Question 1

If net exports is a negative number for a particular year,then

Accepted Answer

A)  the value of firms' inventories declined over the course of the year.
B)  consumption exceeded the sum of investment and government purchases during the year.
C)  the value of goods sold to foreigners exceeded the value of foreign goods purchased during the year.
D)  the value of foreign goods purchased exceeded the value of goods sold to foreigners during the year.E) A) and B)
F) C) and D)

Question 2

Anna,a U.S.citizen,works only in Germany.The value she adds to production in Germany is included

Accepted Answer

A)  in U.S.GDP, but it is not included in German GDP.
B)  in German GDP, but it is not included in U.S.GDP.
C)  in both German GDP and U.S.GDP.
D)  in neither German GDP nor U.S.GDP.E) A) and D)
F) C) and D)

Question 3

After the terrorist attacks on September 11,2001,governments within the United States raised expenditures to increase security at airports.These purchases of goods and services are

Accepted Answer

A)  not included in GDP since they do not represent production.
B)  not included in GDP since the government will have to raise taxes to pay for them.
C)  included in GDP since government expenditures are included in GDP.
D)  included in GDP only to the extent that the federal government, rather than state or local governments, paid for them.E) A) and D)
F) B) and C)

Question 4

The GDP deflator is the ratio of

Accepted Answer

A)  real GDP to nominal GDP multiplied by 100.
B)  real GDP to the inflation rate multiplied by 100.
C)  nominal GDP to real GDP multiplied by 100.
D)  nominal GDP to the inflation rate multiplied by 100.E) All of the above
F) None of the above

Question 5

Because every transaction has a buyer and a seller,

Accepted Answer

A)  GDP is more closely associated with a nation's income than it is with a nation's expenditure.
B)  every transaction contributes equally to an economy's income and to its expenditure.
C)  the number of firms must be equal to the number of households in a simple circular-flow diagram.
D)  firms' profits are necessarily zero in a simple circular-flow diagram.E) B) and D)
F) None of the above

Question 6

For an economy as a whole,

Accepted Answer

A)  wages must equal profit.
B)  consumption must equal saving.
C)  income must equal expenditure.
D)  household spending on goods must equal household spending on services.E) A) and D)
F) All of the above

Question 7

Being able to measure the behavior of the economy with statistics such as GDP

Accepted Answer

A)  is useful only in the accounting sense.
B)  is all that is necessary in order for us to be able to understand macroeconomics.
C)  can be helpful in developing macroeconomic science, but is not useful for policymaking.
D)  is a crucial step toward developing the science of macroeconomics.E) B) and C)
F) C) and D)

Question 8

A country reported a nominal GDP of $115 billion in 2006 and $125 billion in 2005;it reported a GDP deflator of 85 in 2006 and a deflator of 100 in 2005.Between 2005 and 2006,

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) C) and D)
F) B) and C)

Question 9

In the equation Y = C + I + G + NX,

Accepted Answer

A)  Y represents the economy's total expenditure.
B)  C represents household expenditures on services and durable goods.
C)  all of the variables are always positive numbers.
D)  All of the above are correct.E) C) and D)
F) B) and D)

Question 10

A transfer payment is a payment made by

Accepted Answer

A)  consumers, but not in exchange for a tangible product.
B)  firms, but not in exchange for capital equipment.
C)  foreigners, but not in exchange for a domestically-produced good or service.
D)  government, but not in exchange for a currently produced good or service.E) A) and B)
F) B) and D)

Question 11

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 B)
F) None of the above

Question 12

In 2004 in the U.S.,the four components of GDP matched up with their relative importance as follows:

Accepted Answer

A)  C: 50 percent of GDP; I: 18 percent of GDP; G: 27 percent of GDP; NX: 5 percent of GDP.
B)  C: 60 percent of GDP; I: 9 percent of GDP; G: 33 percent of GDP; NX: -2 percent of GDP.
C)  C: 70 percent of GDP; I: 16 percent of GDP; G: 19 percent of GDP; NX: -5 percent of GDP.
D)  C: 75 percent of GDP; I: 14 percent of GDP; G: 17 percent of GDP; NX: -6 percent of GDP.E) B) and C)
F) A) and D)

Question 13

Suppose GDP consists of wheat and rice.In 2005,20 bushels of wheat are sold at $4 per bushel,and 10 bushels of rice are sold at $2 per bushel.In 2004,the price of wheat was $2 per bushel and the price of rice was $1 per bushel.Using 2004 as the base year,it follows that,for 2005,

Accepted Answer

A)  nominal GDP is $100, real GDP is $50, and the GDP deflator is 50.
B)  nominal GDP is $50, real GDP is $100, and the GDP deflator is 200.
C)  nominal GDP is $100, real GDP is $50, and the GDP deflator is 200.
D)  nominal GDP is $40, real GDP is $100, and the GDP deflator is 50.E) B) and D)
F) C) and D)

Question 14

Real GDP is the production of final goods and services valued at

Accepted Answer

A)  current year prices.
B)  constant prices.
C)  expected future prices.
D)  the ratio of current year prices to constant year prices.E) None of the above
F) A) and D)

Question 15

Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing;and (2) purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Accepted Answer

A)  Both item (1)  and item (2)  are included in the consumption component of GDP.
B)  Item (1)  is included in the consumption component, while item (2)  is included in the investment component.
C)  Item (1)  is included in the investment component, while item (2)  is included in the consumption component.
D)  Only item (2)  is included in GDP and it is included in the investment component.E) B) and D)
F) B) and C)

Exam 23: Measuring a Nations Income

After the terrorist attacks on September 11,2001,governments within the United States raised expenditures to increase security at airports.These purchases of goods and services are

Correct Answer
verified

The GDP deflator is the ratio of

Correct Answer
verified

A transfer payment is a payment made by

Correct Answer
verified

Because every transaction has a buyer and a seller,

Correct Answer
verified

Anna,a U.S.citizen,works only in Germany.The value she adds to production in Germany is included

Correct Answer
verified

Real GDP is the production of final goods and services valued at

Correct Answer
verified

A country reported a nominal GDP of $115 billion in 2006 and $125 billion in 2005;it reported a GDP deflator of 85 in 2006 and a deflator of 100 in 2005.Between 2005 and 2006,

Correct Answer
verified

In 2004 in the U.S.,the four components of GDP matched up with their relative importance as follows:

Correct Answer
verified

In the equation Y = C + I + G + NX,

Correct Answer
verified

If net exports is a negative number for a particular year,then

Correct Answer
verified

Suppose GDP consists of wheat and rice.In 2005,20 bushels of wheat are sold at $4 per bushel,and 10 bushels of rice are sold at $2 per bushel.In 2004,the price of wheat was $2 per bushel and the price of rice was $1 per bushel.Using 2004 as the base year,it follows that,for 2005,

Correct Answer
verified

For an economy as a whole,

Correct Answer
verified

Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing;and (2) purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Correct Answer
verified

Being able to measure the behavior of the economy with statistics such as GDP

Correct Answer
verified

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

Correct Answer
verified

Exam 23: Measuring a Nations Income

After the terrorist attacks on September 11,2001,governments within the United States raised expenditures to increase security at airports.These purchases of goods and services are

Correct AnswerverifiedShow Answer

The GDP deflator is the ratio of

Correct AnswerverifiedShow Answer

A transfer payment is a payment made by

Correct AnswerverifiedShow Answer

Because every transaction has a buyer and a seller,

Correct AnswerverifiedShow Answer

Anna,a U.S.citizen,works only in Germany.The value she adds to production in Germany is included

Correct AnswerverifiedShow Answer

Real GDP is the production of final goods and services valued at

Correct AnswerverifiedShow Answer

A country reported a nominal GDP of $115 billion in 2006 and $125 billion in 2005;it reported a GDP deflator of 85 in 2006 and a deflator of 100 in 2005.Between 2005 and 2006,

Correct AnswerverifiedShow Answer

In 2004 in the U.S.,the four components of GDP matched up with their relative importance as follows:

Correct AnswerverifiedShow Answer

In the equation Y = C + I + G + NX,

Correct AnswerverifiedShow Answer

If net exports is a negative number for a particular year,then

Correct AnswerverifiedShow Answer

Suppose GDP consists of wheat and rice.In 2005,20 bushels of wheat are sold at $4 per bushel,and 10 bushels of rice are sold at $2 per bushel.In 2004,the price of wheat was $2 per bushel and the price of rice was $1 per bushel.Using 2004 as the base year,it follows that,for 2005,

Correct AnswerverifiedShow Answer

For an economy as a whole,

Correct AnswerverifiedShow Answer

Consider two items that might be included in GDP: (1) The estimated rental value of owner-occupied housing;and (2) purchases of newly-constructed homes.How are these two items accounted for when GDP is calculated?

Correct AnswerverifiedShow Answer

Being able to measure the behavior of the economy with statistics such as GDP

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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verified

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