Question 1

Which of the following is not included in GDP?

Accepted Answer

A)  a can of bug spray
B)  the services of an exterminator
C)  the honey produced and sold by a beekeeper
D)  All of the above are included in GDP.E) B) and C)
F) All of the above

Question 2

Tom is an organic gardener. For several years, he produced only for his own consumption. Last year, he sold his vegetables at a farmer's market. This year, he sold all of his vegetables to a company producing organic vegetable soup. When is the value of Tom's vegetables included in GDP?

Accepted Answer

A)  ​None of his production is included in GDP, since it is considered home production.
B)  ​Only when he sells his vegetable at the farmer's market.
C)  ​Only when he sells his vegetables to the organic soup company.
D)  When he sells his vegetables at the farmer's market and when he sells the vegetables to the organic soup company.E) A) and C)
F) B) and C)

Question 3

If foreign citizens earn less income in the U.S. than U.S. citizens earn in foreign countries,

Accepted Answer

A)  U.S. net factor payments from abroad are positive, and its GDP is larger than its GNP.
B)  U.S. net factor payments from abroad are positive, and its GNP is larger than its GDP.
C)  U.S. net factor payments from abroad are negative, and its GDP is larger than its GNP.
D)  U.S. net factor payments from abroad are negative, and its GNP is larger than its GDP.E) B) and D)
F) None of the above

Question 4

Transfer payments are

Accepted Answer

A)  included in GDP because they represent income to individuals.
B)  included in GDP because they eventually will be spent on consumption.
C)  not included in GDP because they are not payments for currently produced goods or services.
D)  not included in GDP because taxes will have to be raised to pay for them.E) None of the above
F) B) and D)

Question 5

Table 23-3
The table below contains data for the country of Crete for the year 2010. 
-Refer to Table 23-3. What was Crete's investment in 2010?

Accepted Answer

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

Question 6

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 B)
F) A) and C)

Question 7

In a simple circular-flow diagram, households buy goods and services with the income they get from

Accepted Answer

A)  wages.
B)  rents.
C)  profits.
D)  All of the above are correct.E) B) and D)
F) B) and C)

Question 8

For an economy as a whole,

Accepted Answer

A)  the market value of production must equal expenditure.
B)  investment must equal the value of stocks and bonds purchased.
C)  wages must equal income.
D)  consumption must equal saving.E) A) and B)
F) B) and D)

Question 9

Identify the largest and smallest components of GDP.

Accepted Answer

Consumption is the l...

Question 10

The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions.

Accepted Answer

A) True 
 B)False

Question 11

While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services provided by teachers and exterminators.

Accepted Answer

A) True 
 B)False

Question 12

In 2011 a country had a real GDP of $13.89 trillion and GDP deflator of 110. In 2012 it had a nominal GDP of $17.8 trillion and real GDP of 14.24 trillion. What is the rate of inflation in 2012?

Accepted Answer

The answer of In 2011 a country had a real...

Question 13

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 14

Which of the following is a way to compute GDP?

Accepted Answer

A)  total income earned.
B)  total expenditures on final goods.
C)  add up the market values of all final goods and services.
D)  All of the above are correct.E) C) and D)
F) A) and B)

Question 15

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Accepted Answer

A)  the effect of taxes on the prices of airline tickets, and the profitability of automobile-manufacturing firms
B)  the price of beef, and wage differences between genders
C)  how consumers maximize utility, and how prices are established in markets for agricultural products
D)  the percentage of the labor force that is out of work, and differences in average income from country to countryE) A) and D)
F) A) and B)

Question 16

Identify the immediate effect of each of the following events on U.S. GDP and its components.
a.James receives a Social Security check.
b.John buys an Italian sports car.
c.Henry buys domestically produced tools for his construction company.

Accepted Answer

a.Since this is a transfer payment, ther...

Question 17

Michigan Cranberry Company sold $10 million worth of cranberries it produced. In producing cranberries, it purchased $1 million dollars worth of supplies from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?

Accepted Answer

A)  $12 million
B)  $11 million
C)  $10 million
D)  $9 millionE) A) and C)
F) All of the above

Question 18

Suppose that twenty-five years ago a country had nominal GDP of $1,000, a GDP deflator of 200, and a population of 100. Today it has nominal GDP of $3,000, a GDP deflator of 400, and population of 150. What happened to the real GDP per person?

Accepted Answer

A)  It more than doubled.
B)  It increased, but it less than doubled.
C)  It was unchanged.
D)  It decreased.E) B) and D)
F) B) and C)

Question 19

If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?

Accepted Answer

A)  both real GDP and nominal GDP.
B)  real GDP but not nominal GDP.
C)  nominal GDP but not real GDP.
D)  neither nominal GDP nor real GDP.E) None of the above
F) A) and D)

Question 20

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

Accepted Answer

A)  decreases.
B)  increases.
C)  doesn't change because both legal and illegal production are included in GDP.
D)  doesn't change because these activities are never included in GDP.E) A) and B)
F) A) and C)

Exam 23: Measuring a Nation S Income

For an economy as a whole,

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If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?

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In a simple circular-flow diagram, households buy goods and services with the income they get from

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is a way to compute GDP?

Correct AnswerverifiedShow Answer

Identify the largest and smallest components of GDP.

Correct AnswerverifiedConsumption is the l...View AnswerShow Answer

Transfer payments are

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The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions.

Correct AnswerverifiedShow Answer

If foreign citizens earn less income in the U.S. than U.S. citizens earn in foreign countries,

Correct AnswerverifiedShow Answer

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

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

Which of the following is not included in GDP?

Correct AnswerverifiedShow Answer

Michigan Cranberry Company sold $10 million worth of cranberries it produced. In producing cranberries, it purchased $1 million dollars worth of supplies from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?

Correct AnswerverifiedShow Answer

Tom is an organic gardener. For several years, he produced only for his own consumption. Last year, he sold his vegetables at a farmer's market. This year, he sold all of his vegetables to a company producing organic vegetable soup. When is the value of Tom's vegetables included in GDP?

Correct AnswerverifiedShow Answer

In 2011 a country had a real GDP of $13.89 trillion and GDP deflator of 110. In 2012 it had a nominal GDP of $17.8 trillion and real GDP of 14.24 trillion. What is the rate of inflation in 2012?

Correct AnswerverifiedShow Answer

While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services provided by teachers and exterminators.

Correct AnswerverifiedShow Answer

Identify the immediate effect of each of the following events on U.S. GDP and its components. a.James receives a Social Security check. b.John buys an Italian sports car. c.Henry buys domestically produced tools for his construction company.

Correct Answerverifieda.Since this is a transfer payment, ther...View AnswerShow Answer

Table 23-3 The table below contains data for the country of Crete for the year 2010. -Refer to Table 23-3. What was Crete's investment in 2010?

Correct AnswerverifiedShow Answer

Suppose that twenty-five years ago a country had nominal GDP of $1,000, a GDP deflator of 200, and a population of 100. Today it has nominal GDP of $3,000, a GDP deflator of 400, and population of 150. What happened to the real GDP per person?

Correct AnswerverifiedShow Answer

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

Correct AnswerverifiedShow Answer

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Consumption is the l...
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GDP excludes some products because they ...
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a.Since this is a transfer payment, ther...
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