Question 1

Table 23-4
The table below reports nominal and real GDP for the U.S. from 1929 to 1932. 
-Refer to Table 23-4. What was the growth rate of real GDP for 1930?

Accepted Answer

A)  -8.62%. Real GDP is a better gauge of economic well-being than nominal GDP.
B)  -8.62%. Nominal GDP is a better gauge of economic well-being than real GDP.
C)  -9.43%. Real GDP is a better gauge of economic well-being than nominal GDP.
D)  -9.43%. Nominal GDP is a better gauge of economic well-being than real GDP.

Question 2

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

Accepted Answer

A)  market prices.
B)  statistical estimates of the value of goods and services to consumers.
C)  prices based on the assumption that producers make no profits.
D)  the maximum amount consumers would be willing to pay.

Question 3

Table 23-5
The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015.
Prices and Quantities 
-Refer to Table 23-5. This country's inflation rate from 2016 to 2017 was

Accepted Answer

A)  25.0%.
B)  23.1%.
C)  26.1%.
D)  18.8%.

Question 4

If an economy's GDP falls, then it must be the case that the economy's

Accepted Answer

A)  income and saving fall.
B)  income and market value of all production both fall.
C)  income falls and market value of all production rises.
D)  income rises and market value of all production falls.

Question 5

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.

Question 6

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

Accepted Answer

A)  purchases of staplers, paper clips, and pens by U.S. business firms
B)  purchases of natural gas by U.S. households
C)  purchases of newly constructed homes by U.S. households
D)  All of the above are correct.

Question 7

Identify which of the following are included in the government purchases component of GDP.
the salary paid to a state court judge
unemployment insurance benefits
the payment made by the federal government for a jet fighter
social security payments
a county builds a jail building

Accepted Answer

The following are included in ...

Question 8

An economy recently reported nominal GDP of 3 trillion euro and a GDP deflator of 200. What was real GDP?

Accepted Answer

A)  1.5 trillion euro, and real GDP is a better gauge of economic activity than nominal GDP.
B)  1.5 trillion euro, but nominal GDP is a better gauge of economic activity than real GDP.
C)  6 trillion euro, and real GDP is a better gauge of economic activity than nominal GDP.
D)  6 trillion euro, but nominal GDP is a better gauge of economic activity than real GDP.

Question 9

Table 23-5
The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015.
Prices and Quantities 
-Refer to Table 23-5. This country's inflation rate from 2017 to 2018 was

Accepted Answer

A)  20.0%.
B)  21.8%.
C)  38.9%.
D)  28.0%.

Question 10

If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?

Accepted Answer

A)  $2.5 billion.
B)  $10 billion.
C)  $40 billion.
D)  $100 billion.

Question 11

New home construction is included in the consumption component of GDP.

Accepted Answer

A) True 
 B)False

Question 12

In the equation Y = C + I + G + NX,

Accepted Answer

A)  Y represents the economy's total expenditure.
B)  C represents household expenditures on services and durable goods.
C)  all of the variables are always positive numbers.
D)  All of the above are correct.

Question 13

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 nominal GDP, real GDP, and the GDP deflator for 2010? Show your work.

Accepted Answer

Nominal GDP was $5x100 + $60x1...

Question 14

Table 23-3
The table below contains data for the country of Crete for the year 2010. 
-Refer to Table 23-3. What were Crete's net exports in 2010?

Accepted Answer

A)  ​-$217
B)  ​-$88
C)  ​$88
D)  ​$217

Question 15

The value of the housing services provided by the economy's owner-occupied houses is

Accepted Answer

A)  included in GDP, and the estimated rental values of the houses are used to place a value on these housing services.
B)  included in GDP, and the actual mortgage payments made on the houses are used to estimate the value of these rental services.
C)  excluded from GDP since these services are not sold in any market.
D)  excluded from GDP since the value of these housing services cannot be estimated with any degree of precision.

Question 16

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Accepted Answer

A) True 
 B)False

Question 17

​In computing GDP, market prices are used in the calculations because

Accepted Answer

A)  ​market prices are constant over time.
B)  ​market prices do not reflect how prices change over time.
C)  ​market prices are consistently free of inflation.
D)  ​market prices can be used to combine the variety of goods and services produced in an economy into a single measure.

Question 18

Consumption is $5.5 trillion, investment is $1 trillion, government expenditures are $1.5 trillion, transfer payments are $.5 trillion, exports are $.75 trillion and imports are $1.25 trillion. What is GDP?

Accepted Answer

GDP = C + I + G + NX = $5.5 tr...

Question 19

The city of Ann Arbor Michigan buys a police car manufactured in Germany. In the GDP accounts this transaction is included in

Accepted Answer

A)  in government expenditures and exports.
B)  government expenditures and imports.
C)  exports, but not government expenditures.
D)  imports, but not government expenditures.

Question 20

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

Accepted Answer

A) True 
 B)False

Exam 23: Measuring a Nation S Income

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. What was the growth rate of real GDP for 1930?

Correct AnswerverifiedShow Answer

​In computing GDP, market prices are used in the calculations because

Correct AnswerverifiedShow Answer

Table 23-3 The table below contains data for the country of Crete for the year 2010. -Refer to Table 23-3. What were Crete's net exports in 2010?

Correct AnswerverifiedShow Answer

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

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 nominal GDP, real GDP, and the GDP deflator for 2010? Show your work.

Correct AnswerverifiedNominal GDP was $5x100 + $60x1...View AnswerShow Answer

Table 23-5 The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015. Prices and Quantities -Refer to Table 23-5. This country's inflation rate from 2016 to 2017 was

Correct AnswerverifiedShow Answer

An economy recently reported nominal GDP of 3 trillion euro and a GDP deflator of 200. What was real GDP?

Correct AnswerverifiedShow Answer

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

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Identify which of the following are included in the government purchases component of GDP. the salary paid to a state court judge unemployment insurance benefits the payment made by the federal government for a jet fighter social security payments a county builds a jail building

Correct AnswerverifiedThe following are included in ...View AnswerShow Answer

New home construction is included in the consumption component of GDP.

Correct AnswerverifiedShow Answer

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

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The value of the housing services provided by the economy's owner-occupied houses is

Correct AnswerverifiedShow Answer

If an economy's GDP falls, then it must be the case that the economy's

Correct AnswerverifiedShow Answer

Table 23-5 The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015. Prices and Quantities -Refer to Table 23-5. This country's inflation rate from 2017 to 2018 was

Correct AnswerverifiedShow Answer

At a rummage sale, you buy two old books and an old rocking chair; your spending on these items is not included in current GDP.

Correct AnswerverifiedShow Answer

In the equation Y = C + I + G + NX,

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

Correct AnswerverifiedShow Answer

If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?

Correct AnswerverifiedShow Answer

The city of Ann Arbor Michigan buys a police car manufactured in Germany. In the GDP accounts this transaction is included in

Correct AnswerverifiedShow Answer

Consumption is $5.5 trillion, investment is $1 trillion, government expenditures are $1.5 trillion, transfer payments are $.5 trillion, exports are $.75 trillion and imports are $1.25 trillion. What is GDP?

Correct AnswerverifiedGDP = C + I + G + NX = $5.5 tr...View AnswerShow Answer

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In computing GDP, market prices are used in the calculations because

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Nominal GDP was $5x100 + $60x1...
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The following are included in ...
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GDP = C + I + G + NX = $5.5 tr...
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