University of Colorado, Boulder Chapter 10 Multiple Choice 1)GDP

dealership or the purchase of an antique rocking chair by a person at a yard sale, are 

1. included in current GDP because GDP measures the value of all goods and services sold in the current year.
2. included in current GDP but valued at their original prices.
3. not included in current GDP because it is difficult to determine their value.
4. not included in current GDP because GDP only measures the value of goods and services

produced in the current year.

____    7. Which of the following items is included in U.S. GDP?

1. goods produced by foreign citizens working in the United States
2. the difference in the price of the sale of an existing home and its original purchase price c. known illegal activities

d. None of the above is included in U.S. GDP.

____    8. GDP is equal to

1. the market value of all final goods and services produced within a country in a given period of time.
2. Y.
3. C + I + G + NX.
4. All of the above are correct.

____    9. The consumption component of GDP includes spending on

1. durable goods and nondurable goods, but not spending on services.
2. durable goods and services, but not spending on nondurable goods.
3. nondurable goods and services, but not spending on durable goods.
4. durable goods, nondurable goods, and services.

____ 10. A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory.  In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company.  In which quarter(s) does(do) these transactions raise investment? a. the first and the second

2. the first but not the second
3. the second but not the first
4. neither the first nor the second

____ 11. Transfer payments are

1. included in GDP because they represent income to individuals.
2. included in GDP because they eventually will be spent on consumption.
3. not included in GDP because they are not payments for currently produced goods or services.
4. not included in GDP because taxes will have to be raised to pay for them.

____ 12. Consider the following three items of spending by the government: (i) the federal government pays a $500 unemployment benefit to an unemployed person; (ii) the federal government makes a $2,000 salary payment to a Navy lieutenant; (iii) the city of Bozeman, Montana makes a $10,000 payment to ABC Lighting Company for street lights in Bozeman.  Which of these payments contributes directly to government purchases in the national income accounts? a. only item (i)

2. only item (ii) 
3. only items (i) and (ii)
4. only items (ii) and (iii)

____ 13. Net exports equal

1. exports plus imports.
2. exports minus imports.
3. imports minus exports.
4. GDP minus imports.

____ 14. In the economy of Ukzten in 2010, consumption was $6000, exports were $1000, GDP was $10,000, government purchases were $2000, and imports were $600.  What was Ukzten’s investment in 2010? a. $1400

2. $1600
3. $2400
4. $3600

____ 15. 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? a. $3700

2. $3900
3. $5100
4. $5500

____ 16. In the economy of Ukzten in 2010, consumption was $1000, GDP was $1950, government purchases were

$500, and investment was $700.  What were Ukzten’s net exports in 2010? a. -$250

2. $250
3. $2200
4. Net exports cannot be calculated from the information given.

____ 17. In the economy of Ukzten in 2010, consumption was $5300, GDP was $8800, government purchases were

$1800, imports were $500, and investment was $2000.  What were Ukzten’s exports in 2010? a. -$800

2. -$300
3. $200
4. $300

____ 18. If in some year nominal GDP was $10 trillion and real GDP was $4 trillion, what was the GDP deflator ? a. 25

2. 40
3. 250
4. 400

____ 19. If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator ? a. 87.5

2. 114.3
3. 400
4. 896

____ 20. Suppose an economy produces only eggs and ham.  In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound.  In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound.  For 2009, 

1. nominal GDP is $400, real GDP is $500, and the GDP deflator is 80.
2. nominal GDP is $400, real GDP is $500, and the GDP deflator is 125.
3. nominal GDP is $500, real GDP is $400, and the GDP deflator is 80.
4. nominal GDP is $500, real GDP is $400, and the GDP deflator is 125.

Table 23-4

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 2008.

Prices and Quantities

____ 21. Refer to Table 23-4.  This country’s output grew

1. 29.9% from 2008 to 2009.
2. 33.3% from 2009 to 2010.
3. 24.3% from 2009 to 2010.
4. 15.4% from 2010 to 2011.

Table 23-5

A hypothetical country of Lahland produces only movies and popcorn.   Quantities and prices of these goods for the last several years are shown below.  The base year is 2009.

Prices and Quantities

____ 22. Refer to table 23-5  In which year was this country’s real GDP highest? a. 2008

2. 2009
3. 2010
4. 2011

____ 23. Refer to table 23-5  What was this country’s real GDP in 2010?

1. $8,800
2. $10,500
3. $10,600
4. $12,200

Table 23-6

The table below contains data for the country of Batterland, which produces only waffles and pancakes.  The base year is 2009.

Prices and Quantities

Year Price of  Quantity of Price of Quantity of  Waffles Waffles Pancakes Pancakes

1. 2008. $2.00        100      $1.00   100
   2009. $2.00        120      $2.00   150
   2010. $2.00        150      $3.00   200
   2011. $4.00        180      $3.00   220

____ 24. Refer to Table 23-6.  In 2008, this country's GDP deflator was a. 75.

2. 100.
3. 133.3.
4. This cannot be calculated from the information given.

____ 25. Refer to Table 23-6.  In 2010, this country's GDP deflator was a. 77.8.

2. 100.
3. 128.6.
4. 150.

____ 26. Refer to Table 23-6.  This country's inflation rate from 2010 to 2011 was a. 15.2%.

2. 25.4%.
3. 34.1%.
4. 43.9%.

____ 27. GDP is not a perfect measure of well-being; for example,

1. GDP excludes the value of volunteer work.
2. GDP does not address the distribution of income.
3. GDP does not address environmental quality.
4. All of the above are correct.