Question 1

A recession is always associated with

Accepted Answer

A)   the end of a war.
B)   slowly growing real GDP.
C)   rising inflation.
D)   declining real GDP.E) A) and B)
F) None of the above

Question 2

When an American doctor opens a practice in Bermuda, his production there is part of U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not a question that macroeconomists address?

Accepted Answer

A)   Why is average income high in some countries while it is low in others?
B)   Why does the price of oil rise when war erupts in the Middle East?
C)   Why do production and employment expand in some years and contract in others?
D)   Why do prices rise rapidly in some periods of time while they are more stable in other periods?E) None of the above
F) A) and D)

Question 4

Changes in inventory are included in the investment component of GDP.

Accepted Answer

A) True 
 B)False

Question 5

If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the consumption component of U.S. GDP and the net exports component of U.S. GDP.

Accepted Answer

A) True 
 B)False

Question 6

The GDP deflator for years subsequent to the base year measures the change in

Accepted Answer

A)   nominal GDP from the base year that cannot be attributable to a change in real GDP.
B)   real GDP from the base year that cannot be attributable to a change in nominal GDP.
C)   nominal GDP from the base year that cannot be attributable to a change in prices.
D)   real GDP from the base year that cannot be attributable to a change in prices.E) A) and D)
F) All of the above

Question 7

The government of a country, which has adopted American GDP accounting conventions, reported that seasonally adjusted GDP in quarter 3 was $12 billion at an annual rate. This means that the seasonally-adjusted market value of all final goods and services produced within this country in quarter 3 was

Accepted Answer

A)   $3 billion.
B)   $4 billion.
C)   $12 billion.
D)   $48 billion.E) B) and D)
F) All of the above

Question 8

Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself. Which of the following is correct? The value of changing the oil is

Accepted Answer

A)   included in GDP whether Susan pays Speedy Lube to change it or changes it herself.
B)   included in GDP if Susan pays Speedy Lube to change it but not if she changes it herself.
C)   included in GDP if Susan changes it herself, but not if she pays Speedy Lube to change it.
D)   not included in GDP whether Susan pays Speedy lube to change it or she changes it herself.E) None of the above
F) B) and C)

Question 9

Unemployment compensation is

Accepted Answer

A)   part of GDP because it represents income.
B)   part of GDP because the recipients must have worked in the past to qualify.
C)   not part of GDP because it is a transfer payment.
D)   not part of GDP because the payments reduce business profits.E) A) and B)
F) A) and C)

Question 10

A farmer sells $50,000 of apples to individuals who take them home to eat and $75,000 of apples to a company that uses them all to produce cider. How much of the farmer's sales will be included as apples in GDP?

Accepted Answer

A)   $0
B)   $50,000
C)   $75,000
D)   $125,000E) C) and D)
F) None of the above

Question 11

If consumption is $7000, exports are $600, government purchases are $2000, government transfers are $900, imports are $800, and investment is $1000, then GDP is $9,800.

Accepted Answer

A) True 
 B)False

Question 12

Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the economy's overall production of goods and services changes over time.

Accepted Answer

A) True 
 B)False

Question 13

Table 5-1
The table below contains data for country A for the year 2010.
 
-Refer to Table 5-1. What were country A's imports in 2010?

Accepted Answer

A)   -$32
B)   $32
C)   $88
D)   $120E) A) and B)
F) C) and D)

Question 14

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) All of the above
F) None of the above

Question 15

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) All of the above
F) A) and D)

Question 16

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

Question 17

If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

Accepted Answer

A)   83.33, and this indicates that the price level has decreased by 16.67 percent since the base year.
B)   83.33, and this indicates that the price level has increased by 83.33 percent since the base year.
C)   120, and this indicates that the price level has increased by 20 percent since the base year.
D)   120, and this indicates that the price level has increased by 120 percent since the base year.E) All of the above
F) A) and D)

Question 18

In the United States in 2009, consumption represented approximately

Accepted Answer

A)   60 percent of GDP.
B)   70 percent of GDP.
C)   80 percent of GDP.
D)   90 percent of GDP.E) A) and B)
F) A) and C)

Question 19

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) A) and C)

Question 20

A country's real GDP rose from 500 to 550 while its nominal GDP rose from 600 to 770. What was this country's inflation rate?

Accepted Answer

A)   16.7%
B)   20%
C)   -14.3%
D)   -20%E) All of the above
F) None of the above

Exam 5: Measuring a Nations Income

Grapes are considered intermediate goods

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In the United States in 2009, consumption represented approximately

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If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

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Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself. Which of the following is correct? The value of changing the oil is

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Changes in inventory are included in the investment component of GDP.

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Unemployment compensation is

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If consumption is $7000, exports are $600, government purchases are $2000, government transfers are $900, imports are $800, and investment is $1000, then GDP is $9,800.

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When an American doctor opens a practice in Bermuda, his production there is part of U.S. GDP.

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The GDP deflator for years subsequent to the base year measures the change in

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Table 5-1 The table below contains data for country A for the year 2010. -Refer to Table 5-1. What were country A's imports in 2010?

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A country's real GDP rose from 500 to 550 while its nominal GDP rose from 600 to 770. What was this country's inflation rate?

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Which of the following is not a question that macroeconomists address?

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Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the economy's overall production of goods and services changes over time.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the consumption component of U.S. GDP and the net exports component of U.S. GDP.

Correct AnswerverifiedShow Answer

For the purpose of calculating GDP, investment is spending on

Correct AnswerverifiedShow Answer

A farmer sells $50,000 of apples to individuals who take them home to eat and $75,000 of apples to a company that uses them all to produce cider. How much of the farmer's sales will be included as apples in GDP?

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Gross domestic product includes all

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A recession is always associated with

Correct AnswerverifiedShow Answer

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