Question 1

Unlike national income, personal income

Accepted Answer

A)   includes retained earnings, indirect business taxes, corporate income taxes and social insurance contributions, and excludes interest and transfer payments received by households from the government.
B)   excludes retained earnings, indirect business taxes corporate income taxes, social insurance contributions and interest and transfer payments received by households from the government.
C)   excludes retained earnings, indirect business taxes, corporate income taxes and social insurance contributions, and includes interest and transfer payments received by households from the government.
D)   includes retained earnings, indirect business taxes, corporate income taxes, social insurance contributions, and interest and transfer payments received by households from the government.E) All of the above
F) None of the above

Question 2

Suppose an economy produces only iPhones and bananas. In 2010, 1000 iPhones are sold at $300 each and 5000 pounds of bananas are sold at $3 per pound. In 2009, the base year, iPhones sold at $400 each and bananas sold at $2 per pound. For 2010,

Accepted Answer

A)   nominal GDP is $315,000, real GDP is $410,000, and the GDP deflator is 76.83.
B)   nominal GDP is $410,000, real GDP is $315,000, and the GDP deflator is 130.16.
C)   nominal GDP is $315,000, real GDP is $410,000, and the GDP deflator is 130.16.
D)   nominal GDP is $410,000, real GDP is $315,000, and the GDP deflator is 76.83.E) A) and B)
F) C) and D)

Question 3

If real GDP and the GDP deflator both rise, then it must be that nominal GDP rose.

Accepted Answer

A) True 
 B)False

Question 4

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

Accepted Answer

A)   values of goods and services based on surveys of consumers.
B)   market prices.
C)   quantities purchased by a typical urban household.
D)   profits from producing goods and services.E) None of the above
F) A) and B)

Question 5

Which of the following is included in U.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)   Both (a)  and (b)  are correct.
D)   Neither (a)  nor (b)  is correct.E) None of the above
F) All of the above

Question 6

Rachel babysits for her sister for no pay. When she babysits for someone else she charges $8 an hour. When is Rachel's babysitting included in GDP?

Accepted Answer

A)   When she babysits for her sister and when she babysits for someone else.
B)   When she babysits for her sister, but not when she babysits for someone else.
C)   When she babysits for someone else, but not when she babysits for her sister.
D)   Neither when she babysits for her sister nor for someone else.E) A) and B)
F) All of the above

Question 7

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 8

If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

Accepted Answer

A) True 
 B)False

Question 9

In the national income accounts, depreciation is called

Accepted Answer

A)   "consumption of fixed capital."
B)   "negative investment."
C)   "diminished value."
D)   "loss due to wear."E) A) and D)
F) A) and C)

Question 10

Macroeconomic statistics tell us about a particular household, firm, or market.

Accepted Answer

A) True 
 B)False

Question 11

In the economy of Ukzten in 2010, consumption was $4000, exports were $800, GDP was $9500, imports were $200, and investment was $1000. What were Ukzten's government purchases in 2010?

Accepted Answer

A)   $3700
B)   $3900
C)   $5100
D)   $5500E) None of the above
F) All of the above

Question 12

The consumption component of GDP includes spending on

Accepted Answer

A)   durable goods and nondurable goods, but not spending on services.
B)   durable goods and services, but not spending on nondurable goods.
C)   nondurable goods and services, but not spending on durable goods.
D)   durable goods, nondurable goods, and services.E) None of the above
F) C) and D)

Question 13

If total spending rises from one year to the next, then

Accepted Answer

A)   the economy must be producing a larger output of goods and services.
B)   goods and services must be selling at higher prices.
C)   either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both.
D)   employment or productivity must be rising.E) A) and B)
F) All of the above

Question 14

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 D)
F) A) and C)

Question 15

A country reported a nominal GDP of $85 billion in 2010 and $100 billion in 2009. It also reported a GDP deflator of 100 in 2010 and 105 in 2009. Between 2009 and 2010,

Accepted Answer

A)   real output and the price level both rose.
B)   real output rose and the price level fell.
C)   real output fell and the price level rose.
D)   real output and the price level both fell.E) All of the above
F) A) and D)

Question 16

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 GDPE) None of the above
F) A) and B)

Question 17

Which of the following is an example of depreciation?

Accepted Answer

A)   falling stock prices
B)   the retirement of several employees
C)   computers becoming obsolete
D)   All of the above are examples of depreciation.E) A) and B)
F) A) and C)

Question 18

If nominal GDP is $10 trillion and real GDP is $8 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) None of the above
F) A) and B)

Question 19

For an economy as a whole,

Accepted Answer

A)   wages must equal profit.
B)   consumption must equal saving.
C)   income must equal expenditure.
D)   the number of buyers must equal the number of sellers.E) B) and D)
F) A) and D)

Question 20

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

Exam 5: Measuring a Nations Income

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

Suppose an economy produces only iPhones and bananas. In 2010, 1000 iPhones are sold at $300 each and 5000 pounds of bananas are sold at $3 per pound. In 2009, the base year, iPhones sold at $400 each and bananas sold at $2 per pound. For 2010,

Correct AnswerverifiedShow Answer

The consumption component of GDP includes spending on

Correct AnswerverifiedShow Answer

If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

Correct AnswerverifiedShow Answer

Macroeconomic statistics tell us about a particular household, firm, or market.

Correct AnswerverifiedShow Answer

Which of the following is an example of depreciation?

Correct AnswerverifiedShow Answer

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

Correct AnswerverifiedShow Answer

For an economy as a whole,

Correct AnswerverifiedShow Answer

Unlike national income, personal income

Correct AnswerverifiedShow Answer

If total spending rises from one year to the next, then

Correct AnswerverifiedShow Answer

Which of the following is included in GDP?

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Rachel babysits for her sister for no pay. When she babysits for someone else she charges $8 an hour. When is Rachel's babysitting included in GDP?

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

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

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In the national income accounts, depreciation is called

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

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A country reported a nominal GDP of $85 billion in 2010 and $100 billion in 2009. It also reported a GDP deflator of 100 in 2010 and 105 in 2009. Between 2009 and 2010,

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

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In the economy of Ukzten in 2010, consumption was $4000, exports were $800, GDP was $9500, imports were $200, and investment was $1000. What were Ukzten's government purchases in 2010?

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If real GDP and the GDP deflator both rise, then it must be that nominal GDP rose.

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