Question 1

Suppose an apartment complex converts to a condominium, so that the former renters are now owners of their housing units. Suppose further that a current estimate of the value of the condominium owners' housing services is the same as the rent they previously paid. What happens to GDP as a result of this conversion?

Accepted Answer

A)   GDP necessarily increases.
B)   GDP necessarily decreases.
C)   GDP is unaffected because neither the rent nor the estimate of the value owner-occupied housing services is included in GDP.
D)   GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services.E) B) and C)
F) All of the above

Question 2

Transfer payments

Accepted Answer

A)   are payments that flow from government to households.
B)   are not made in exchange for currently produced goods or services.
C)   alter household income, but they do not reflect the economy's production.
D)   All of the above are correct.E) B) and C)
F) C) and D)

Question 3

Table 23-11
The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009.
Prices and Quantities
 
-Refer to Table 23-11.
What was the inflation rate for 2010? Show your work.

Accepted Answer

2009 is the base year so the GDP Deflato...

Question 4

Which of the following items is included in U.S. GDP?

Accepted Answer

A)   the estimated value of production accomplished at home, such as backyard production of fruits and vegetables
B)   the value of illegally-produced goods and services
C)   the value of cars and trucks produced in foreign countries and sold in the U.S.
D)   None of the above is included in U.S. GDP.E) C) and D)
F) B) and C)

Question 5

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Accepted Answer

A)   would be included in GDP because they are part of government purchases.
B)   would be included in GDP because they are part of investment expenditures.
C)   would not be included in GDP because they are transfer payments.
D)   would not be included in GDP because the government raises taxes to pay for them.E) A) and B)
F) A) and C)

Question 6

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that

Accepted Answer

A)   GDP is not a useful measure of society's welfare.
B)   GDP is still a useful measure of society's welfare because providing these other attributes is the responsibility of government.
C)   GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare.
D)   GDP is still the best measure of society's welfare because these other values cannot actually be measured.E) A) and B)
F) A) and C)

Question 7

Which of the following is correct?

Accepted Answer

A)   Nominal GDP is always less than real GDP.
B)   Nominal GDP is always greater than real GDP.
C)   Nominal GDP equals real GDP in the base year.
D)   Nominal GDP equals real GDP in all years but the base year.E) A) and B)
F) A) and C)

Question 8

Table 23-9
A country produces only ice cream and pie. 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 23-9. This country's inflation rate from 2009 to 2010 to the nearest tenth was

Accepted Answer

A)   2.9%
B)   8.8%
C)   13.3%
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 9

What measure of GDP shows the value of goods and services produced if we valued these good and services at the prices that prevailed in some specific year in the past?

Accepted Answer

The answer of What measure of GDP shows the value...

Question 10

Quality Motors is a Japanese-owned company that produces automobiles; all of its automobiles are produced in American plants. In 2008, Quality Motors produced $25 million worth of automobiles and sold $12 million in the U.S. and $13 million in Mexico. In addition, it sold $2 million from the previous year's inventory in the U.S. The transactions just described contribute how much to U.S. GDP for 2008?

Accepted Answer

A)   $12 million
B)   $14 million
C)   $25 million
D)   $27 millionE) B) and C)
F) A) and D)

Question 11

A Mexican oil field service company works on oil rigs in the U.S. The value of the company's services produced by Mexican citizens and the equipment they own is included in

Accepted Answer

A)   Mexican GNP and U.S. GNP.
B)   Mexican GDP and U.S. GNP.
C)   Mexican GNP and U.S. GDP.
D)   Mexican GDP and U.S. GDP.E) None of the above
F) B) and C)

Question 12

Table 23-2
The table below contains data for country A for the year 2010.
 
-Refer to Table 23-2. What were country A's government purchases in 2010?

Accepted Answer

A)   $553
B)   $1198
C)   $1975
D)   $2752E) C) and D)
F) A) and D)

Question 13

If nominal GDP is $8 trillion and real GDP is $10 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) A) and B)
F) A) and C)

Question 14

Which of the following is included in GDP?

Accepted Answer

A)   medical marijuana purchased from a government-run pharmacy by a glaucoma patient
B)   recreational marijuana purchased from a drug dealer by a college student
C)   recreational marijuana produced and consumed by a man in his attic
D)   All of the above are included in GDP.E) B) and C)
F) A) and B)

Question 15

Which of the following is included in Singapore's GDP?

Accepted Answer

A)   The value of production by a Singaporean working in the U.S.
B)   The value of production by an American working in Singapore
C)   The value of production by a Singaporean that crosses the border to work in Malaysia.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 16

Janet bought flour and used it to bake bread she ate. ABC Bakery bought flour which it used to bake bread that customers purchased. In which case will the flour be counted as a final good?

Accepted Answer

A)   Janet's purchase and ABC Bakery's purchase.
B)   ABC Bakery's purchase but not Janet's purchase.
C)   Janet's purchase but not ABC Bakery's purchase.
D)   Neither Janet's purchase nor ABC Bakery's purchase.E) B) and C)
F) A) and D)

Question 17

If the GDP deflator in 2009 was 150 and the GDP deflator in 2010 was 175, then the inflation rate in 2010 was 25%.

Accepted Answer

A) True 
 B)False

Question 18

In the GDP accounts production equals

Accepted Answer

A)   income.
B)   income + saving.
C)   income - government expenditures.
D)   income - imports.E) None of the above
F) All of the above

Question 19

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Accepted Answer

A)   reduced measured GDP.
B)   not affected measured GDP.
C)   increased measured GDP by the value of the restaurant meals.
D)   increased measured GDP by the value added by the restaurant's preparation and serving of the meals.E) A) and B)
F) B) and D)

Question 20

The underground economy

Accepted Answer

A)   excludes the amount of criminal activity in an economy.
B)   is larger for developed nations than developing nations when measured as a percent of GDP.
C)   includes otherwise legal transactions that go unreported or unrecorded.
D)   in the United States is insignificant is size when compared to the official measure of GDP.E) All of the above
F) A) and C)

Exam 10: Measuring a Nations Income

In the GDP accounts production equals

Correct Answer
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Table 23-9 A country produces only ice cream and pie. 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 23-9. This country's inflation rate from 2009 to 2010 to the nearest tenth was

Correct Answer
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Correct Answer
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A Mexican oil field service company works on oil rigs in the U.S. The value of the company's services produced by Mexican citizens and the equipment they own is included in

Correct Answer
verified

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Correct Answer
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Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that

Correct Answer
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Transfer payments

Correct Answer
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Which of the following is correct?

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

Correct Answer
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Janet bought flour and used it to bake bread she ate. ABC Bakery bought flour which it used to bake bread that customers purchased. In which case will the flour be counted as a final good?

Correct Answer
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Which of the following is included in Singapore's GDP?

Correct Answer
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Which of the following is included in GDP?

Correct Answer
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The underground economy

Correct Answer
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Table 23-11 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. Prices and Quantities -Refer to Table 23-11. What was the inflation rate for 2010? Show your work.

Correct Answer
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2009 is the base year so the GDP Deflato...
View Answer

Table 23-2 The table below contains data for country A for the year 2010. -Refer to Table 23-2. What were country A's government purchases in 2010?

Correct Answer
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Correct Answer
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Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Correct Answer
verified

If the GDP deflator in 2009 was 150 and the GDP deflator in 2010 was 175, then the inflation rate in 2010 was 25%.

Correct Answer
verified

What measure of GDP shows the value of goods and services produced if we valued these good and services at the prices that prevailed in some specific year in the past?

Correct Answer
verified

Which of the following items is included in U.S. GDP?

Correct Answer
verified

Exam 10: Measuring a Nations Income

In the GDP accounts production equals

Correct AnswerverifiedShow Answer

Table 23-9 A country produces only ice cream and pie. 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 23-9. This country's inflation rate from 2009 to 2010 to the nearest tenth was

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A Mexican oil field service company works on oil rigs in the U.S. The value of the company's services produced by Mexican citizens and the equipment they own is included in

Correct AnswerverifiedShow Answer

To encourage formation of small businesses, the government could provide subsidies; these subsidies

Correct AnswerverifiedShow Answer

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that

Correct AnswerverifiedShow Answer

Transfer payments

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Janet bought flour and used it to bake bread she ate. ABC Bakery bought flour which it used to bake bread that customers purchased. In which case will the flour be counted as a final good?

Correct AnswerverifiedShow Answer

Which of the following is included in Singapore's GDP?

Correct AnswerverifiedShow Answer

Which of the following is included in GDP?

Correct AnswerverifiedShow Answer

The underground economy

Correct AnswerverifiedShow Answer

Table 23-11 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. Prices and Quantities -Refer to Table 23-11. What was the inflation rate for 2010? Show your work.

Correct Answerverified2009 is the base year so the GDP Deflato...View AnswerShow Answer

Table 23-2 The table below contains data for country A for the year 2010. -Refer to Table 23-2. What were country A's government purchases in 2010?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Correct AnswerverifiedShow Answer

If the GDP deflator in 2009 was 150 and the GDP deflator in 2010 was 175, then the inflation rate in 2010 was 25%.

Correct AnswerverifiedShow Answer

What measure of GDP shows the value of goods and services produced if we valued these good and services at the prices that prevailed in some specific year in the past?

Correct AnswerverifiedShow Answer

Which of the following items is included in U.S. GDP?

Correct AnswerverifiedShow Answer

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2009 is the base year so the GDP Deflato...
View Answer

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