Question 1

The value of goods added to a firm's inventory in a certain year is treated as

Accepted Answer

A)   consumption, since the goods will be sold to consumers in another period.
B)   intermediate goods, and so is not included in that year's GDP.
C)   investment, since GDP aims to measure the value of the economy's production that year.
D)   spending on durable goods, since the goods could not be inventoried unless they were durable.E) A) and B)
F) A) and C)

Question 2

Table 5-4
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 2008.
Prices and Quantities
 
-Refer to Table 5-4. In 2008, this country's

Accepted Answer

A)   nominal GDP was greater than real GDP, and the GDP deflator was greater than 100.
B)   nominal GDP was equal to real GDP, and the GDP deflator was equal to 1.
C)   nominal GDP was less than real GDP, and the GDP deflator was less than 100.
D)   nominal GDP was equal to real GDP, and the GDP deflator was equal to 100.E) B) and D)
F) A) and B)

Question 3

GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included.

Accepted Answer

GDP excludes some products because they ...

Question 4

If the value of an economy's imports exceeds the value of that economy's exports, then net exports is a negative number.

Accepted Answer

A) True 
 B)False

Question 5

The income that households and noncorporate businesses receive is called

Accepted Answer

A)   personal income.
B)   net national product.
C)   disposable personal income.
D)   national income.E) None of the above
F) B) and C)

Question 6

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

Accepted Answer

Real income is nominal income adjusted f...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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 B)

Question 9

A country reported nominal GDP of $200 billion in 2010 and $180 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 105 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) All of the above

Question 10

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

Accepted Answer

A)   U.S. investment and GDP increase, but German GDP is unaffected.
B)   U.S. investment and German GDP increase, but U.S. GDP is unaffected.
C)   U.S. investment, U.S. GDP, and German GDP are unaffected because tractors are intermediate goods.
D)   U.S. investment, U.S. GDP, and German GDP all increase.E) B) and C)
F) B) and D)

Question 11

Consumer 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) All of the above
F) None of the above

Question 12

Which of the following subcomponents of GDP can be either positive or negative?

Accepted Answer

A)   inventory investment
B)   exports
C)   government purchases
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 13

A transfer payment is

Accepted Answer

A)   a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location.
B)   a payment that is automatically transferred from your bank account to pay a bill or some other obligation.
C)   a form of government spending that is not made in exchange for a currently produced good or service.
D)   the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure.E) B) and C)
F) B) and D)

Question 14

Table 5-2
The table below contains data for the country of Crete for the year 2010.
 
-Refer to Table 5-2. What was Crete's consumption in 2010?

Accepted Answer

A)   $1810
B)   $2013
C)   $2315
D)   $3131E) A) and B)
F) C) and D)

Question 15

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

Accepted Answer

A) True 
 B)False

Question 16

Table 5-2
The table below contains data for the country of Crete for the year 2010.
 
-Refer to Table 5-2. What was Crete's investment in 2010?

Accepted Answer

A)   $675
B)   $1090
C)   $1491
D)   $1793E) None of the above
F) C) and D)

Question 17

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not correct?

Accepted Answer

A)   GNP equals net national product plus losses from depreciation.
B)   For most countries, including the United States, GDP and GNP are nearly the same.
C)   GDP and GNP typically move in opposite directions.
D)   Personal income equals disposable personal income plus personal taxes plus certain nontax payments.E) None of the above
F) B) and D)

Question 19

Ryan lives in an apartment where he pays $7,000 a year in rent. Alexis lives in a house that could be rented for $14,000 a year. How much do these housing services contribute to GDP?

Accepted Answer

A)   $21,000
B)   $14,000
C)   $7,000
D)   $0E) B) and C)
F) B) and D)

Question 20

In early2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Accepted Answer

A)   the price of the house, the cost of remodeling materials, the increase in rental value
B)   the price of the house and the cost of remodeling materials, but not the increase in rental value
C)   the costs of the remodeling materials and the increase in rent, but not the price of the house
D)   None of the above are correct.E) A) and B)
F) A) and C)

Exam 5: Measuring a Nations Income

You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully.

Correct AnswerverifiedReal income is nominal income adjusted f...View AnswerShow Answer

If the value of an economy's imports exceeds the value of that economy's exports, then net exports is a negative number.

Correct AnswerverifiedShow Answer

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

Correct AnswerverifiedShow Answer

GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included.

Correct AnswerverifiedGDP excludes some products because they ...View AnswerShow Answer

The value of goods added to a firm's inventory in a certain year is treated as

Correct AnswerverifiedShow Answer

The income that households and noncorporate businesses receive is called

Correct AnswerverifiedShow Answer

Which of the following subcomponents of GDP can be either positive or negative?

Correct AnswerverifiedShow Answer

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

Correct AnswerverifiedShow Answer

Ryan lives in an apartment where he pays $7,000 a year in rent. Alexis lives in a house that could be rented for $14,000 a year. How much do these housing services contribute to GDP?

Correct AnswerverifiedShow Answer

A country reported nominal GDP of $200 billion in 2010 and $180 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 105 in 2009. Between 2009 and 2010,

Correct AnswerverifiedShow Answer

A transfer payment is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

Correct AnswerverifiedShow Answer

In early2010 Molly paid $200,000 for a house built in 2000. She spent $30,000 on new materials to remodel the house. Although Molly lived in the house after she remodeled it, its rental value rose. Which of the following contributed to real GDP in 2010?

Correct AnswerverifiedShow Answer

Table 5-4 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 2008. Prices and Quantities -Refer to Table 5-4. In 2008, this country's

Correct AnswerverifiedShow Answer

Table 5-2 The table below contains data for the country of Crete for the year 2010. -Refer to Table 5-2. What was Crete's consumption in 2010?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 5-2 The table below contains data for the country of Crete for the year 2010. -Refer to Table 5-2. What was Crete's investment in 2010?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

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Real income is nominal income adjusted f...
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GDP excludes some products because they ...
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