1) Which of the following statistics is the best single measure of an economy's well-being?

gross
domestic product
2) What is the relationship between income and expenditure for an economy? Income equals
expenditure
3) In a simple circular-flow diagram, how are total income and total expenditure interrelated?
They are always equal because every transaction has a buyer and a seller.
4) Which of the following is the correct definition of GDP? the market value of all final goods
and services produced within a country in a given period of time
5) Suppose you decide to buy the old house that you are renting now. How will your purchase of
the house affect GDP? GDP will not be affected because the house is not built in the
current period and its rent was already included in the GDP.
6) Over the past few decades, Canadians have chosen to cook less at home and eat more at
restaurants. How has this practice affected GDP? It has increased measured GDP.
7) How are intermediate goods treated in GDP computations? They are excluded because their
value is already counted in the value of final goods.
8) How are goods that go into inventory and are not sold during the current period treated in GDP
terms? They are included in current-period GDP as inventory investment.
9) The local Chevrolet dealership has an increase in inventory of 25 cars in 2012. How will the sale
of all 25 cars in 2013 affect the GDP? The value of the cars will be counted as part of
GDP in 2012, but not in 2013.
10) Darla, a U.S. citizen, only works in Canada. How does the value added to production from her
employment impact GDP and GNP? It raises Canadian GDP and U.S. GNP
11) Which of the following is counted in Canadian GDP? Canadian final goods and services
purchased by the American government
12) In computing GDP, what is investment? spending on new capital equipment,
inventories, and structures, including new housing
13) A Canadian tourist buys a $75 handbag in Italy. What happens to Canadian imports/exports and
GDP? Canadian imports increase by $75, but Canadian GDP is unaffected.
14) The law and order situation in a country deteriorates and the government responds by hiring
more police and providing them with better equipment. How are these purchases of goods and
services treated in GDP? They are included in GDP since government expenditures
are included in GDP.
15) With respect to GDP, how are welfare payments treated? They are excluded from GDP
because they do not represent current government purchases of goods and
services.
16) Which of the following is included in the investment component of GDP? purchases of new
houses
17) Which of the following examples will increase Canadian net exports? A U.S. resident buys a
Blackberry manufactured in Canada.
18) In a given year, an economy has consumption of $4000, investment of $2000, government
purchases of $1500, exports of $500 and imports of $600. What is the GDP? $7400
19) Which of the following best describes real GDP? Real GDP evaluates, at base-year prices,
all goods and services produced in the current year.
20) Suppose an economy produces only wheat and rice. Last year, 20 bushels of wheat are sold at $4
per bushel, and 10 bushels of rice are sold at $2 per bushel. If the price of wheat was $2 per
 bushel and the price of rice was $1 per bushel in the base year, what can we conclude?
Nominal GDP is $100, real GDP is $50, and the GDP deflator is 200.
21) What is the nominal GDP of Burgazina for 2011? $1100

22)
23) Using 2010 as the base year, what can we conclude for 2011? Real GDP is $880, and the GDP
deflator is 125
24) Using 2011 as the base year, what can we conclude for 2010? Real GDP is $950, and the
GDP deflator is 80.
25) When economists talk about growth in the economy, how do they measure that growth?
with the percentage change in real GDP
26) If nominal GDP is $1 trillion and real GDP is $0.8 trillion, what is the GDP deflator? 125
27) A country reported a nominal GDP of $100 billion in 2012 and $75 billion in 2011 and
reported a GDP deflator of 125 in 2012 and 120 in 2011. What happened to real output and
prices from 2011 to 2012? Real output and prices both rose
28) What is the GDP deflator? a measure of the overall price level
29) A farmer produces the same output in 2012 as in 2011. His input prices increase by 3 percent
and so does his product price. Which inflation rate makes the farmer as well off in 2012 as in
2011? 3 percent
30) Suppose that 25 years ago a country had nominal GDP of 1000, a GDP deflator of 200, and a
population of 100. Today, that country has a nominal GDP of 3000, a deflator of 400, and a
population of 150. What happened to the real GDP per person? It did not change.
31) The term “inflation” is used to describe a situation in which he overall level of
prices in the economy is increasing.
32) Macroeconomics includes the study of topics such as national output, the
inflation rate, and the trade deficit
33) Which of the following questions is more likely to be studied by a
microeconomist than a macroeconomist? Why do wages differ across industries?
34) Macroeconomists study economy-wide phenomena.
35) Which of the following statistics is the best single measure of an economy’s well-
being? GDP
36) A transfer payment is
a form of government spending that is not made in exchange for a currently
produced good or service.
 37) Which of the following headlines would be more closely related to what
microeconomists study than what macroeconomists study? The price of oranges
rises after an early frost.

38) Firms use the money they get from a sale for paying wages.
paying wages. , making a profit., paying rents.
39) Which of the following represents a transfer payment? the government sends your
grandfather his Social Security check.
40) If GDP rises, income and production must both rise.
41) George buys and lives in a newly constructed home he paid $200,000 for in 2003. He
sells the house in 2004 for $225,0000. The 2004 sale does not increase 2004 GDP and
does nothing to 2003 GDP. Đúng
42) In a simple circular-flow diagram total income and total expenditure are equal only
when all goods and services produced are sold. Sai
43) Robert works as a lawyer. GDP computations should include both his income and his
production. Sai
44) If GDP rises, income and production must both rise. Đúng
45) The total sales of all firms in the economy for a year is larger than GDP for the year.
Đúng
46) If a state legalized gambling and then reversed its decision and made gambling illegal,
then other things the same GDP necessarily decreases. Đúng
47) If a state legalized gambling and then reversed its decision and made gambling illegal,
then other things the same GDP necessarily decreases. Đúng
48) The total sales of all firms in the economy for a year is larger than GDP for the year.
Đúng
49) Over the last few decades Americans have chosen to cook less at home and eat more at
restaurants. This change in behavior, by itself, did not affect measured GDP. Sai
50) To compute GDP we sum the cost of producing final goods and services. Sai
51) The basic tools of supply and demand are central to macroeconomic analysis as well as
to microeconomic analysis.
52) Which of the following is not a question that macroeconomists address? Why does
the price of oil rise when war erupts in the Middle East?
53) Which of the following statements about GDP is correct?
a. GDP measures two things at once: the total income of everyone in the economy and
the total expenditure on the economy's output of goods and services.
b. Money continuously flows from households to firms and then back to households,
and GDP measures this flow of money.
c. GDP is generally regarded as the best single measure of a society's economic well-
being.
55) For an economy as a whole, income must equal expenditure because every dollar of
spending by some buyer is a dollar of income for some seller.

56) According to the circular-flow diagram, GDP can be computed as either the revenue firms
receive from the sales of goods and services or the payments firms make to factors of production.

57) For an actual economy, total expenditures on goods and services by households
does not equal GDP because household expenditures on goods and services falls short of
GDP, since household save for the future.
58) 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
market prices.
59) Suppose that an economy produces 20,000 units of good A which sells at $3 a unit
and 40,000 units of good B which sells at $1 per unit. Production of good A contributes
3/2 times as much to GDP as the production of good B.
60) Suppose an apartment complex converts to a condominium, so that the former
renters are now owners of their housing units. Suppose further that a current estimate of
the value of the condominium owners' housing services is the same as the rent they
previously paid. What happens to GDP as a result of this conversion? GDP is
unaffected because previously the rent payments were included in GDP and now the rent
payments are replaced in GDP by the estimate of the value of owner occupied housing
services.
61) GDP excludes most items that are produced and sold illegally and most items that
are produced and consumed at home because measuring them is so difficult.
62) 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 increased measured GDP by
the value added by the restaurant's preparation and serving of the meals.
63) A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The
oranges produced by the farmer are called intermediate goods.
64) Sam, an American citizen, prepares meals for his family at home. Ellen, a Canadian
citizen, commutes to the U.S. to help prepare meals at a restaurant in Idaho. Whose
value of services preparing meals is included in U.S. GDP? Ellen's but not Sam's.
65) 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 $250 to GDP.
66) U.S. GDP includes production of foreigners working in the U.S. but excludes production by U.S.
residents working in foreign countries.
67) Which of the following correctly lists what is included in the consumption component of
GDP? household purchases of services, nondurable goods, and durable goods other than residential
construction
68) Which of the following is not an example of a durable good? a business suit.
69) For the purpose of calculating GDP, investment is spending on capital equipment, inventories,
and structures, including household purchases of new housing
70) A Texas household receives a Social Security check for $1500, which is uses to purchase a
$40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in
Korea, and $220 on groceries from a local store. As a result, U.S. GDP increases by $220.
71) In the economy of Talikastan in 2015, consumption was $700, exports were $200, government
purchases were $300, imports were $150, and investment was $400. What was Talikastan's GDP in
2015? $1450
72) GDP and GNP are identical when all domestic production is by domestically owned producers
and no foreign production is carried out by domestic producers.
73) Changes in real GDP reflect only changes in the amounts being produced
74) The GDP deflator is the ratio of nominal GDP to real GDP multiplied by 100.
75) In the base year, the GDP deflator is always 100.
76) If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP? $40
billion
77) Which of the following statements about recessions is true? There is no ironclad rule for the
declaration of recessions.
78) 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 GDP per person
79) Expenditures on a nation's domestic production are equal to its domestic production.
80) For an economy as a whole, the market value of production must equal expenditure.
81) Because every transaction has a buyer and a seller, every transaction contributes
equally to an economy's income and to its expenditure.
82) If an economy's GDP falls, then it must be the case that the economy's income and expenditure
both fall.
83) Which of the following statements about GDP is correct? GDP is to a nation's economy as
household income is to a household.
84) In order to include many different goods and services in an aggregate measure, GDP is computed
using,primarily, market prices
85) GDP includes the value of all final goods and services produced within a country
using primarily market prices to measure the value of goods and services.
86) Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house that could be
rented for$21,000 a year. How much do these housing services contribute to GDP? $28,000
87) Estimates of the values of which of the following non-market goods or services are included
in GDP? the estimated rental value of owner-occupied homes
88) Suppose an apartment complex converts to a condominium, so that the former renters are
now owners of their housing units. Suppose further that a current estimate of the value of the
condominium owners' housing services is the same as the rent they previously paid. What
happens to GDP as a result of this conversion? GDP is unaffected because previously
the rent payments were included in GDP and now the rent payments are replaced
in GDP by the estimate of the value of owner occupied housing services.
88) Grapes are considered intermediate goods if the purchaser uses them to make wine to
sell others but not if the purchaser eats them.
89) Transactions involving items produced in the past, such as the sale of a 5-year-old
automobile by a used car dealership or the purchase of an antique rocking chair by a person at
a yard sale, area. not included in current GDP because GDP only measures the value of
goods and services produced in the current year.
89) Michigan Cranberry Company sold $10 million worth of cranberries it produced. In
producing cranberries, it purchased $1 million dollars worth of supplies 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? $9 million
90) Which of the following is not included in U.S. GDP? The market value of an oil change
that Ben performs on his own car.
91) GDP is equal to
a. the market value of all final goods and services produced within a country in a given period of time.
b. Y.
c. C + I + G + NX.
92) An identity is an equation that must be true because of how the variables in the equation are
defined.
93) Which of the following is included in the investment component of GDP? spending on new
business equipment such as power tools but not spending on stocks and bonds
94) Transfer payments
a. are payments that flow from government to households.
b. are not made in exchange for currently produced goods or services.
c. alter household income, but they do not reflect the economy's production.
95) Net exports equal exports minus imports
96) In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was
$8000,government purchases were $1200, and imports were $600. What was Talikastan's investment in
2015? $3200
97) If the prices of all goods and services produced in the economy rose while the quantity of all goods
and services stayed the same, which would rise? nominal GDP but not real GDP.
98) Changes in nominal GDP reflect both changes in prices and changes in the amounts being produced.
99) The GDP deflator is the ratio of nominal GDP to real GDP multiplied by 100
100) In the base year, the GDP deflator is always 100
101) If real GDP is 5,100 and nominal GDP is 4,900, then the GDP deflator is 96.1 so prices are lower
than in the base year.
102) Suppose an economy's production consists only of corn and soybeans. In 2010, 20 bushels
of corn are sold at $4per bushel and 10 bushels of soybeans are sold at $2 per bushel. In 2009,
the price of corn was $2 per bushel and the price of soybeans was $1 per bushel. Using 2009
as the base year, it follows that, for 2010, nominal GDP is $100, real GDP is $50, and the GDP
deflator is 200.
103) GDP is not a perfect measure of well-being; for example, GDP fails to account for the
quality of the environment
104) Countries with low GDP per person tend to have higher rates of infant mortality.
105) U.S. GDP includes estimates of the value of items that are produced and consumed at home, such
as house work and car maintenance. False
106) If the value of an economy's imports exceeds the value of that economy's exports, then net exports
is a negative number. True
107) If real GDP and the GDP deflator both rise, then it must be that nominal GDP rose. True
108) Which of the following is not correct? The consumer price index is used to measure
the quantity of goods and services that the economy is producing.
109) The term inflation is used to describe a situation in which the overall level of prices in the
economy is increasing
110) The CPI is calculated monthly by the Bureau of Labor Statistics.
111) When computing the cost of the basket of goods and services purchased by a typical
consumer, which of the following changes from year to year? the prices of the goods and
services
112) For any given year, the CPI is the price of the basket of goods and services in the given
year divided by the price of the basket in the base year, then multiplied by 100.
113) If 2012 is the base year, then the inflation rate for 2012 equals [(CPI in 2013 - CPI in 2012) / CPI in
2012] x 100
114) The price index was 220 in one year and 238.2 in the next year. What was the inflation rate?
a. 8.3 percent
115) The price index was 150 in the first year, 142.5 in the second year, and 138.2 in the third
year. The economy experienced 5.0 percent deflation between the first and second years,
and 3.0 percent deflation between the second and third years
116) Samantha goes to the grocery store to make her monthly purchase of ginger ale. As she
enters the soft drink section, she notices that the price of ginger ale has increased 15 percent,
so she decides to buy some peppermint tea instead. To which problem in the construction of the
CPI is this situation most relevant? substitution bias
117) One of the widely acknowledged problems with using the consumer price index as a
measure of the cost of livingis that the CPI fails to account for the introduction of new
goods.
118) The GDP deflator reflects the current level of prices relative to the level of prices in the
base year.
119) The CPI differs from the GDP deflator in that increases in the prices of domestically
produced goods that are sold to the U.S. government show up in the GDP deflator but
not in the CPI.
120) Indexation refers to using a law or contract to automatically correct a dollar amount
for the effects of inflation.
121) If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest
rate is 7 percent. False
122) The term inflation is used to describe a situation in which the overall level of prices in the
economy is increasing
123) The inflation rate is calculated by determining the percentage increase in the price index from the
preceding period.
124) If the consumer price index was 88 in 2009, 95 in 2010, and 100 in 2011, then the base year must
be 2011
125) If the consumer price index was 100 in the base year and 107 in the following year, then the
inflation rate was 7%
126) The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of
milk, 2 shirts, and 2 pairs of pants. In 2005, bread cost $1.00 per loaf, milk cost $1.50 per
gallon, shirts cost $6.00 each, and pants cost $10.00 per pair. In 2006, bread cost $1.50 per
loaf, milk cost $2.00 per gallon, shirts cost $7.00 each, and pants cost $12.00 per pair. Using
2005 as the base year, what was Aquilonia's inflation rate in 2006? 24.4
127) In an imaginary economy, consumers buy only sandwiches and magazines. The fixed
basket consists of 20 sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a
magazine cost $2. In 2007, a sandwich cost $5. The base year is 2006. If the inflation rate in
2007 was 16 percent, then how much did a magazine cost in 2007? $2.08
128) Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again
between 2004 and 2005. However, the inflation rate was higher between 2004 and 2005 than it was
between 2003 and 2004. Which of the following scenarios is consistent with this assumption? The CPI
was 100 in 2003, 105 in 2004, and 130 in 2005.
129) The table below pertains to Pieway, an economy in which the typical consumer's basket consists of
10 bushels of peaches and 15 bushels of pecans. The cost of the basket in 2005 was $200
130) The cost of the basket in 2006 was $240
131) If 2005 is the base year, then the CPI for 2005 was 100
132) If 2005 is the base year, then the CPI for 2006 was 120
133) If 2006 is the base year, then the CPI for 2005 was 83.3
134) If 2006 is the base year, then the CPI for 2006 was 100
135) If 2005 is the base year, then the inflation rate in 2006 was 20%
136) Megan's salary for three consecutive years, along with other values, are presented in the table
below. Megan's 2008 salary in 2010 dollars is 69,960
137) suppose the consumer price index for 2010 is not necessarily 233.2. Then Megan's 2010 salary
represents more purchasing power than her 2008 salary as long as the consumer price index for 2010 is
less than 240
138) The nominal interest rate for 2009 is 9.6%
139) Suppose the consumer price index for 2010 is not necessarily 233.2. If the nominal interest rate for
2010 is 7.3 percent , then the consumer price index for 2010 is, in fact, 220.48
140) Jake loaned Elwood $5,000 for one year at a nominal interest rate of 10 percent. After
Elwood repaid the loan in full, Jake complained that he could buy 4 percent fewer goods with
the money Elwood gave him than he could before he loaned Elwood the $5,000. From this, we
can conclude that the rate of inflation during the year was 14%