Question 1

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 C)
F) B) and D)

Question 2

Which of the following is included in the investment component of GDP?

Accepted Answer

A)   spending on new residential construction and spending on stocks and bonds
B)   spending on new residential construction but not spending on stocks and bonds
C)   spending on stocks and bonds but not spending on new residential construction
D)   neither spending on stocks and bonds nor spending on new residential constructionE) All of the above
F) None of the above

Question 3

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

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The percentage change in the price level from one period to another is called

Accepted Answer

A)   the growth rate.
B)   the inflation rate.
C)   the GDP deflator.
D)   the unemployment rate.E) A) and B)
F) None of the above

Question 6

A stove is produced by a firm in 2014, added to the firm's inventory in 2014, and sold to a household in 2015. It follows that

Accepted Answer

A)   the value of the good is added to the investment category of 2014 GDP, added to the consumption category of 2015 GDP, and subtracted from the investment category of 2015 GDP.
B)   the value of the good is added to the investment category of 2014 GDP, added to the consumption category of 2015 GDP, and not included in the investment category of 2015 GDP.
C)   the value of the good is added to the investment category of 2014 GDP, subtracted from the consumption category of 2015 GDP, and not included in the investment category of 2015 GDP.
D)   the value of the good is added to the investment category of 2014 GDP, subtracted from the consumption category of 2015 GDP, and added to the investment category of 2015 GDP.E) A) and B)
F) A) and C)

Question 7

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

Accepted Answer

A)   $1178
B)   $1295
C)   $1882
D)   $1999E) None of the above
F) B) and C)

Question 8

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Which of the following is always measured in prices from a base-year?

Accepted Answer

A)   both nominal and real GDP.
B)   nominal but not real GDP.
C)   real but not nominal GDP.
D)   neither nominal nor real GDP.E) C) and D)
F) B) and D)

Question 11

The residents of Ireland earn $200 million of income from abroad. Residents of other countries earn $300 million in Ireland. Therefore, Ireland's

Accepted Answer

A)   net factor payments from abroad are positive, and its GDP is larger than its GNP.
B)   net factor payments from abroad are positive, and its GNP is larger than its GDP.
C)   net factor payments from abroad are negative, and its GDP is larger than its GNP.
D)   net factor payments from abroad are negative, and its GNP is larger than its GDP.E) A) and B)
F) All of the above

Question 12

Consumption consists of spending by households on goods and services, with the exception of

Accepted Answer

A)   purchases of intangible services.
B)   purchases of durable goods.
C)   purchases of new houses.
D)   spending on education.E) All of the above
F) B) and C)

Question 13

Which of the following is included in the investment component of GDP?

Accepted Answer

A)   spending to build new houses
B)   spending to build new factories
C)   spending on business equipment such as welding equipment
D)   All of the above are included in the investment component of GDP.E) A) and B)
F) A) and D)

Question 14

Figure 23-2. 
-Refer to Figure 23-2. Identify the location of firms and households.

Accepted Answer

W is firms...

Question 15

Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP, but the value of intermediate goods produced and not sold is included directly as part of GDP.

Accepted Answer

Intermediate goods produced and sold dur...

Question 16

Which of the following is the correct formula for the GDP deflator?

Accepted Answer

A)   
B)   
C)  
D)  E) None of the above
F) B) and C)

Question 17

Table 23-12
A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year. 
-Refer to Table 23-12. Calculate the rate of inflation for 2012.

Accepted Answer

The answer of Table 23-12
A country produces only ice cream...

Question 18

If the price of a dress is three times the price of a pair of shoes, then a pair of shoes contributes

Accepted Answer

A)   exactly one-third as much to GDP as does a dress.
B)   more than one-third as much to GDP as does a dress.
C)   less than one-third as much to GDP as does a dress.
D)   exactly one-fourth as much to GDP as does a dress.E) None of the above
F) A) and B)

Question 19

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 imports in 2010?

Accepted Answer

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

Question 20

Define GDP. Remember to be specific about what it includes.

Accepted Answer

GDP is the market value of all...

Exam 23: Measuring a Nations Income

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

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 imports in 2010?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

The percentage change in the price level from one period to another is called

Correct AnswerverifiedShow Answer

If the price of a dress is three times the price of a pair of shoes, then a pair of shoes contributes

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Consumption consists of spending by households on goods and services, with the exception of

Correct AnswerverifiedShow Answer

The residents of Ireland earn $200 million of income from abroad. Residents of other countries earn $300 million in Ireland. Therefore, Ireland's

Correct AnswerverifiedShow Answer

Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP, but the value of intermediate goods produced and not sold is included directly as part of GDP.

Correct AnswerverifiedIntermediate goods produced and sold dur...View AnswerShow Answer

Table 23-12 A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year. -Refer to Table 23-12. Calculate the rate of inflation for 2012.

Correct AnswerverifiedShow Answer

A stove is produced by a firm in 2014, added to the firm's inventory in 2014, and sold to a household in 2015. It follows that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is always measured in prices from a base-year?

Correct AnswerverifiedShow Answer

Figure 23-2. -Refer to Figure 23-2. Identify the location of firms and households.

Correct AnswerverifiedW is firms...View AnswerShow Answer

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

Correct AnswerverifiedShow Answer

Which of the following is included in the investment component of GDP?

Correct AnswerverifiedShow Answer

Which of the following is included in the investment component of GDP?

Correct AnswerverifiedShow Answer

Define GDP. Remember to be specific about what it includes.

Correct AnswerverifiedGDP is the market value of all...View AnswerShow Answer

Which of the following is the correct formula for the GDP deflator?

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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

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Intermediate goods produced and sold dur...
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W is firms...
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GDP is the market value of all...
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