Question 1

Periods during which real GDP rises are called recessions.

Accepted Answer

A) True 
 B)False

Question 2

Retained earnings is income that

Accepted Answer

A)   households retain after paying taxes.
B)   businesses retain after paying taxes.
C)   corporations have earned but have not used to invest in plant, equipment, and inventories.
D)   corporations have earned but have not paid out to their owners.E) All of the above
F) A) and B)

Question 3

Gross domestic product includes all

Accepted Answer

A)   legal and illegal final goods, but it excludes all legal and illegal final services.
B)   legal and illegal final goods and all legal and illegal final services.
C)   legal final goods and services, but it excludes illegal final goods and services.
D)   legal and illegal final goods and legal final services, but it excludes illegal final services.E) C) and D)
F) None of the above

Question 4

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

Question 5

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

Question 6

If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?

Accepted Answer

A)   $6.7 billion.
B)   $15 billion.
C)   $21.6 billion.
D)   $38 billion.E) A) and C)
F) All of the above

Question 7

If in some year nominal GDP was $10 trillion and real GDP was $4 trillion, what was the GDP deflator?

Accepted Answer

A)   25.
B)   40.
C)   250.
D)   400.E) All of the above
F) None of the above

Question 8

If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200.

Accepted Answer

A) True 
 B)False

Question 9

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

Accepted Answer

A)   $500
B)   $700
C)   $1200
D)   $1700E) A) and D)
F) A) and C)

Question 10

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

Question 11

Table 23-1
The table below contains data for Chereaux for the year 2015. 
-Refer to Table 23-1. Personal income for Chereaux in 2015 is

Accepted Answer

A)   $178.
B)   $201.
C)   $259.
D)   $196.E) A) and C)
F) B) and C)

Question 12

Recessions are associated with lower incomes, rising unemployment, and falling profits.

Accepted Answer

A) True 
 B)False

Question 13

Grapes are considered intermediate goods

Accepted Answer

A)   whether the purchaser uses them to make wine to sell or eats them.
B)   if the purchaser uses them to make wine to sell others but not if the purchaser eats them.
C)   if the purchaser eats them, but not if the purchaser uses to them to make wine to sell.
D)   None of the above is correct.E) C) and D)
F) A) and B)

Question 14

For an economy as a whole, income must exceed expenditure.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following transactions adds to U.S. GDP for 2015?

Accepted Answer

A)   In 2015, Frank's Feta manufactures 2000 pounds of cheese that will eventually be sold to grocery stores. The 2000 pounds of cheese remains in Frank's inventory at the end of 2015.
B)   An Irish marketing consultant works in Richmond during the summer of 2015 and earns $45,000 during that time.
C)   When Len and Mika were both single, they lived in separate apartments and each paid $700 in rent. Len and Mika got married in 2015 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for $1,500 per month.
D)   All of the above transactions add to U.S. GDP for 2015.E) A) and C)
F) B) and D)

Question 16

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

Question 17

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

Question 18

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

Accepted Answer

A) True 
 B)False

Question 19

Table 23-5
The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015.
Prices and Quantities 
-Refer to Table 23-5. This country's output grew

Accepted Answer

A)   31.3% from 2015 to 2016.
B)   42.0% from 2016 to 2017.
C)   15.4% from 2016 to 2017.
D)   53.6% from 2017 to 2018.E) A) and B)
F) B) and D)

Question 20

In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was $7500, imports were $200, and investment was $1000. What were Talikastan's government purchases in 2015?

Accepted Answer

A)   $1200
B)   $1900
C)   $2500
D)   $4500E) B) and C)
F) A) and D)

Exam 23: Measuring a Nations Income

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

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Table 23-5 The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015. Prices and Quantities -Refer to Table 23-5. This country's output grew

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For an economy as a whole, income must exceed expenditure.

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If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?

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If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.

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Periods during which real GDP rises are called recessions.

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If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200.

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Gross domestic product includes all

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

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Recessions are associated with lower incomes, rising unemployment, and falling profits.

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In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was $7500, imports were $200, and investment was $1000. What were Talikastan's government purchases in 2015?

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A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

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Grapes are considered intermediate goods

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Which of the following transactions adds to U.S. GDP for 2015?

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

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Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Personal income for Chereaux in 2015 is

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Retained earnings is income that

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According to the circular-flow diagram GDP

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Which of the following items is included in GDP?

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If in some year nominal GDP was $10 trillion and real GDP was $4 trillion, what was the GDP deflator?

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