1. Gasoline is considered a final good if it is sold by a (Points : 1)
gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles.
pipeline operator to a gasoline station in San Francisco.
gasoline station to a motorist in Los Angeles.
All of the above are correct.
2. If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, then the economy experienced (Points : 1)
10 percent inflation between years 1 and 2 ,and 5 percent inflation between years 2 and 3.
10 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.
11.1 percent inflation between years 1 and 2, and 5 percent inflation between years 2 and 3.
11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.
3. The value of goods added to a firm's inventory in a certain year is treated as (Points : 1)
consumption, since the goods will be sold to consumers in another period.
saving, since the goods are being saved until they are sold in another period.
investment, since GDP aims to measure the value of the economy's production that year.
spending on durable goods, since the goods could not be inventoried unless they were durable.
4. Goods that go into inventory and are not sold during the current period are (Points : 1)
counted as intermediate goods and so are not included in current period GDP.
counted in current period GDP only if the firm that produced them sells them to another firm.
included in current period GDP as inventory investment.
included in current period GDP as consumption.
5. Table 23-1
The table below contains data for the country of Wrexington for the year 2006.
GDP $110
Income earned by citizens abroad $5
Income foreigners earn here $15
Losses from depreciation $4
Indirect business taxes $6
Business subsidies $2
Statistical discrepancy $0
Retained earnings $5
Corporate income taxes $6
Social insurance contributions $10
Interest paid to households by government $5
Transfer payments to households from government $15
Personal taxes $30
Nontax payments to government $5
Refer to Table 23-1. Disposable personal income for Wrexington in 2006 is (Points : 1)
$56.
$66.
$116.
$126.
6. In the economy of Wrexington in 2008, consumption was $3000, exports were $200, GDP was $8000, government purchases were $1000, and imports were $600. What was Wrexington's investment in 2008? (Points : 1)
$3200
$3600
$3800
$4400
7. Gross domestic product includes all (Points : 1)
legal and illegal goods, but it excludes all legal and illegal services.
legal and illegal goods and all legal and illegal services.
legal goods and services, but it excludes illegal goods and services.
legal and illegal goods and legal services, but it excludes illegal services.
8. Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has (Points : 1)
reduced measured GDP.
not affected measured GDP.
increased measured GDP only to the extent that the value of the restaurant meals exceeded the value of meals previously cooked at home.
increased measured GDP by the full value of the restaurant meals.
9. Which of the following items is counted as part of government purchases? (Points : 1)
The federal government pays the salary of a Navy officer.
The state of Nevada pays a private firm to repair a Nevada state highway.
The city of Las Vegas, Nevada pays a private firm to collect garbage in that city.
All of the above are correct.
10. Gina, a U.S. citizen, works only in Germany. The value of Gina's production is included in (Points : 1)
U.S. GDP and German GDP.
U.S. GDP and German GNP.
U.S. GNP and German GDP.
U.S. GNP and German GNP.
11. For an imaginary economy, the value of the consumer price index was 138.75 in 2007, and the inflation rate was 11 percent between 2006 and 2007. The consumer price index in 2006 was (Points : 1)
125.
127.75.
149.75.
154.01.
12. In the economy of Wrexington in 2008, exports were $500, GDP was $6400, government purchases were $1500, imports were $600, and investment was $2000. What was Wrexington's consumption in 2008? (Points : 1)
$1800
$2800
$3000
$4000
13. In the actual economy, goods and services are purchased by (Points : 1)
households, but not firms or the government.
households and firms, but not the government.
households and the government, but not firms.
households, firms, and the government.
14. In 2007, Corny Company grows and sells $2 million worth of corn to Tasty Cereal Company, which makes corn flakes. Tasty Cereal Company produces $6 million worth of corn flakes in 2007, with sales to households during the year of $4.5 million. The unsold $1.5 million worth of corn flakes remains in Tasty Cereal Company's inventory at the end of 2007. The transactions just described contribute how much to GDP for 2007? (Points : 1)
$4.5 million
$6 million
$6.5 million
$8 million
15. Between October 2001 and October 2002, the CPI in Canada rose from 116.5 to 119.8 and the CPI in Mexico rose from 93.2 to 102.3. What were the inflation rates for Canada and Mexico over this one-year period? (Points : 1)
2.8 percent for Canada and 9.1 percent for Mexico
2.8 percent for Canada and 9.8 percent for Mexico
3.3 percent for Canada and 9.1 percent for Mexico
3.3 percent for Canada and 9.8 percent for Mexico
16. Which of the following is not included in GDP? (Points : 1)
carrots grown in your garden and eaten by your family
carrots purchased at a farmer's market and eaten by your family
carrots purchased at a grocery store and eaten by your family
More than one of the above is not included in GDP.
17. U.S. GDP and U.S. GNP are related as follows: (Points : 1)
GNP = GDP + Value of exported goods - Value of imported goods.
GNP = GDP - Value of exported goods + Value of imported goods.
GNP = GDP + Income earned by foreigners in the U.S. - Income earned by U.S. citizens abroad.
GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad.
18. During the current quarter, a firm produces consumer goods and adds some of those goods to its inventory rather than selling them. The value of the goods added to inventory is (Points : 1)
not included in the current quarter GDP.
included in the current quarter GDP as investment.
included in the current quarter GDP as consumption.
included in the current quarter GDP as a statistical discrepancy.
19. In the nation of Paolaland, quarterly GDP is always higher in the second quarter than in other quarters. In order to account systematically for this predictable second-quarter jump in GDP, Paolaland's government statisticians will (Points : 1)
employ a statistical procedure called seasonal adjustment.
report a four-quarter moving average of GDP rather than the one-quarter figure.
report GNP rather than GDP.
report personal income rather than GDP.
20. James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent by doing so. How much do the housing services provided by the two houses contribute to GDP? (Points : 1)
$0
$10,000
$12,000
$22,000
Economics MCQ Gigla 20
