92. If the U.S. government pays an economist at the U.S. Department of Commerce $50,000 in salary in 2003, and $30,000 in retirement benefit in 2004

B.the 2003 payment is included in 2003 GDP as government purchases, but the 2004 payment is not included in 2004 GDP.

A.each payment will be included in GDP as government purchases for the respective years.

C. the 2003 payment is included in 2003 GDP as government purchases, and the 2004 payment is included in 2004 GDP as government transfer payments.

D.the 2003 payment is included in 2003 GDP as government purchases, and the 2004 payment is allocated to previous years' GDP according to the amount of work performed each year.

93. To encourage formation of small businesses, the government could provide subsidies; these subsidies would

C. not be included in GDP because they are transfer payments.

A.be included in GDP because they are part of government expenditures.

B.be included in GDP because they are part of investment expenditures.

D.not be included in GDP because the government raises taxes to pay for them.

94. Transfer payments are

B.not included in GDP because they are not payments for currently produced goods or services.

A.included in GDP because they represent income to individuals.

C. included in GDP because the income will be spent for consumption.

D.not included in GDP because taxes will have to be raised to pay for them.

95. Social Security payments are

C. excluded from GDP because they do not represent current government purchases of goods and services.

A.included in GDP because they represent payment for work performed in the past.

B.included in GDP because they represent potential consumption.

D.excluded from GDP because they are not private pensions.

96. Unemployment compensation is

B.not part of GDP because it is a transfer payment.

A.part of GDP because it represents income.

C. part of GDP because the recipients must have worked in the past to qualify.

D.not part of GDP because the payments reduce business profit.

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

A.U.S. exports of goods and services

D.None of the above are correct.

98. Which of the following is included in the Consumption component of GDP?

B.purchases of foreign goods and services

C. purchases of newly constructed homes

D.All of the above are correct.

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

D.All of the above are correct.

A.purchases of newly constructed homes

B.purchases of foreign capital goods such as industrial equipment

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

B.purchases of capital equipment that were manufactured in a foreign country by a foreign firm

A.purchases of stocks and bonds

C. the estimated rental value of owner-occupied housing

D.None of the above are correct.

101. Which of these would NOT be included in the component(s) listed after them?

C. Emily receives her Social Security check—U.S. government expenditures.

A.Mary buys a skateboard manufactured in Germany—U.S. consumption and U.S. imports.

B.Shelly adds DVDs produced in the United States to her inventory—U.S. investment.

D.None of the above are correct.

102. Which of these things would NOT be included in the components listed after them?

C. Beverly buys a newly issued stock in a U.S. corporation—U.S. investment.

A.Ruth buys a motorcycle made in Japan to ride on her weekends offff—U.S. consumption and U.S. import.

B.Shirley owns her own home which has an estimated rental value—U.S. consumption

D.Samantha produces some art work but doesn’t sell them all in the current quarter and so adds them to her inventory—investment.

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

C. either the economy must be producing a larger output of goods and services, or the prices at which goods and services are sold must be higher, or both.

A.the economy must be producing a larger output of goods and services.

B.prices at which goods and services are sold must be higher.

D.employment or productivity must be rising.

B.evaluates current production at the prices that prevailed in some specifific year in the past.

A.evaluates current production at current prices.

C. is not a valid measure of the economy’s performance, since prices change from year to year.

D.is a measure of the value of goods only, hence, it excludes the value of services.

113. Which of the following statements about GDP is most accurate?

A.Nominal GDP values production at current prices, while real GDP values production at constant prices.

B.Nominal GDP values production at constant prices, while real GDP values production at current prices.

C. Nominal GDP values production at market prices, while real GDP values production at the cost of the resources used in the production process.

D.Nominal GDP consistently underestimates the value of production, while real GDP consistently overestimates the value of production.

120. Real GDP is the production of final goods and services valued at

D. the ratio of current year prices to constant year prices.

121. Which statement represents most correctly the relationship between nominal GDP and real GDP?

C. Nominal GDP measures current production using current prices, while real GDP measures current production using base-year prices.

A.Nominal GDP measures base-year production using base-year prices, while real GDP measures current production using current prices.

B.Nominal GDP measures current production using base-year prices, while real GDP measures current production using current prices.

D.Nominal GDP measures current production using current prices, while real GDP measures base-year production using base-year prices.

122. Which of the following statements about nominal GDP and real GDP is most accurate?

B.Real GDP is a better gauge of economic well-being than is nominal GDP.

A.Nominal GDP is a better gauge of economic well-being than is real GDP.

C. Real GDP and nominal GDP are equally good measures of economic well-being.

D.Whether real GDP or nominal GDP is a better measure of economic well-being depends on what sort of goods are produceD.

123. When economists talk about growth in the economy, they measure that growth with the

B.percentage change in real GDP.

A.absolute change in nominal GDP.

C. absolute change in real GDP.

D.percentage change in nominal GDP.

124. The GDP deflator is the ratio of

B. real GDP to nominal GDP multiplied by 100.

D. nominal GDP to real GDP multiplied by 100.

133. The GDP deflator can be used to identify the

A.increase in nominal GDP that is due to an increase in prices rather than an increase in production.

B.increase in real GDP that is due to an increase in prices rather than an increase in production.

C. increase in the cost of living for typical U.S. consumers.

D.reduction in government spending required to balance the federal budget.

139. GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

B.the consumption component of GDP.

C. government expenditures per person.

D.the level of business investment.

143. Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP.

C. However, GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare.

A.Therefore, GDP is not a useful measure of society's welfare.

B.However, GDP is still a useful measure of society's welfare because providing these other attributes is the responsibility of government.

D.However, GDP is still the best measure of society’s welfare because these other values cannot actually be measureD.

147. 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

B.longer life expectancy and a higher percentage of the population that is literate.

A.longer life expectancy and a lower 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.

148. Which of the following statements is accurate?

D.All of the above are correct.

A.In rich countries, people typically live into their late seventies, while in poor countries, people typically live only until their fififties or early sixties.

B.In rich countries, almost all the population can read, while in poor countries, about half the population is illiterate.

C. Poor countries tend to have higher infant mortality rates, higher maternal mortality, and higher rates of child malnutrition than do rich countries.

150. Being able to measure the behavior of the economy with statistics such as GDP

D.is a crucial step toward developing the science of macroeconomics.

A.is useful only in the accounting sense.

B.is all that is necessary in order for us to be able to understand the macroeconomy.

C. can be helpful in developing macroeconomic science, but is not useful for policymaking.

Chapter 23 (B)

Authored by Hằng Nguyễn

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MULTIPLE CHOICE QUESTION

2 mins • 1 pt

81. A U.S. publisher purchases new computers. This purchase by itself makes

A.investment and GDP higher.

B.investment higher and leaves GDP unchangeD.

C. investment higher and reduces GDP.

D.neither investment nor GDP higher.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

82. A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result

A.U.S. investment and GDP increase, but German GDP is unaffected

B.U.S. investment and German GDP increase, but U.S. GDP is unaffected

C. U.S. investment, U.S. GDP, and German GDP are unaffected, because tractors are intermediate goods.

D.U.S. investment, U.S. GDP, and German GDP all increase.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

83. If a U.S. citizen buys a television made in Korea by a Korean firm,

A.U.S. net exports decrease, and U.S. GDP decreases.

B.U.S. net exports are unaffected, and U.S. GDP decreases.

C. U.S. net exports are unaffected, and U.S. GDP is unaffected

D.U.S. net exports decrease but U.S. GDP is unaffected

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

84. If a U.S. household buys a $75 handbag from Italy, U.S. consumption increases by $75, U.S.

A.imports increase by $75, and U.S. GDP increases by $75.

B.imports increase by $75, but U.S. GDP is unaffected

C. imports are unaffected, and U.S. GDP is unaffected

D.exports increase by $75, and U.S. GDP increases by $75.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

87. After the terrorist attack on September 11, governments raised expenditures to increase security at airports. These purchases of goods and services are

A.not included in GDP since they are not productive.

B.not included in GDP since the government will have to raise taxes to pay for them.

C. included in GDP since government expenditures are included in GDP.

D.included in GDP only to the extent that the Federal, and not state or local governments, paid for them.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

90. A transfer payment is

A.a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location.

B.a payment that is automatically transferred from your bank account to pay your utility bill.

C. the term that is used to indicate that your paycheck has been automatically deposited to your bank account.

D.a form of government spending that is not made in exchange for a currently produced good or service.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

91. Which of the following represents a transfer payment?

A.you transfer $1,000 from your bank account to a mutual funD.

B.the government sends your grandfather his Social Security check.

C. the bank transfers $10 quarterly interest to your savings account.

D.your employer automatically transfers $100 each month from your wages to a non-taxable medical spending account.

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