Question 1

Figure 23-1. 
-Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?

Accepted Answer

A)   markets for factors of production and markets for goods and services
B)   firms and households
C)   expenditures and income
D)   consumption and investmentE) C) and D)
F) All of the above

Question 2

The inflation rate in year 2 equals

Accepted Answer

A)   
B)  
C)   
D)   E) A) and B)
F) All of the above

Question 3

Disposable personal income is the income that

Accepted Answer

A)   households have left after paying taxes and non-tax payments to the government.
B)   businesses have left after paying taxes and non-tax payments to the government.
C)   households and noncorporate businesses have left after paying taxes and non-tax payments to the government.
D)   households and businesses have left after paying taxes and non-tax payments to the government.E) None of the above
F) All of the above

Question 4

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

Accepted Answer

A)   GDP excludes the value of volunteer work.
B)   GDP does not address the distribution of income.
C)   GDP does not address environmental quality.
D)   All of the above are correct.E) C) and D)
F) A) and C)

Question 5

Transactions involving items produced in the past, such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale, are

Accepted Answer

A)   included in current GDP because GDP measures the value of all goods and services sold in the current year.
B)   included in current GDP but valued at their original prices.
C)   not included in current GDP because it is difficult to determine their value.
D)   not included in current GDP because GDP only measures the value of goods and services produced in the current year.E) A) and D)
F) A) and C)

Question 6

In the base year, the GDP deflator is always

Accepted Answer

A)   -1.
B)   0.
C)   1.
D)   100.E) C) and D)
F) All of the above

Question 7

A country reported nominal GDP of $100 billion in 2010 and $75 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 120 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) A) and B)
F) A) and C)

Question 8

Consumption is $5.5 trillion, investment is $1 trillion, government expenditures are $1.5 trillion, transfer payments are $.5 trillion, exports are $.75 trillion and imports are $1.25 trillion. What is GDP?

Accepted Answer

GDP = C + I + G + NX = $5.5 tr...

Question 9

Net exports equal

Accepted Answer

A)   exports plus imports.
B)   imports minus exports.
C)   Y - C + I + G) .
D)   Y - C - I - G) .E) A) and B)
F) A) and C)

Question 10

According to the circular-flow diagram, GDP

Accepted Answer

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

Question 11

Which of the following statements about recessions is true?

Accepted Answer

A)   An old rule of thumb defining recession is two consecutive quarters of falling nominal GDP.
B)   Recessions occur at regular intervals and last standard amounts of time.
C)   There is no ironclad rule for the declaration of recessions.
D)   Recessions are associated with low unemployment and high income.E) All of the above
F) B) and C)

Question 12

Which of the following is always measured in prices from a base-year?

Accepted Answer

A)   both nominal and real GDP.
B)   nominal but not real GDP.
C)   real but not nominal GDP.
D)   neither nominal nor real GDP.E) A) and B)
F) A) and C)

Question 13

In a simple circular-flow diagram, total income and total expenditure are

Accepted Answer

A)   never equal because total income always exceeds total expenditure.
B)   seldom equal because of the ongoing changes in an economy's unemployment rate.
C)   equal only when the government purchases no goods or services.
D)   always equal because every transaction has a buyer and a seller.E) None of the above
F) C) and D)

Question 14

For the purpose of calculating GDP, investment is spending on

Accepted Answer

A)   stocks, bonds, and other financial assets.
B)   real estate and financial assets such as stocks and bonds.
C)   capital equipment, inventories, and structures, including household purchases of new housing.
D)   capital equipment, inventories, and structures, excluding household purchases of new housing.E) C) and D)
F) None of the above

Question 15

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Accepted Answer

A)   GDP would definitely increase, despite the fact that GDP includes environmental quality.
B)   GDP would definitely decrease because GDP includes environmental quality.
C)   GDP would definitely increase because GDP excludes environmental quality.
D)   GDP could either increase or decrease because GDP excludes environmental quality.E) B) and D)
F) A) and C)

Question 16

Consider the following three items of spending by the government: i)  the federal government pays a $500 unemployment benefit to an unemployed person; ii)  the federal government makes a $2,000 salary payment to a Navy lieutenant; iii)  the city of Bozeman, Montana makes a $10,000 payment to ABC Lighting Company for street lights in Bozeman. Which of these payments contributes directly to government purchases in the national income accounts?

Accepted Answer

A)   only item i) 
B)   only item ii) 
C)   only items i)  and ii) 
D)   only items ii)  and iii) E) B) and D)
F) All of the above

Question 17

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Accepted Answer

The answer of A farmer sells sugar to a candy...

Question 18

If nominal GDP is $10 trillion and real GDP is $8 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) All of the above
F) C) and D)

Question 19

Table 23-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932.
 
-Refer to Table 23-4. If prices had remained constant between 1929 and 1930, Nominal GDP would have decreased

Accepted Answer

A)   8.62%.
B)   9.43%.
C)   11.97%.
D)   13.6%.E) None of the above
F) A) and B)

Question 20

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

Exam 10: Measuring a Nations Income

Figure 23-1. -Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?

Correct Answer
verified

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

Correct Answer
verified

Which of the following is always measured in prices from a base-year?

Correct Answer
verified

Transactions involving items produced in the past, such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale, are

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Correct Answer
verified

According to the circular-flow diagram, GDP

Correct Answer
verified

Net exports equal

Correct Answer
verified

Which of the following statements about recessions is true?

Correct Answer
verified

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Correct Answer
verified

Which of the following items is included in GDP?

Correct Answer
verified

For the purpose of calculating GDP, investment is spending on

Correct Answer
verified

In a simple circular-flow diagram, total income and total expenditure are

Correct Answer
verified

Consumption is $5.5 trillion, investment is $1 trillion, government expenditures are $1.5 trillion, transfer payments are $.5 trillion, exports are $.75 trillion and imports are $1.25 trillion. What is GDP?

Correct Answer
verified
GDP = C + I + G + NX = $5.5 tr...
View Answer

In the base year, the GDP deflator is always

Correct Answer
verified

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. If prices had remained constant between 1929 and 1930, Nominal GDP would have decreased

Correct Answer
verified

Disposable personal income is the income that

Correct Answer
verified

A country reported nominal GDP of $100 billion in 2010 and $75 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 120 in 2009. Between 2009 and 2010,

Correct Answer
verified

The inflation rate in year 2 equals

Correct Answer
verified

Exam 10: Measuring a Nations Income

Figure 23-1. -Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is always measured in prices from a base-year?

Correct AnswerverifiedShow Answer

Transactions involving items produced in the past, such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale, are

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Correct AnswerverifiedShow Answer

According to the circular-flow diagram, GDP

Correct AnswerverifiedShow Answer

Net exports equal

Correct AnswerverifiedShow Answer

Which of the following statements about recessions is true?

Correct AnswerverifiedShow Answer

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following items is included in GDP?

Correct AnswerverifiedShow Answer

For the purpose of calculating GDP, investment is spending on

Correct AnswerverifiedShow Answer

In a simple circular-flow diagram, total income and total expenditure are

Correct AnswerverifiedShow Answer

Consumption is $5.5 trillion, investment is $1 trillion, government expenditures are $1.5 trillion, transfer payments are $.5 trillion, exports are $.75 trillion and imports are $1.25 trillion. What is GDP?

Correct AnswerverifiedGDP = C + I + G + NX = $5.5 tr...View AnswerShow Answer

In the base year, the GDP deflator is always

Correct AnswerverifiedShow Answer

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. If prices had remained constant between 1929 and 1930, Nominal GDP would have decreased

Correct AnswerverifiedShow Answer

Disposable personal income is the income that

Correct AnswerverifiedShow Answer

A country reported nominal GDP of $100 billion in 2010 and $75 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 120 in 2009. Between 2009 and 2010,

Correct AnswerverifiedShow Answer

The inflation rate in year 2 equals

Correct AnswerverifiedShow Answer

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GDP = C + I + G + NX = $5.5 tr...
View Answer

Correct Answer
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