Question 1

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

Accepted Answer

A)   The value of the goods and services produced by the restaurant is included in both French GDP and U.S. GDP.
B)   The value added by American workers and equipment in France is included in U.S. GDP and the value added by French workers and equipment is added to French GDP.
C)   The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP.
D)   The value of the goods and services produced by the restaurant is included in U.S. GDP, but not in French GDP.E) B) and C)
F) A) and D)

Question 2

A German citizen buys an automobile produced in the United States by a Japanese company. As a result,

Accepted Answer

A)   U.S. net exports increase, U.S. GDP is unaffected, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected.
B)   U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, German GNP is unaffected, and German GDP decreases.
C)   U.S. net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected.
D)   U.S. net exports and GDP are unaffected, Japanese GNP increases, and German net exports, GNP, and GDP decrease.E) All of the above
F) C) and D)

Question 3

Which of the following is not a correct statement about the growth of real GDP in the U.S. economy?

Accepted Answer

A)   Real GDP in 2009 was almost four times its 1965 level.
B)   Growth was steady between 1965 and 2009.
C)   Continued growth in real GDP enables the typical American to enjoy greater economic prosperity than his or her parents and grandparents did.
D)   The output of goods and services produced grew on average about 3 percent per year between 1965 and 2009.E) None of the above
F) B) and C)

Question 4

Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?

Accepted Answer

A)   Sam's and Ellen's.
B)   Sam's but not Ellen's.
C)   Ellen's but not Sam's.
D)   Nether Sam's nor Ellen's.E) B) and C)
F) A) and B)

Question 5

Government purchases include spending on goods and services by

Accepted Answer

A)   the federal government, but not by state or local governments.
B)   federal and state governments, but not by local governments.
C)   federal, state, and local governments.
D)   federal, state, and local governments, as well as household spending by employees of those governments.E) A) and C)
F) A) and D)

Question 6

Which of the following statements about GDP is correct?

Accepted Answer

A)   GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.
B)   Money continuously flows from households to firms and then back to households, and GDP measures this flow of money.
C)   GDP is generally regarded as the best single measure of a society's economic well-being.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 7

The basic tools of supply and demand are central to microeconomic analysis but are of little use to macroeconomics.

Accepted Answer

A) True 
 B)False

Question 8

Disposable personal income is the income that households and noncorporate businesses have left after satisfying all their obligations to the government.

Accepted Answer

A) True 
 B)False

Question 9

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) B) and C)
F) C) and D)

Question 10

Which of the following is not included in U.S. GDP?

Accepted Answer

A)   unpaid cleaning and maintenance of houses
B)   services such as those provided by lawyers and hair stylists
C)   the estimated rental value of owner-occupied housing
D)   production of foreign citizens living in the United StatesE) All of the above
F) A) and B)

Question 11

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

Accepted Answer

A)   investment.
B)   government spending.
C)   consumption of services.
D)   consumption of durable goods.E) C) and D)
F) A) and B)

Question 12

In the economy of Ukzten in 2010, consumption was $3000, exports were $400, GDP was $5000, imports were $600, and investment was $1100. What were Ukzten's government purchases in 2010?

Accepted Answer

A)   $300
B)   $500
C)   $700
D)   $1100E) B) and C)
F) C) and D)

Question 13

Microeconomics and macroeconomics are closely linked.

Accepted Answer

A) True 
 B)False

Question 14

The investment component of GDP refers to financial investment in stocks and bonds.

Accepted Answer

A) True 
 B)False

Question 15

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

Accepted Answer

A)   caused measured GDP to fall.
B)   not caused any change in measured GDP.
C)   caused measured GDP to rise.
D)   probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.E) All of the above
F) A) and C)

Question 16

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) A) and B)
F) B) and C)

Question 17

In the economy of Ukzten in 2010, consumption was $3000, GDP was $5500, government purchases were $1000, imports were $2000, and investment was $1000. What were Ukzten's exports in 2010?

Accepted Answer

A)   -$1500
B)   $500
C)   $1500
D)   $2500E) None of the above
F) B) and C)

Question 18

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

Accepted Answer

A)   $500
B)   $700
C)   $1200
D)   $1700E) A) and D)
F) C) and D)

Question 19

In the economy of Ukzten in 2010, consumption was one-half of GDP, government purchases were $2000 more than investment, investment was one-sixth of GDP, and the value of imports exceeded the value of exports by $500. What was Ukzten's GDP in 2010?

Accepted Answer

A)   $3000
B)   $4500
C)   $9000
D)   $15,000E) A) and D)
F) None of the above

Question 20

In the economy of Ukzten in 2010, consumption was $200, exports were $50, GDP was $325, government purchases were $100, imports were $125, and investment was $100. What were Ukzten's net exports in 2010?

Accepted Answer

A)   -$75
B)   -$50
C)   $50
D)   $75E) C) and D)
F) B) and C)

Exam 5: Measuring a Nations Income

The basic tools of supply and demand are central to microeconomic analysis but are of little use to macroeconomics.

Correct AnswerverifiedShow Answer

Disposable personal income is the income that households and noncorporate businesses have left after satisfying all their obligations to the government.

Correct AnswerverifiedShow Answer

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

Correct AnswerverifiedShow Answer

In the economy of Ukzten in 2010, consumption was $3000, GDP was $5500, government purchases were $1000, imports were $2000, and investment was $1000. What were Ukzten's exports in 2010?

Correct AnswerverifiedShow Answer

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

Correct AnswerverifiedShow Answer

In the economy of Ukzten in 2010, consumption was $3000, exports were $400, GDP was $5000, imports were $600, and investment was $1100. What were Ukzten's government purchases in 2010?

Correct AnswerverifiedShow Answer

Which of the following is not included in U.S. GDP?

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Which of the following statements about GDP is correct?

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Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

Correct AnswerverifiedShow Answer

Which of the following is not a correct statement about the growth of real GDP in the U.S. economy?

Correct AnswerverifiedShow Answer

Microeconomics and macroeconomics are closely linked.

Correct AnswerverifiedShow Answer

Government purchases include spending on goods and services by

Correct AnswerverifiedShow Answer

In the economy of Ukzten in 2010, consumption was $200, exports were $50, GDP was $325, government purchases were $100, imports were $125, and investment was $100. What were Ukzten's net exports in 2010?

Correct AnswerverifiedShow Answer

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

Correct AnswerverifiedShow Answer

In the economy of Ukzten in 2010, consumption was one-half of GDP, government purchases were $2000 more than investment, investment was one-sixth of GDP, and the value of imports exceeded the value of exports by $500. What was Ukzten's GDP in 2010?

Correct AnswerverifiedShow Answer

Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose value of services preparing meals is included in U.S. GDP?

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

The investment component of GDP refers to financial investment in stocks and bonds.

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

A German citizen buys an automobile produced in the United States by a Japanese company. As a result,

Correct AnswerverifiedShow Answer

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