to a retired person.
B)   The city of Des Moines,Iowa pays $10,000 to a tree-trimming firm to trim trees along city boulevards.
C)   The state of Iowa pays $1,000 to help a low-income family pay its medical bills.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 3

Table 23-4
The table below contains data for the country of Dachsland,which produces only pretzels and books.The base year is 2005.
 
-Refer to Table 23-4.Dachsland's real GDP was

Accepted Answer

A)   $585 in 2006,$585 in 2007,and $585 in 2008.
B)   $660 in 2006,$825 in 2007,and $1065 in 2008.
C)   $670 in 2006,$780 in 2007,and $900 in 2008.
D)   $760 in 2006,$1100 in 2007,and $1600 in 2008.E) All of the above
F) A) and B)

Question 4

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 C)
F) B) and C)

Question 5

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)   consumer and producer surpluses.
D)   costs of producing goods and services.E) A) and C)
F) A) and B)

Question 6

In the economy of Wrexington in 2008,nominal GDP was $20 billion and the GDP deflator was 50.What was Wrexington's real GDP in 2008?

Accepted Answer

A)   $2.5 billion
B)   $10 billion
C)   $40 billion
D)   $100 billionE) C) and D)
F) B) and C)

Question 7

The information below was reported by the World Bank.On the basis of this information,which list below contains the correct ordering of GDP per person from highest to lowest?

Accepted Answer

A)   Japan,Switzerland,United States
B)   Japan,United States,Switzerland
C)   Switzerland,United States,Japan
D)   United States,Japan,SwitzerlandE) A) and B)
F) A) and C)

Question 8

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)   prices that government economists believe reflect the true value of goods and services to society.
C)   the assumption that quantities of goods and services produced are unchanged from year to year.
D)   the assumption that prices of goods and services are unchanged from year to year.E) B) and C)
F) A) and D)

Question 9

Gasoline is considered a final good if it is sold by a

Accepted Answer

A)   gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles.
B)   pipeline operator to a gasoline station in San Francisco.
C)   gasoline station to a motorist in Los Angeles.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 10

Which of the following transactions adds to U.S.GDP for 2006?

Accepted Answer

A)   In 2006,Ashley sells a car that she bought in 2002 to William for $5,000.
B)   An American management consultant works in Mexico during the summer of 2006 and earns the equivalent of $30,000 during that time.
C)   When John and Jennifer were both single,they lived in separate apartments and each paid $750 in rent.John and Jennifer got married in 2006 and they bought a house that,according to reliable estimates,could be rented for $1,600 per month.
D)   None of the above transactions adds to U.S.GDP for 2006.E) B) and D)
F) All of the above

Question 11

Recessions are not associated with which of the following?

Accepted Answer

A)   increased bankruptcies
B)   falling profits
C)   falling incomes
D)   falling unemploymentE) None of the above
F) B) and C)

Question 12

Table 23-2
The table below contains data for the country of Wrexington for the year 2008.
 
-Refer to Table 23-2.What were Wrexington's government purchases in 2008?

Accepted Answer

A)   $553
B)   $1198
C)   $1975
D)   $2752E) B) and D)
F) C) and D)

Question 13

When economists refer to intangible items,they are referring to such things as

Accepted Answer

A)   illegal goods,and the value of such items is included in GDP.
B)   illegal goods,and the value of such items is excluded from GDP.
C)   consulting services and dental care,and the value of such items is included in GDP.
D)   consulting services and dental care,and the value of such items is excluded from GDP.E) B) and D)
F) B) and C)

Question 14

The value of the housing services provided by the economy's owner-occupied houses is

Accepted Answer

A)   included in GDP,and the estimated rental values of the houses are used to place a value on these housing services.
B)   included in GDP,and the actual mortgage payments made on the houses are used to estimate the value of these rental services.
C)   excluded from GDP since these services are not sold in any market.
D)   excluded from GDP since the value of these housing services cannot be estimated with any degree of precision.E) A) and C)
F) A) and B)

Question 15

Changes in inventory are included in the investment component of GDP.

Accepted Answer

A) True 
 B)False

Question 16

Tyler and Camille both live in Oklahoma.A new-car dealer in Oklahoma bought a new car from the manufacturer for $18,000 and sold it to Tyler for $22,000.Later that year,Tyler sold the car to Camille for $17,000.By how much did these transactions contribute to U.S.GDP for the year?

Accepted Answer

A)   $18,000
B)   $22,000
C)   $39,000
D)   $57,000E) B) and D)
F) A) and B)

Question 17

Which government entity computes U.S.GDP every three months?

Accepted Answer

A)   the Council of Economic Advisers
B)   the Department of Commerce
C)   the Department of Treasury
D)   the Federal ReserveE) None of the above
F) All of the above

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)   banks.
B)   economists.
C)   the government.
D)   markets.E) C) and D)
F) B) and D)

Question 20

The basic tools of supply and demand are

Accepted Answer

A)   useful only in the analysis of economic behavior in individual markets.
B)   useful in analyzing the overall economy,but not in analyzing individual markets.
C)   central to microeconomic analysis,but seldom used in macroeconomic analysis.
D)   central to macroeconomic analysis as well as to microeconomic analysis.E) C) and D)
F) A) and B)

Exam 23: Measuring a Nations Income

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

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An economy's income is the same as its expenditure because every transaction has a buyer and a seller.

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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

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

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Changes in inventory are included in the investment component of GDP.

Correct AnswerverifiedShow Answer

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

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The information below was reported by the World Bank.On the basis of this information,which list below contains the correct ordering of GDP per person from highest to lowest?

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In the economy of Wrexington in 2008,nominal GDP was $20 billion and the GDP deflator was 50.What was Wrexington's real GDP in 2008?

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Table 23-2 The table below contains data for the country of Wrexington for the year 2008. -Refer to Table 23-2.What were Wrexington's government purchases in 2008?

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Gasoline is considered a final good if it is sold by a

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Which of the following transactions adds to U.S.GDP for 2006?

Correct AnswerverifiedShow Answer

Table 23-4 The table below contains data for the country of Dachsland,which produces only pretzels and books.The base year is 2005. -Refer to Table 23-4.Dachsland's real GDP was

Correct AnswerverifiedShow Answer

Which government entity computes U.S.GDP every three months?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following items is counted as part of government purchases?

Correct AnswerverifiedShow Answer

The basic tools of supply and demand are

Correct AnswerverifiedShow Answer

When economists refer to intangible items,they are referring to such things as

Correct AnswerverifiedShow Answer

Tyler and Camille both live in Oklahoma.A new-car dealer in Oklahoma bought a new car from the manufacturer for $18,000 and sold it to Tyler for $22,000.Later that year,Tyler sold the car to Camille for $17,000.By how much did these transactions contribute to U.S.GDP for the year?

Correct AnswerverifiedShow Answer

Recessions are not associated with which of the following?

Correct AnswerverifiedShow Answer

The value of the housing services provided by the economy's owner-occupied houses is

Correct AnswerverifiedShow Answer

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