Question 1

Which of the following statistics is usually regarded as the best single measure of a society's economic well-being?

Accepted Answer

A)   the unemployment rate
B)   the inflation rate
C)   gross domestic product
D)   the trade deficitE) A) and D)
F) A) and C)

Question 2

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Accepted Answer

A)   GDP would definitely increase, despite the fact that GDP includes environmental quality.
B)   GDP would definitely decrease because GDP includes environmental quality.
C)   GDP would definitely increase because GDP excludes environmental quality.
D)   GDP could either increase or decrease because GDP excludes environmental quality.E) A) and B)
F) A) and C)

Question 3

In the economy of Ukzten in 2010, consumption was $800, GDP was $2000, government purchases were $400, and investment was $600. What were Ukzten's net exports in 2010?

Accepted Answer

A)   -$200
B)   $200
C)   $1800
D)   Net exports cannot be calculated from the information given.E) None of the above
F) A) and C)

Question 4

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Accepted Answer

A)   longer life expectancy and a lower percentage of the population that is literate.
B)   longer life expectancy and a higher percentage of the population that is literate.
C)   very nearly the same life expectancy and a lower percentage of the population that is literate.
D)   very nearly the same life expectancy and a higher percentage of the population that is literate.E) A) and B)
F) A) and D)

Question 5

Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide and sells it to Chewy Chomp, Inc., which uses the rawhide to produce and sell dog chews. With each $2 of rawhide that it buys from Rolling Rawhide, Chewy Chomp, Inc. produces a dog chew and sells it for $5. Neither firm had any inventory at the beginning of 2008. During that year, Rolling Rawhide produced enough rawhide for 1000 dog chews. Chewy Chomp, Inc. bought 75% of that rawhide for $1500 and promised to buy the remaining 25% for $500 in 2009. Chewy Chomp, Inc. produced 750 dog chews during 2008 and sold each one during that year for $5. What was the economy's GDP for 2008?

Accepted Answer

A)   $3750
B)   $4250
C)   $5250
D)   $5750E) A) and D)
F) A) and C)

Question 6

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

Accepted Answer

A)   nominal GDP.
B)   real GDP.
C)   the GDP deflator.
D)   GNP.E) All of the above
F) A) and B)

Question 7

A transfer payment is a payment made by

Accepted Answer

A)   consumers, but not in exchange for a tangible product.
B)   firms, but not in exchange for capital equipment.
C)   foreigners, but not in exchange for a domestically-produced good or service.
D)   government, but not in exchange for a currently produced good or service.E) A) and D)
F) A) and C)

Question 8

Transfer payments are

Accepted Answer

A)   included in GDP because they represent income to individuals.
B)   included in GDP because they eventually will be spent on consumption.
C)   not included in GDP because they are not payments for currently produced goods or services.
D)   not included in GDP because taxes will have to be raised to pay for them.E) A) and B)
F) All of the above

Question 9

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Accepted Answer

A)   U.S. consumption falls by $500, U.S. net exports decline by $500, and U.S. GDP declines by $1000.
B)   U.S. consumption does not change, U.S. net exports decline by $500, and U.S. GDP declines by $500.
C)   U.S. consumption increases by $500, U.S. net exports remain the same, and U.S. GDP increases by $500.
D)   U.S. consumption increases by $500, U.S. net exports decline by $500, and U.S. GDP remains the same.E) All of the above
F) C) and D)

Question 10

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

Accepted Answer

A)   $150 to GDP.
B)   $250 to GDP.
C)   between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle.
D)   $400 to GDP.E) None of the above
F) A) and B)

Question 11

Much of macroeconomics attempts to explain

Accepted Answer

A)   changes in the price of oil and gasoline.
B)   long-run growth and short-run fluctuations in real GDP.
C)   changes in the growth rate of state government spending.
D)   changes in the prices and quantities of individual goods and services.E) A) and B)
F) All of the above

Question 12

Bountiful Harvest Bakery buys $4.00 of flour from Grinkers' Mill and uses the flour to make bread sold to the public for $12.00. Taking these two transactions into account, what is the effect on GDP?

Accepted Answer

A)   GDP increases by $4.00
B)   GDP increases by $8.00
C)   GDP increases by $12.00
D)   GDP increases by $16.00E) None of the above
F) C) and D)

Question 13

Which of the following is not an example of a nondurable good?

Accepted Answer

A)   a loaf of bread
B)   a pair of jeans
C)   a microwave
D)   a pound of baconE) B) and C)
F) A) and B)

Question 14

We would expect a macroeconomist, as opposed to a microeconomist, to be particularly interested in

Accepted Answer

A)   explaining how economic changes affect prices of particular goods.
B)   devising policies to deal with market failures such as externalities and market power.
C)   devising policies to promote low inflation.
D)   identifying those markets that are competitive and those that are not competitive.E) A) and D)
F) None of the above

Question 15

Michigan Tea Company sold $15 million worth of tea it produced. In producing this tea it purchased $5 million dollars worth of ingredients from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?

Accepted Answer

A)   $21 million
B)   $15 million
C)   $10 million
D)   $9 millionE) A) and D)
F) B) and C)

Question 16

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Accepted Answer

A)   the effect of taxes on the prices of airline tickets, and the profitability of automobile-manufacturing firms
B)   the price of beef, and wage differences between genders
C)   how consumers maximize utility, and how prices are established in markets for agricultural products
D)   the percentage of the labor force that is out of work, and differences in average income from country to countryE) B) and D)
F) B) and C)

Question 17

U.S. GDP excludes the production of most illegal goods.

Accepted Answer

A) True 
 B)False

Question 18

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Accepted Answer

A) True 
 B)False

Question 19

How does U.S. gross domestic product (GDP)  differ from U.S. gross national product (GNP) ?

Accepted Answer

A)   GNP = GDP - losses from depreciation
B)   GNP = GDP + income earned by U.S. citizens abroad - income that foreign citizens earned in the U.S.
C)   GNP = GDP + transfer payments to households + - indirect sales taxes
D)   GNP = GDP - depreciation - retained earningsE) A) and B)
F) None of the above

Question 20

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

Accepted Answer

A) True 
 B)False

Exam 5: Measuring a Nations Income

Much of macroeconomics attempts to explain

Correct Answer
verified

Transfer payments are

Correct Answer
verified

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

Correct Answer
verified

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Correct Answer
verified

Which of the following statistics is usually regarded as the best single measure of a society's economic well-being?

Correct Answer
verified

Bountiful Harvest Bakery buys $4.00 of flour from Grinkers' Mill and uses the flour to make bread sold to the public for $12.00. Taking these two transactions into account, what is the effect on GDP?

Correct Answer
verified

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Correct Answer
verified

U.S. GDP excludes the production of most illegal goods.

Correct Answer
verified

How does U.S. gross domestic product (GDP) differ from U.S. gross national product (GNP) ?

Correct Answer
verified

We would expect a macroeconomist, as opposed to a microeconomist, to be particularly interested in

Correct Answer
verified

Correct Answer
verified

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Correct Answer
verified

In the economy of Ukzten in 2010, consumption was $800, GDP was $2000, government purchases were $400, and investment was $600. What were Ukzten's net exports in 2010?

Correct Answer
verified

Which of the following is not an example of a nondurable good?

Correct Answer
verified

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

Correct Answer
verified

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Correct Answer
verified

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

Correct Answer
verified

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Correct Answer
verified

Michigan Tea Company sold $15 million worth of tea it produced. In producing this tea it purchased $5 million dollars worth of ingredients from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?

Correct Answer
verified

A transfer payment is a payment made by

Correct Answer
verified

Exam 5: Measuring a Nations Income

Much of macroeconomics attempts to explain

Correct AnswerverifiedShow Answer

Transfer payments are

Correct AnswerverifiedShow Answer

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

Correct AnswerverifiedShow Answer

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Correct AnswerverifiedShow Answer

Which of the following statistics is usually regarded as the best single measure of a society's economic well-being?

Correct AnswerverifiedShow Answer

Bountiful Harvest Bakery buys $4.00 of flour from Grinkers' Mill and uses the flour to make bread sold to the public for $12.00. Taking these two transactions into account, what is the effect on GDP?

Correct AnswerverifiedShow Answer

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Correct AnswerverifiedShow Answer

U.S. GDP excludes the production of most illegal goods.

Correct AnswerverifiedShow Answer

How does U.S. gross domestic product (GDP) differ from U.S. gross national product (GNP) ?

Correct AnswerverifiedShow Answer

We would expect a macroeconomist, as opposed to a microeconomist, to be particularly interested in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Correct AnswerverifiedShow Answer

In the economy of Ukzten in 2010, consumption was $800, GDP was $2000, government purchases were $400, and investment was $600. What were Ukzten's net exports in 2010?

Correct AnswerverifiedShow Answer

Which of the following is not an example of a nondurable good?

Correct AnswerverifiedShow Answer

If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP.

Correct AnswerverifiedShow Answer

Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist?

Correct AnswerverifiedShow Answer

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

Correct AnswerverifiedShow Answer

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Correct AnswerverifiedShow Answer

Michigan Tea Company sold $15 million worth of tea it produced. In producing this tea it purchased $5 million dollars worth of ingredients from foreign countries and paid workers who reside in Canada but commute to the U.S. $1 million. How much did these transactions add to U.S. GDP?

Correct AnswerverifiedShow Answer

A transfer payment is a payment made by

Correct AnswerverifiedShow Answer

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