Question 1

GDP is not a perfect measure of well-being; for example,

Accepted Answer

A)   GDP incorporates a large number of non-market goods and services that are of little value to society.
B)   GDP places too much emphasis on the value of leisure.
C)   GDP fails to account for the quality of the environment.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 2

Expenditures on a nation's domestic production

Accepted Answer

A)   are less than its domestic production.
B)   are equal to its domestic production.
C)   are greater than its domestic production.
D)   could be less than, equal to, or greater than its domestic production.E) A) and D)
F) A) and B)

Question 3

Most goods whose purchases are included in the investment component of GDP are used to produce other goods in future periods.

Accepted Answer

A) True 
 B)False

Question 4

Changes in the GDP deflator reflect only changes in the prices of goods and services.

Accepted Answer

A) True 
 B)False

Question 5

A professional gambler moves from a state where gambling is illegal to a state where gambling is legal. Most of his income was, and continues to be, from gambling. His move

Accepted Answer

A)   raises GDP.
B)   decreases GDP.
C)   doesn't change GDP because gambling is never included in GDP.
D)   doesn't change GDP because in either case his income is included.E) A) and B)
F) C) and D)

Question 6

Are sales of used goods included in GDP? Explain why or why not. Hint: Remember how GDP is defined.

Accepted Answer

Sales of used goods ...

Question 7

AA Appliances sells refrigerators. In 2015 it added $100,000 to its inventory. $10,000 of this addition was from used refrigerators, and the remaining $90,000 was from their purchases of newly manufactured refrigerators. How much of AA's inventory is included in 2015 GDP?

Accepted Answer

A)   $0
B)   $10,000
C)   $90,000
D)   $100,000E) C) and D)
F) A) and B)

Question 8

Which of the following is not included in GDP?

Accepted Answer

A)   carrots grown in your garden and eaten by your family
B)   carrots purchased at a farmer's market and eaten by your family
C)   carrots purchased at a grocery store and eaten by your family
D)   None of the above are included in GDP.E) A) and B)
F) A) and C)

Question 9

In the circular flow diagram what are the three types of payments from firms to factors of production? Is the sum of these payments greater than, less than, or equal to GDP?

Accepted Answer

Wages, rents, and pr...

Question 10

The residents of country A earn $500 million of income from abroad. Residents of other countries earn $200 million in country A. These earnings are accounted for in country A's

Accepted Answer

A)   GNP which is larger than GDP in country A.
B)   GNP which is smaller than GDP in country A.
C)   GDP which is larger than GNP in country A.
D)   GDP which is smaller than GNP in country A.E) A) and C)
F) A) and B)

Question 11

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013.
 
-Refer to Table 23-6. In 2012, this country's GDP deflator was

Accepted Answer

A)   74.2.
B)   100.0.
C)   171.4.
D)   240.0.E) A) and B)
F) C) and D)

Question 12

Explain how real GDP differs from nominal GDP.

Accepted Answer

Real GDP reflects on...

Question 13

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

Accepted Answer

A) True 
 B)False

Question 14

Changes in nominal GDP reflect

Accepted Answer

A)   only changes in prices.
B)   only changes in the amounts being produced.
C)   both changes in prices and changes in the amounts being produced.
D)   neither changes in prices nor changes in the amounts being produced.E) C) and D)
F) A) and B)

Question 15

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $6300, government purchases were $1300, and investment was $1500. What were Talikastan's imports in 2015?

Accepted Answer

A)   $500
B)   -$700
C)   $700
D)   $500.E) C) and D)
F) B) and D)

Question 16

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 consumption in 2010?

Accepted Answer

A)   $2018
B)   $3010
C)   $3311
D)   $4015E) B) and D)
F) B) and C)

Question 17

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

Accepted Answer

A) True 
 B)False

Question 18

National income differs from net national because

Accepted Answer

A)   it includes profits of corporations.
B)   of a statistical discrepancy.
C)   it includes transfer payments.
D)   it excludes depreciation.E) All of the above
F) A) and B)

Question 19

GDP does not make adjustments for leisure time, environmental quality, or volunteer work.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)   spending on new business equipment such as power tools and spending on stocks and bonds
B)   spending on new business equipment such as power tools but not spending on stocks and bonds
C)   spending on stocks and bonds but not spending on new business equipment such as power tools
D)   neither spending on new business equipment such as power tools nor spending on stocks and bondsE) A) and D)
F) A) and C)

Exam 5: Measuring a Nations Income

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $6300, government purchases were $1300, and investment was $1500. What were Talikastan's imports in 2015?

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Changes in the GDP deflator reflect only changes in the prices of goods and services.

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GDP is not a perfect measure of well-being; for example,

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Expenditures on a nation's domestic production

Correct AnswerverifiedShow Answer

GDP does not make adjustments for leisure time, environmental quality, or volunteer work.

Correct AnswerverifiedShow Answer

In the circular flow diagram what are the three types of payments from firms to factors of production? Is the sum of these payments greater than, less than, or equal to GDP?

Correct AnswerverifiedWages, rents, and pr...View AnswerShow Answer

Explain how real GDP differs from nominal GDP.

Correct AnswerverifiedReal GDP reflects on...View AnswerShow Answer

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

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Which of the following is not included in GDP?

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Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2012, this country's GDP deflator was

Correct AnswerverifiedShow Answer

National income differs from net national because

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Most goods whose purchases are included in the investment component of GDP are used to produce other goods in future periods.

Correct AnswerverifiedShow Answer

The residents of country A earn $500 million of income from abroad. Residents of other countries earn $200 million in country A. These earnings are accounted for in country A's

Correct AnswerverifiedShow Answer

AA Appliances sells refrigerators. In 2015 it added $100,000 to its inventory. $10,000 of this addition was from used refrigerators, and the remaining $90,000 was from their purchases of newly manufactured refrigerators. How much of AA's inventory is included in 2015 GDP?

Correct AnswerverifiedShow Answer

Are sales of used goods included in GDP? Explain why or why not. Hint: Remember how GDP is defined.

Correct AnswerverifiedSales of used goods ...View AnswerShow Answer

A professional gambler moves from a state where gambling is illegal to a state where gambling is legal. Most of his income was, and continues to be, from gambling. His move

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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 consumption in 2010?

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GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

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Changes in nominal GDP reflect

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

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Wages, rents, and pr...
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Real GDP reflects on...
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Sales of used goods ...
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