lOMoARcPSD|7167470

Chapter 10 Measuring a Nation’s Income

Macroeconomics (Đại học Kinh tế Thành phố Hồ Chí Minh)

StuDocu is not sponsored or endorsed by any college or university

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)
 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  277

Chapter10
MeasuringaNat
ion’
sInc
ome
1. Macr oeconomi stsstudy
a. de c
isionsofhous eholdsandfir
ms .
b.e conomy- widephe nomena.
c.t heint e
r ac
tionofhous e
holdsandfirms
.
d.r egulationsoffirmsanduni ons.
ANSWER: b.e conomy-widephenomena
.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 0

2.Whichoft hefollowi ngheadli

neswoul dbemor eclos
elyrel
ate
dtowha
tmi
croe
conomi
stss
tudyt
hanwha
t
macroeconomi s
tss t
udy?
a. Une mployme ntr at
erise
sf r
om 5pe rc
entto5.5perce
nt.
b.Re alGDPgr owsby3. 1pe rcentinthet hi
rdquarte
r.
c. Retails
alesats tore
sshow largegains.
d.Thepr i
ceofor angesr
isesaft
e rane ar
lyfros
t.
ANSWER: d.Thepr iceofor angesris
esaft
erane ar
lyfr
ost
.
TYPE:
M DIFFICULTY:1SECTI ON:10.0

3. Whichoft
hefoll
owi ngque s
tionsismor eli
kelytobestudiedbyamicr
oeconomis
tthanamac
roe
conomi
st
?
a. Whydoprice
si nge ner
alrisebymor eins omecountri
esthanot
her
s?
b.Whydowa gesdifferac
rossindustrie
s?
c. Whydoproduc t
ionandi ncomei ncreaseinsomepe r
iodsandnoti
nothers
?
d.Whyhasa ver
a geincomei ncre
asedove rti
me ?
ANSWER: b.Whydowa gesdiffe
rac r
ossindus
tri
es?
TYPE:
TFDI FFI
CULTY:1SECTI ON:23 .0

4. Mac roeconomicsinclude sthes tudyoft opicssuchas

a. na t
ionaloutput,thei nflat
ionr a
te,andt hetradedefic
it.
b.t hepr i
ceofCi s
cos toc k,wa gediffe
rencesbe tweengenders
,andantit
r ustl
aws
.
c. differ
encesinmar ke ts t
ructure,andhow c ons umersmaximizeuti
li
ty.
d.Noneoft heabovear ec orrect.
ANSWER: a.na tionalout put,theinfla
tionrat
e,andthetradedefici
t.
TYPE:
M DI FFICULTY:1SECTI ON:10. 0

5.Thegoalofmac r
oeconomi csis
a.toexplainhow economi cchangesaffec
tpricesofpar
tic
ulargoods.
b.tode vi
sepolic
iestode alwithmarke tf
ail
ur e
ssuchasexter
nali
tie
sandmonopol
y.
c.toexplainchangesthataffec
thouseholdsandfirmsinge ner
al.
d.Noneoft heabovear ec or
rect
.
ANSWER: c.toe xplainchangesthataffe
cthouse
holdsandfirmsi
ngener
al.
TYPE:
M DI
FFICULTY:1SECTI ON:10.0

6. Thebas i
ct ool
sofs upplyandde mandar e
a. usefulonlyintheanal ysi
sofe conomi cbehaviorinindi
vidualmar ket
s.
b.us efulinanalyzingtheove r
allec onomy,butnoti nanal
yzingindividualmarke
ts.
c. notpar ti
cul
arlyus ef
ulineit
he rmac roeconomi cormicr
oeconomi canalysi
s.
d.c entraltomacroe c
onomi canalysisaswe llastomi c
roec
onomi canalysi
s.
ANSWER: d.c entralt
omac roeconomi canalys
isaswellastomi cr
oeconomicanal
ysi
s.
TYPE:
M DIFFICULTY:1SECTI ON:10. 0

7. Whic hofthef oll

owings t
ati
sti
csi
sthebe
sts
ingl
eme
asur
eofane
conomy’
swe
ll-
bei
ng?
a.t heune mpl oyme ntr
ate
b.t heinfla
tionr at
e
c. GDP
d.t hetradede fic
it
ANSWER: c.GDP
TYPE:
M DI FFICULTY:1SECTI ON:10.0

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

278  Chapter 10/Measuring a Nation’s Income

8. Whichoft
hefoll
owi ngiscorr
ectforane c
onomy?
a.Incomeisgreat
erthanproduction.
b.Product
ionisgreate
rthanincome .
c.Incomealwaysequalsproduction.
d.Incomeequalsproducti
ononlywhe nsavi
ngiszero.
ANSWER: c.I ncomealwayse qual
sproduct
ion.
TYPE:
M DIFFICULTY:1SECTI ON:10.1

9. Robertworksasalawye
r .
a. GDPc omputati
onsshouldbemadeus i
nghisi ncomefrom pr
ovidinglegalse
rvices
,nothisproduct
ionofl
egal
se
r vi
ces
.
b.GDPc omputati
onsshouldbemadeus i
nghispr oduct
ion,nothisincomefrom provi
dinglegalse
rvi
c e
s.
c. GDPc omputati
onsshouldinc
ludebot hhisincomeandhi sproducti
on.
d.GDPc omputati
onsshouldinc
ludee i
therhisincomeorhispr oducti
on,butnotboth.
ANSWER: d.GDPc omputa
tionsshouldinc l
udeei
therhisincomeorhi sproducti
on,butnotboth.
TYPE:
M DIFFICULTY:1SECTI ON:10.1

10.IfGDPr is
es,
a.i ncomeandproductionmus tbothris
e.
b.i ncomeandproductionmus tbothfal
l.
c.i ncomemustris
e,butpr oduct
ionma yris
eorfal
l.
d.pr oducti
onmustris
e ,butinc
omema yris
eorfal
l.
ANSWER: a
.i ncomeandpr oducti
onmustbothr
ise
.
TYPE:
M DI FFICULTY:1SECTION:10. 1

11.Inasimplecirc
ular
-flow dia
gr am tot
alincomeandt ot
alexpendi
tureare
a.s eldom e
qualbecauseoft hedynami cc hangeswhichoc c
urinane c
onomy.
b.e qualonlywhenal lgoodsands er
vicesproduceda resol
d.
c. alwaysequalbe
caus eeveryt rans
acti
onhasabuye randas el
ler
.
d.al waysequalbe
caus eofac counti
ngr ules.
ANSWER: c.al wayse qualbecausee verytr
ansacti
onhasabuye randas
ell
er.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 1

12.Inasimplecircul
ar-flow di agram,totali
ncomeandt otalexpenditur
esi
nane conomyar
e
a.e qualbecausefirmsar eultimatel
yowne dbyhous eholds.
b.e qualonlyiftherei snos aving.
c.e qualbecauseeve rytr ansacti
onhasabuye randas e
ller.
d.ne verequalbe c
aus esomepe ople
’sincomei snotforpr oduct
ion.
ANSWER: c.e qualbe causeeverytransact
ionhasabuye randasel
ler
.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 1

13.Fi
rmsus ethemone yt
heygetfr
om asal
efor
a. pa
yingwa ges
.
b.maki ngaprofit
.
c. pa
yingr e
nts
.
d.Alloftheabovearecorr
ect
.
ANSWER: d.Alloft
heabovearecor
rec
t.
TYPE:
M DIFFICULTY:1SECTI ON:10.0

14.Thes i
mplec i
rcular-flow diagram i
llustrat
est hat
a. producti
onge nera t
esincomes ot hatincomeandpr oduct
ionar
ethesame
.
b.t heeconomy’ sinc omee xceedsitspr oduction.
c.t heproductionofane conomye xc e
edsi tsincome.
d.Noneoft heabovear enecessar
ilycor r
ect.
ANSWER: a .pr oduc ti
onge neratesincomes othatinc
omeandproduct
ionar
ethes
ame
.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 1

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  279

15.Inaneconomyc onsi
stingofonl yhouseholdsandfir
ms,GDPc
anbec
omput
edby
a. addingupthetotale xpe ndi
turesofhousehol
ds.
b.addi ngupthetotalinc omepai dbyfirms.
c. Eit
heraorbar ecorre c
t .
d.Noneoft heabovear ec orr
ect.
ANSWER: c.Ei theraorbar ecorre
c t
.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 1

16.Productionequalsincomebe c
aus e
a. byl a
w fir
msmus tpayoutal lthei
rrevenueasincomet
osomeone
.
b.f oreverysal
et hereisabuye randas el
ler
.
c. becauseulti
ma tel
yfirmsareowne dbyhouseholds.
d.Noneoft heabovear ecorr
ec t.
ANSWER: b.f oreve
rys aletherei
sabuye randase
lle
r.
TYPE:
M DI FFICULTY:1SECTI ON:10.1

17.Whichoft
hefollowingisthec orrectdefiniti
onofGDP?
a.themarketvalueofallgoodspr oduce dwi t
hinac ount
ry
b.themarketvalueofallfinalgoodsands ervicesproduce
dbyt heci
tizensofac
ountr
y
c.themarketvalueofallfinalgoodsands ervicesproduce
dwi t
hinac ountry
d.Noneoftheabovear ecor rect.
ANSWER: c
.t hemar ketvalueofal lfinalgoodsands e
rvi
cesproduc e
dwithi
nacount
ry
TYPE:
M DIFFICULTY:1SECTI ON:10. 2

18.Tocomput eGDPwe
a.s implysum thenumbe roffinalgoodsands e r
vices
.
b.s um thecostofpr oducingfinalgoodsands ervic
es.
c. usewe i
ghtsde te
rmi nedbyas urve
yr e
gardinghow muc hpeopl
evaluedi
ffe
rents
ort
sofgoodsands
ervi
cest
o
computeGDPasawe ighteda ve
rage.
d.s um themar ketvaluesoffinalgoodsands ervices
.
ANSWER: d.s um themar ketvaluesoffinalgoodsands
ervi
ces
.
TYPE:
M DIFFI CULTY:1SECTI ON:10. 2

19.Inordertoincl
udemanydi ffer
entproduct
sinanaggrega
teme as
ure,GDPisc
omput e
dusing
a. val
ue sofgoodsbasedons urve
ysofconsumer
s.
b.pr i
mar il
ymar ketpri
ces
.
c. pri
mar il
ycostsofproduc t
ion.
d.we ightsthatarecompute dbyhow muc hofapart
icul
argoodisproduc
edrel
ati
vetot
otalout
put
.
ANSWER: b.primarilymar ke
tpri
ces.
TYPE:
M DI FFICULTY:1SECTI ON:10.2

20.GDPi scomputedus ingmar ketpricesastheval ueoffinalgoodsands e

rvicesbecause
a. marketpri
cesdon’ tchangemuc h,soitiseasytomakec ompari
sonsbetwe enyears
.
b.i fmarke
tprice
sar eoutofl i
newi thhow pe oplevaluegoods,t
hegove rnments e
tscei
li
ngsandfloor
sont
hem.
c. marketpri
cesreflectthevalueofgoodsands ervi
ces.
d.Noneoft heabovear ecorre
c t
;thegove rnme ntdoesnotus emarketpri
c e
stocomput eGDP.
ANSWER: c.mar ketpricesrefle
cttheval ueofgoodsands ervi
ces.
TYPE:
M DI FFICULTY:1SECTI ON:10. 2

21.Whic hofthefoll
owi ngisnotincludedinGDP?
a. unpaidcleani
ngandmai ntenanc eofhouses
b.s ervi
cessuchast hoseprovidedbyl awyersandhai rst
yli
sts
c.t heest
ima t
edr entalval
ueofowne r-
occupi
edhous ing
d.pr oducti
onoff oreignci
tizenslivi
ngintheUni te
dSt a
tes
ANSWER: a.unpai dc l
eaningandmai ntenanceofhouses
TYPE:
M DI FFI
CULTY:2SECTI ON:10. 2

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

280  Chapter 10/Measuring a Nation’s Income

22.Theval ueofhous
ingser
viceprovi
de dbythee conomy’ ss t
ockofhouse sis
a. noti ncl
udedi
nGDPs inceiti
snots ol
dont hemar ket.
b.c ount e
dandisval
uedast hemor t
gagepa ymentmadeont hehouse .
c.c ount e
dandusesonl
yt hepurchasepric
eoft hehous eintheyearitissol
d.
d.c ount e
dandisbas
edonane st
imateofitsrentalvalue.
ANSWER: d.countedandi sbasedonane st
ima teofit
sr e
ntalvalue.
TYPE:
M DIFFI CULTY:2SECTION:10.2

23.Supposethatanapart
me ntcomplexc onver
tstoac ondominium whe rether enter
sarenow ownersofthe
irf
orme
r
apart
me nt
s.
a. Therentwasincl
ude dinGDP; t
hepur chas
e softhecondominiumsar enot.
b.Ther entwasincl
ude dinGDP ,ands oisthepur c
haseoft hecondomi niums .
c. TherentwasnotincludedinGDP;t hepurchasesofthecondomi niumsar e.
d.Ne it
hertherentoftheapartmentsnorthepur chasesofthecondomi ni um ar
eincl
udedinGDP .
ANSWER: a.ther e
ntwasi ncl
ude dinGDP; t
hepur chase
soft hec ondominiumsarenot.
(???)
TYPE:
M DI FFI
CULTY:2SECTI ON:10. 2

24.Suppos ethatanapar tmentcompl exconvert

st oacondomi ni
um whe rether
enter
sarenow owne r
softhei
rformer
apart
me nt
s.Suppos ethatane st
imateoftheval ueofthecondominium owners
’housingservi
cesisnow thesameas
thei
rforme rrent.
a. GDPne cessar
ilyincrease
s.
b.GDPne cessar
ilyde c
reases.
c. GDPi sunaffe
c t
edbe causeneit
he rt
her entnorthee s
timat
eofthevalueofhousi
ngs ervi
cesisincl
udedinGDP .
d.GDPi sunaffe
c t
edbe causepreviousl
yrentwasi ncludedinGDP ,andnow i
tisre
pl ac
edbyt hee s
timat
eofthe
valueofhous ingservices.
ANSWER: d.GDPi sunaffect
edbe c
aus eprevi
ous l
yrentwasincl
udedinGDP ,andnow i tisre
plac
edbythe
esti
ma teoftheval ueofhousings ervi
ces.
TYPE:
M DI FFI
CULTY:2SECTI ON:10. 2

25.Whichoft
hefol
lowingnon-mar ketgoodsors ervi
cesisincl
udedasane
sti
mat
einU.
S.GDP?
a.theval
ueofunpaidhous e
wor k
b.theval
ueofvegetabl
esthatpeoplegr ow inthe
irgardens
c.theest
imat
edrentalval
ueofowne r-occ
upi e
dhome s
d.Noneoftheabovearecorrect.
ANSWER: c
.t heest
ima t
e drentalvalueofowne r
-occupi
edhomes
TYPE:
M DI FFI
CULTY:2SECTI ON:10.2

26.Overthelastfew decadesAme ri
canshavechosentocookl
essa
thomeandeatmoreatre
staur
ant
s.Thi
schangei
n
behavi
or,byitself
,
a.incr e
asedme asuredGDP .
b.r e
duc edme as uredGDP .
c.di dnotaffectme asur
edGDP .
d.affect
edme asure
dGDPonl ytotheextentt
hatpeoplee
atmorea
tre
staur
ant
sthanathome.
ANSWER: a.incre ase
dme asuredGDP .
TYPE:
M DI FFICULTY:2SECTI ON:10. 5

27.Ove rti
mepe opl
eha vec omet orel
ymor eonmar ket
-produce
dgoodsandles
songoodst
hatt
heyproduc
efor
thems e
lves.Forexa mplepe opleeata
trest
aurantsr
elat
ivel
ymoreandprepar
ethe
irownmeal
sathomerela
tive
ly
less
.Byi t
selfthi
sc hangewoul d
a. makeGDPf allovertime .
b.notmakeanyc hangeinGDPove rti
me .
c. makeGDPr iseove rti
me .
d.c hangeGDP ,butinanunc ert
aindir
ecti
on.
ANSWER: c .makeGDPr i
seovert
ime .
TYPE:
M DI FFICULTY:3SECTI ON:10. 2

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  281

28.Ral
phpa yssome onetomow hislawn.Nortonmowshi sownl a
wn.
a. Onlywha tRalphpaystohavehisla
wnmowe disincludedinGDP .
b.Wha tRalphpa ystohavehisla
wnmowe dandt heest
ima tedvaluetoNor
tonofmowinghi
sown l
awnar
ebot
h
inc
lude dinGDP .
c. Neitherwha tRalphpaysnortheesti
matedvalueofNor ton’smowingisi
ncl
udedinGDP.
d.Theans we rdependsonwha tNort
onr e
port
stos urveytakers.
ANSWER: a.onlywha tRalphpaystohavehislawnmowe di si
ncl
udedinGDP.
TYPE:
M DI FFICULTY:1SECTI ON:10.2

29.Ji
mi sac hefatar e
staurant.Sal
lyprepar
edhe rownme al
sduringthefir
stquar
terof2002,andthena
teatJ
im’
s
res
tauranteveryda yi nthesecondquart
erof2002.Sal
ly’
schangeofhabit
a. necessari
lyraisesGDP .
b.ne cessari
lyreduc esGDP .
c.r ai
sesGDPonl yi ftherest
aurantmealsar
emoree xpens
ivethantheesti
matedvalueofSall
y’sme
als
.
d.hasnoi mpac tonGDP .
ANSWER: a.ne ces
saril
yrais
esGDP .
TYPE:
M DI FFICULTY:2SECTI ON:10. 2

30.IfSus
ande c
idestochangetheoilinhe rcarher
sel
finst
eadofha
vi ngSpeedyLubec
hanget
heoi
lforhe
rGDP
a. nece
ssar
il
yr i
ses.
b.ne ce
ssar
il
yfalls
.
c. wil
lbeunaffect
edbecausethesames e r
vic
eisproducedi
neithercas
e.
d.wi l
lbeunaffect
edbecausecarmai nte
nanceisnotincl
udedi
nGDP .
ANSWER: b.necessar
il
yf al
ls
.
TYPE:
M DI FFICULTY:2SECTI ON:10.2

31.A profess
ionalgamblermovesfrom as t
atewhe regamblingi
sil
legalt
oas
tat
ewhe
regambl
ingi
sle
gal
.Thi
smove
a. necessar
ilyrai
sesGDP .
b.ne cessar
ilydecre
asesGDP .
c. doe s
n’tchangeGDPbe causegambl i
ngi sneverincl
udedinGDP .
d.doe s
n’tchangeGDPbe causeineithercasehisincomeisi
ncl
ude d.
ANSWER: a.ne c
essar
il
yr ai
sesGDP .
TYPE:
M DIFFI CULTY:1SECTI ON:10.2

32.A profess
ionalgamblermovesfrom astat
ewhe regamblingi
sle
galt
oast
atewhe
regambl
ingi
sil
legal
.Thi
smove
a. necessar
ilyrai
sesGDP .
b.ne cessar
ilydecre
asesGDP .
c. doe s
n’tchangeGDPbe causegamblingisneverincl
udedinGDP.
d.doe s
n’tchangeGDPbe causeineit
hercasehisincomeisi
ncl
uded.
ANSWER: b.ne c
essar
il
yde c
reasesGDP.
TYPE:
M DIFFI CULTY:1SECTI ON:10.2

33.Ifast
atemadeani l
legalacti
vit
ys uchasgamblingorpr os
tit
uti
onlegal
,the
not
herthi
ngst
hes
ameGDP
a. necess
ari
lyinc
reases.
b.ne cess
ari
lydecre
ases.
c. doesn’
tchangebecausebothlegalandill
egalproducti
onareinc
ludedinGDP.
d.doe sn’
tchangebecausetheseacti
vit
iesareneve
ri nc
ludedinGDP .
ANSWER: a.ne ces
saril
yincreas
es.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 2

34.Ifast
atelegalizedgambl ingandthenrever
seditsdeci
sionandmadegambli
ngi
ll
egal
,the
not
hert
hingst
hes
ame
GDP
a. necess
arilyincreas
e s.
b.ne cess
arilyde c
reases.
c. doesn’
tc hangebe causebothle
galandill
egalproducti
onareinc
lude
dinGDP.
d.doe sn’
tc hangebe causegamblingisne
verincludedinGDP .
ANSWER: b.ne cess
ari
lydecre
ases
.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 2

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

282  Chapter 10/Measuring a Nation’s Income

35.Roomma te
sGraceandKe l
lyares
hari
nghous e
hol
dc horesandthinkthe
yhaveaneve
nex
change
.Ot
hert
hingst
he
same ,i
finst
eadtheypaideac
hotherfort
hechore
stheothe rdi
dGDPwoul d
a.r ise
.
b.f all
.
c. beunaffect
edbe c
ausepai
dornot,house
holdchoresarenotincl
udedinGDP.
d.beunaffe ct
edbe c
ausepai
dornot,house
holdchoresareinc
ludedinGDP .
ANSWER: a
.r is
e.
TYPE:
M DI FFICULTY:1SECTI ON:10.2

36.Whichofthef
oll
owi ngisc
orrect
?
a. Theval
ueofalli
nt e
rmediat
egoodsandfinalgoodsareincludedinGDP.
b.Thevalueofinte
r medi
ategoodsareincl
udedi nGDPonl yifthe
ywe r
eproducedi
nthepr
eviousyear
.
c. Theval
ueofinte
r medi
ategoodsareincl
udedi nGDPonl yifthe
yarepur
c has
edbyfir
msr
atherthanhous
ehol
ds.
d.Thevalueofinte
r medi
ategoodsarenotincl
ude di
nGDP .
ANSWER: d.Theval ueofint
erme di
ategoodsarenotincl
udedinGDP.
TYPE:
M DI FFICULTY:1SECTION:10.2

37.GDP
a.include
st hevalueofinte
rme di
ategoodssowec angetame as
ureofs ale
s .
b.excludesthevalueofinter
me di
ategoodsbecausetheyaretoodifficul
ttome asure.
c.excludesthevalueofinter
me di
ategoodsbecausethei
rvalueisalr e
adyc ounte
di ntheval
ueoffinalgoods
.
d.Noneoft heabovear ecorre
ct.
ANSWER: c.e xcl
udesthevalueofint
erme di
ategoodsbe c
aus ethei
rvaluei sal
readyc
ount
edi nthevalueof
finalgoods.
TYPE:
M DIFFICULTY:1SECTI ON:10.2

38.Thetotalsal
esofallfirmsinthee conomyf oraye
ar
a.equal sGDPf ortheye ar
.
b.islargerthanGDPf ortheyear.
c.issmal le
rthanGDPf ortheye ar.
d.equal sGNPf ortheye ar
.
ANSWER: b. islargerthanGDPf ort
heye
ar.
TYPE:
M DIFFICULTY:2SECTI ON:22.2

39.Grape sar
e
a. alwayscount
edasanintermedi
ategood.
b.c ountedasanint
ermediat
egoodonlyiftheyareusedtopr oduceanothergoodli
kewine.
c.c ountedasanint
ermediat
egoodonlyiftheyareconsumed.
d.c ountedasanint
ermediat
egoodwhe thert
heyareuse dtopr oduceanot
hergoodorconsume d.
ANSWER: b.counte
dasani nte
rme di
ategoodonlyiftheyar eusedt
opr oduc
eanothergoodli
kewi
ne.
TYPE:
M DIFFI CULTY:1SECTION:10.2

40.Fl
ouri s
a. alwayscount
edasani ntermedi
ategood.
b.c ountedasanintermediat
egoodifiti
susedbyacompanyt
omakebread.
c.c ountedasafinalgoodifi
tisusedbyaconsumerwhobake
sbr
eadforhisownc
ons
umpt
ion.
d.Bot hbandcar ecor
rect
.
ANSWER: d.Bot hbandcar ecorr
ect
.
TYPE:
M DIFFI CULTY:1SECTI ON:10.2

41.Gasolinei
s
a. alwayscons
ideredanintermedi
ategood.
b.c ountedasafinalgoodifacompanyusesittoprovidet
ransport
ati
onser
vice
s.
c.c ountedasafinalgoodifacons
ume ruse
si tt
or unalawnmowe rtomow heryar
d.
d.Bot hbandcar ecor
rect
.
ANSWER: c.c ounte
dasafinalgoodifac onsumerusesitt
orunthela
wnmowe rt
omow he
ryar
d.
TYPE:
M DIFFI CULTY:1SECTI ON:10.2

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  283

42.Goodsthatgoint
oinve ntoryandarenotsoldduringthecurrentperiodar e
a.countedasinter
me di
ategoodsands oarenotincl
udedinc urre
ntpe riodGDP .
b.countedincurrentGDPonl yi
fthefirmthatproducedthems ell
st he
mt oanot
herfir
m.
c.includedincurrentpe r
iodGDPasi nventor
yinvestment.
d.includedincurrentpe r
iodGDPasc onsumpt i
on.
ANSWER: c
.i ncl
ude di
ncurrentperi
odGDPasi nvent
or yinvest
me nt.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 2

43.ThelocalChe vrol
etdealers
hi phasani ncreaseininventoryof25c ar
sin2003.In2004itsel
lsall25c ars
.
a. Thevalueofi ncr
easedi nventor
ywi l
lbec ountedaspar tofGDPi n2003,butthevalueofthec arssoldin2004
wil
lnotc auseGDPt oi ncrease.
b.Theval ueoft heincr
e asedinventorywi llnotaffec
t2003GDP ,
butwillbeincl
udedi n2004GDP .
c. Thevalueoft heincr
e asedinventorywi llbecountedas2003GDPandt hevalueofthecarssoldi n2004will
i
ncrease2004GDP .
d.Noneoft heabovear ecor r
ect.
ANSWER: a.Theval ueofincreasedi nve
ntorywi llbecounte
daspar tofGDPi n2003,butt hevalueofthe
c
ar ssol
di n2004wi llnotcauseGDPt oincre
as e
.
TYPE:
M DIFFICULTY:2SECTI ON:10. 2

44.A movi ecompanymake s500,000DVDsofoneofi tslat

estrel
eases.Its
ell
s300, 000ofthem be f
oretheendoft he
se
condquar ter,andholdst heothe r
sinitswarehouse.
a. SincetheDVDswi lleventuall
ybeboughtbyc onsume r
s,theyareincludedasc onsumptionint hesec
ondquar te
r.
b.Si ncetheDVDswe renotpur chasedthi
squarter
,theywi l
lbec ountedasani ncre
aseinthird-quart
erGDP .
c. TheDVDswi llbecountedasac hangei
ninventoryinthes ec
ondquar t
erands owi l
lbeincludedins econd-
quar t
erGDP .
d.TheDVDswi llbecountedasac hangei
ninventoryinthes ec
ondquar t
er,andwhe nsoldint hethi
rdquar t
erwi
ll
raiseGDP .
ANSWER: c.TheDVDswi l
lbecounte
dasac hangeininventoryinthes e c
ondquar t
e rands owillbe
includedinse c
ond- quarterGDP.
TYPE:
M DIFFI CULTY:2SECTI ON:10. 2

45.Ge or
gebuysandlive
si nanewlyconstruct
edhomehepai d$200 ,
000forin2003.Hesell
sthehous
ein2004f
or
$225,
0000.
a. The2004sal
eincrease
s2004GDPby$225 ,
000anddoesnothingto2003GDP .
b.The2004s al
eincrease
s2004GDPby$25 ,000anddoesnothingto2003GDP .
c. The2004sal
edoe snotinc
rease2004GDPanddoe snothi
ngt o2003GDP .
d.The2004s al
eincrease
s2004GDPby$225 ,
000and2003GDPi sr
evis
edupwar dby$25,
000.
ANSWER: c
.The2004s al
edoe snotincre
ase2004GDPanddoe snothingto2003GDP.
TYPE:
M DI FFICULTY:2SECTION:10.2

46.Dar
la,aCanadiancit
izen, onlywor
ksintheUnitedSt
ate
s.Theval
ueadde
dtopr
oduc
tionf
rom he
rempl
oyme
nti
s
a.includedinbothU.S. GDPandU. S.GNP .
b.includedonlyinU.S.GDP .
c.includedonlyinU.S.GNP .
d.noti nc
ludedinei
therU. S.GDPorU. S.GNP.
ANSWER: b.include donl
yinU.S.GDP .
TYPE:
M DIFFICULTY:2SECTI ON:10. 2

47.Gre
g,aU. S.ci
ti
zen,worksonlyinCanada.Theval
ueadde
dtopr
oduc
tionf
rom hi
sempl
oyme
nti
s
a.includedinbothU.S.GDPandU. S.GNP .
b.includedonlyinU.S.GDP.
c.includedonlyinU.S.GNP .
d.noti nc
ludedineit
herU.S.GDPorU. S.GNP.
ANSWER: c.incl
udedonl yi
nU.S.GNP .
TYPE:
M DIFFICULTY:2SECTI ON:10.2

48.Anna ,aU.S.
citi
zen,wor
ksonlyinGermany.Theval
ueadde
dtopr
oduc
tionf
rom he
rempl
oyme
nti
sinc
lude
d
a. onlyinU.S.GDP .
b.onl yinGermanGDP .
c.i nbothGe r
manandU. S.GDP .
d.i nneit
herGe rmannorU.S.GDP.
ANSWER: b.onlyinGe rmanGDP.
TYPE:
M DI FFI
CULTY:2SECTI ON:10.2

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

284  Chapter 10/Measuring a Nation’s Income

49.AnI t
ali
anc ompanyope nsapast
acompanyi
ntheU.
S.Thepr
ofit
sfr
om t
hispas
tac
ompa
nyar
einc
lude
din
a. bothU.S.andIt
ali
anGNP .
b.bot hU.S.andIt
ali
anGDP .
c. U.S.GDPandI tal
ianGNP .
d.U. S.GNPandI tal
ianGDP .
ANSWER: c.U. S.GDPandItal
ianGNP.
TYPE:
M DIFFICULTY:2SECTI ON:10. 2

50.AnAme ric
ancompanyownsaf astfoodrest
aurantinRomani
a.Theval
ueofgoodsands
ervi
cesi
tpr
oduc
esi
s
incl
ude d
a.i nbothRomanianandU. S.GDP .
b.par tl
yinRomanianGDPandpar tlyinU.S.GDP.
c.i nRomanianGDP ,butnotU. S.GDP .
d.i nU.S.GDP,butnotRomani anGDP .
ANSWER: c.inRomani anGDP ,butnotU.S.GDP.
TYPE:
M DI FFICULTY:2SECTION:10. 2

51.Whichoft
hef ol
lowingisi ncl
udedi nGDP?
a.thesal
eofs t
ocksandbonds
b.thesal
eofus edgoods
c.thesal
eofs e
rvicessuc hasvis
itstoadoct
or
d.Alloftheabovearec orrect
.
ANSWER: c
.t hes aleofse
rvicess
uchasvi
sit
stoadoc
tor
TYPE:
M DIFFICULTY:2SECTI ON:10. 2

52.Whic hofthefol
lowi ngisincl
udedi
nGDP?
a.t hesal
eofs t
oc ksandbonds
b.t heest
imatedr entalval
ueofowneroccupiedhous
ing
c. unpaidproduc ti
onofgoodsands e
r vi
cesathome
d.Al loftheabovear ecorrect
.
ANSWER: b.t heesti
ma t
edr
entalval
ueofownerocc
upi
edhous
ing
TYPE:
M DIFFI CULTY:2SECTI ON:10.2

53.Whi chofthefoll
owingisinc l
udedinU. S.GDP?
a. goodspr oducedbyforeignciti
zenswor ki
ngintheUnit
edStat
es
b.t hediffe
renceinthepriceofthesaleofane xi
sti
nghomeanditsori
ginalpurc
hasepr
ice
c. knowni lle
galact
ivit
ies
d.Noneoft heabovearec orrec
t.
ANSWER: a.goodspr oducedbyf orei
gnc i
ti
zenswor
kingintheUnitedStat
es
TYPE:
M DI FFICULTY:2SECTI ON:10.2

54.Whi choft hefollowingi scountedinU.S.GDP?

a. finalgoodsands ervicespurchase
dbyt hegovernme nt
b.bot ht hepe achesus edbyabake rytomakepe achpiesandthepeachpies
c. goodsands e
r vi
cespr oducedbyU. S.c
iti
zensworkinginfor
eigncountr
ies
d.Noneoft heabovear ecorre
ct.
ANSWER: a.finalgoodsands ervi
cespurchas
edbyt hegover
nme nt
TYPE:
M DIFFI CULTY:2SECTI ON:10. 2

55.Whichoft
hefoll
owingiscountedinGDP?
a.theest
imat
edvalueofhous ework
b.theval
ueofill
egal
lyproducedgoodsands e
rvic
es
c.theval
ueofne wl
yissuedstocksandbonds
d.Noneoftheabovearecorrect
.
ANSWER: d.Noneoft heabovearecor
rect
.
TYPE:
M DIFFICULTY:2SECTION:10.2

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  285

56.U.
S.GNPi scalc
ulate
df r
om U.S.GDPby
a.i
ncludingincomeearnedbyf
or e
ignersintheUnitedSta
tesande x
cludi
ngincomee
arnedbyU.S.ci
ti
zens
abroad.
b.i
ncludingincomeearnedbyU.S.ci
ti
ze nsabr
oada ndexcludi
ngincomee ar
nedbyf
orei
gner
sintheU.S.
c.i
ncludingincomeearnedbyf
or e
ignersintheUnitedSta
tes.
d.exc
ludingincomeearnedbyU.S.ci
tizensabroad.
ANSWER: b. i
ncl
udingi
ncomee arne
dbyU. S.ci
ti
zensabroadande xc
ludi
ngi
ncomeearnedby
f
oreigner
sint heU.
S.
TYPE:M DIFFICULTY:2SECTI ON:10.2

57.How i
sNNPc al
cul
ate
d?
a.bysubt
ract
ingsavingfrom thetot
alincomeofc it
izensofana tion
b.bysubt
ract
ingbusinessexpensesandt axesfrom thetotalprofit
se ar
nedbyc it
ize
nsofanati
on
c.bysubt
ract
ingdepr e
ciati
onfrom thetotalincomeofc it
izensofana t
ion
d.bysubt
ract
ingdepr e
ciati
onfrom thetotalprofit
se ar
nedbyc i
tizensofana t
ion
ANSWER: c. bys ubtr
acti
ngde precia
tionfrom thet ot
alincomeofc it
izensofanat
ion
TYPE:M DIFFI
CULTY:2SECTION:10. 2

58.I
nthenati
onalincomeaccounts,depre
cia
tioniscal
led
a."consumptionoffix
e dcapi
tal
."
b."tot
altaxdepreci
ati
on."
c."consumptionofcircul
ati
ngcapital
."
d."l
ossduet owe ar
.”
ANSWER: a . "consumpti
onoffixedcapi
tal
."
TYPE:M DIFFI
CULTY:2SECTI ON:10.2

59.Na
tionalinc
omei sde finedas
a.alli
ncomepr oducedwi t
hinacountry.
b.thetot
ali ncomee arne
dbyana t
ion’
sresi
dent
sfrom theproducti
onofgoodsands e
rvic
eswithi
nthe
bordersofthec ount r
y.
c.thetot
ali ncomee arne
dbyana t
ion’
sresi
dent
sinthepr oduct
ionofgoodsandservi
ces.
d.theincomer ece
ivedbythenati
onalgovernment
.
ANSWER: c . thetot
alinc
omee arnedbyana t
ion’sres
ide
ntsintheproduc
tionofgoodsandser
vic
es.
TYPE:M DIFFICULTY:2SECTI ON:10.2

60.Na
tionalinc
omedi ffe
r sfrom netnati
onalproducti
ntha
titi
ncl
ude
sbus
ine
sss
ubs
idi
esande
xcl
ude
s
a.profit
sofc orporat
ions.
b.indirec
tbus i
ne sst
axes.
c.retai
nede arningsofcorpora
tions.
d.depreciation.
ANSWER: b. indir
ectbusines
staxe
s.
TYPE:M DIFFICULTY:2SECTI ON:10.2

61.Thei
ncomethathous eholdsandnoncor
porat
ebus
ine
sse
sre
cei
vei
scal
led
a.personalincome .
b.propr i
etors
’income.
c.disposablepersonali
ncome.
d.nationalincome.
ANSWER: a. per
sonali
ncome.
TYPE:M DIFFI
CULTY:2SECTI ON:10.2

62.Unl
ikenationalincome ,pers
onali ncome
a.i nc
ludesr e
tainedear nings,
cor porat
ei ncomet axesands ocialinsurancecontri
butions ,ande x
cludes
inter
estandt ransfe
rpa yme ntsr e
cei
ve dbyhous eholdsf r
om gove rnme nt .
b.e xcl
ude sretai
nedear nings,corporat
ei ncomet axe s,soci
alinsur ancecontr
ibutions,andi nter
estand
transf
erpa yme ntsrecei
vedbyhous ehol dsfr
om gove rnme nt.
c.e xcl
ude sretai
nedear nings,corporat
ei ncomet axe sands ocialinsurancecontri
but ions,andincludes
inter
estandt ransfe
rpa yme ntsr e
cei
ve dbyhous eholdsf r
om gove rnme nt .
d.i nc
ludesr e
tainedear nings,
cor porat
ei ncomet axes,s oci
ali
ns uranc econt
ributi
ons ,andi nte
restand
transf
erpa yme ntsrecei
vedbyhous ehol dsfr
om gove rnme nt.
ANSWER: c. e
x cludesretainede arnings,
c orpor at
eincomet axesands oci
alins urancecontri
but
ions
,
andincludesintere
s tandt r
ans ferpayme ntsreceive dbyhous e
hol dsfrom governme nt.
TYPE:M DIFFICULTY:2SECTI ON:10. 2

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

286  Chapter 10/Measuring a Nation’s Income

63.Di
sposablepers
onali ncomeistheincomet ha
t
a.householdsha vel
eftaft
erpa yingtaxesandnon- taxpa yme ntstot hegovernment.
b.busi
ne ss
e shavele
ftaft
erpa yingtaxesandnon- taxpa yme ntstot hegovernment.
c.householdsandnonc orpora t
ebus i
nesseshaveleftaft
e rpayingt axesandnon-taxpaymentst
ot he
government.
d.householdsandbus ines
sesha veleftaft
erpayingt ax
esandnon- t axpayme nt
stothegover
nme nt.
ANSWER: c. hous e
hol dsandnonc orporatebusine s
sesha vel ef
taft
erpayingtax
esandnon- t
ax
payme ntstothegovernme nt.
TYPE:M DIFFICULTY:2SECTI ON:10.2

64.Re
tai
nede ar
ningsaret hepar tofincomet ha t
a.hous eholdsretainafterpa yingtaxes
.
b.bus i
ne s
sesr e
tainafterpa yingtaxes.
c.c or
porationspa ytothe i
rowne rsintheform ofdivi
dends.
d.c or
porationsdonotpa yt ot he
irowne rsinthefor
m ofdivide
nds.
ANSWER: d. corpora t
ionsdonotpa yt
ot hei
rowne r
sinthef
orm ofdi
vide
nds
.
TYPE:M DIFFI
CULTY:2SECTI ON:10. 2
Usethef
oll
owingtabletoans wert henextfiveque sti
ons.

GDP $110
IncomeEar ne dbyCi t
izensAbroad $5
IncomeFor e i
gne rsEarnhe re $15
De preciati
on $4
IndirectBus ines sTaxes $6
Bus i
ne ssSubs idies $2
Stati
sticalDi screpancy $0
Retaine dEar nings $5
Cor porateInc omeTax e s $6
SocialInsur anceCont ributi
ons $10
InterestPaidt oHous eholdsbyGove r
nment $5
TransferPa yme ntstoHous ehol
dsfrom Gove
rnme
nt $15
PersonalTax es $30
Non- taxpa yme ntstoGove rnment $5

65.GNPf orthi
seconomyis
a. $96.
b.$100.
c. $105.
d.$110.
ANSWER: b.$100.
TYPE:TFDI FFICULTY:2SECTION:22
.2

66.NNPf orthi
seconomyis
a. $100.
b.$96.
c. $90.
d.$88.
ANSWER: b.$96.
TYPE:TFDI FFICULTY:3SECTION:22
.2

67.Nationali
ncomefort
hiseconomyis
a. $96.
b.$92.
c. $90.
d.$88.
ANSWER: b.$92.
TYPE:TFDI FFICULTY:3SECTION:22 .
2

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  287

68.Per
sonalIncomefort
hiseconomyis
a. $91.
b.$81
c. $80.
d.$51.
ANSWER: a.$91.
TYPE:TFDI FFICULTY:3SECTION:22 .
2

69.Dis
pos abl
epers
onalinc
omefort
hise
conomyi
s
a. $56.
b.$46.
c. $45.
d.$11.
ANSWER: a
.$56.
TYPE:TFDI FFICULTY:3SECTION:22.
2

70.Thegove
rnmentrepor
tsthat“
GDPi ncreas
edby1.6pe rcentinthelas
tquar
ter
."Thi
ssta
teme
ntme
anst
hatGDP
i
ncre
ased
a.by6.4perc
entfortheyear.
b.atanannualrat
eof6 .
4pe rc
entduringthelastquarter.
c.atanannualrat
eof1 .
6pe rc
entduringthelastquarter.
d.atanannualrat
eof.4pe rc
entduringthelastquarter.
ANSWER: c. atanannualr at
eof1 .
6pe rc
e ntduringt
helas
tquart
er.
TYPE:M DIFFI
CULTY:1SECTI ON:10.2

71.Ifthegover
nme ntr
eport
sthat“GDPincre
asedatanannualr
ateof6.
0pe
rce
ntf
ort
hef
our
thquar
terof2002”t
hen
GDPi ncre
asedby
a. 6.0per
centduri
ng2002.
b.24. 0per
centduri
ng2002.
c. 6.0per
centduri
ngthefourt
hquarte
r.
d.1. 5per
centduri
ngthefourt
hquarte
r.
ANSWER: d.1.5perc
entdur
ingthefour
thquart
er.
TYPE:
M DI FFICULTY:1SECTION:10.2

72.RecentvaluesofGDPs ugge s
tt hatinthefourt
hquar terU.S.GDPi sa bout$10t ril
liondol l
ars.
a. Thisnumbe rreflect
stheac tualamountoffinalgoodsands ervicespr oducedi nt hefourthquar t
er.
b.Tofindt heamountac tuallypr oducedinthatquarterwewoul dha vetodi vi
debyf ourbe causeGDPi sre port
ed
atannualrates.
c. Theamountac tuall
ypr oduc e
di nthefourthquarterissome wha thighe rbecaus eGDPi ss eas
onal l
yadjustedand
nonseasonall
yadj ust
edGDPf orthefourthquarteristypic
alhighe r.
d.Tofindt heamountac tuallypr oducedinthatquarterwouldr equirebot hdividingi tbyaboutf ourandt hen
addingbac kinwha thadbe enr emovedforseasonaladjustment.
ANSWER: d.Tofindt heamountac t
uall
ypr oduc e
di nthatquar te
rwoul dre quirebothdividingitbyabout
fourandt henaddi ngbac kinwha thadbe enr emovedf ors e
as onaladjus t
me nt.
TYPE:
M DIFFI CULTY:2SECTI ON:10. 2

73.IntheUnit
edSt
ate
srealGDPi sreport
ede achquarter
.
a. Thes
enumbersar
eadj us
tedtomaket hem me asur
ea tannualands easonall
yadjus
t e
dr at
es.
b.The s
enumbersar
eadj us
tedtomaket hem annualra t
es,butnoadj ustme ntf
orseasonalvari
ati
onsaremade.
c. Thes
enumbersar
equar t
erl
yra t
esthathavebe enseasonal
lyadjusted.
d.The s
enumbersar
ea tquart
erl
yr at
esandha venotbe enseasonall
yadj usted.
ANSWER: a
.The senumbe rsareadjust
edt omaket hem me asurea tannualands eas
onall
yadjus
tedra
tes
.
TYPE:
M DI FFI
CULTY:1SECTI
ON:10. 2

74.Inthena t
ionofOphe lia,quarter
lyGDPi salwa yshigheri
nt hesec
ondquar te
rthani
nothe
rquar
ter
s.I
nor
dert
o
accountforthispredictablejumpi nGDP ,Ophe li
a’sgover
nme ntst
ati
sti
cianswill
a. makes uretoac countf orinventorycha ngesdur i
ngthese c
ondquarter.
b.r eportre
alGDP ,notnomi nalGDP .
c.f ocusonGNPr atherthanGDPdur i
ngt hesecondquarter.
d.makeas e asonaladjus t
me ntforthesecondquar te
rdata.
ANSWER: d. makeas e
as onaladjustmentforthesec
ondquar te
rdat
a.
TYPE:
M DI FFICULTY:2SECTI ON:10. 2

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

288  Chapter 10/Measuring a Nation’s Income

75.Inc
omput ingGDP ,i
nvest
me ntiss pendingon
a.s tocks,bonds,andothe rfinanc i
alasset
s.
b. realestat
eandfinancialas sets
.
c. ne wc apit
alequipment,inve ntori
e s
,andstruct
ures,incl
udi
ngnew housi
ng.
d. capitalequipment,i
nve ntories,ands t
ruct
ures,ex
cludinghous
ehol
dpur chase
sofnew housi
ng.
ANSWER: c.ne wc apitalequi pment,i
nventor
ies,andst
ruc
ture
s,inc
ludingnew hous
ing.
TYPE:
M DI FFI
CULTY:2SECTI ON:10. 3

76.Gover
nme ntpur chasesincl
udes pendingongoodsa ndservi
cesby
a.thefederalgovernme ntonly.
b.stat
eandf ederalgove r
nme nt sonly
.
c.local
,sta
teandf ede r
algove rnme nt
s .
d.localandstategove r
nme nts,butnott hefede
ralgover
nme nt
.
ANSWER: c .local,st
ateandf ederalgove
rnme nt
s.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 3

77.Ifyoubuyaburgerandf ri
esatyourf a
voritefastfoodr e
s t
aurant
a. nei
the
rGDPnorc onsumpt i
ons pendingwi llbeaffecte
dbe causeyouwoul
dha
vee
ate
nathomei
fyouhadn'
t
eat
enatt
herestaurant
.
b.GDPwi l
lbehigher,butconsumpt i
ons pendi ngwi l
lbeunc hanged.
c. GDPwi l
lbeunc hanged,butconsumpt i
ons pendingwi llbehighe
r.
d.bothGDPandc onsumpt i
ons pendingwi l
lbehi gher
.
ANSWER: d.bot hGDPandc onsumpt ions pendingwi l
lbehigher
.
TYPE:
M DI FFICULTY:1SECTI ON:10.3

78.Considertwot hingst hatmightbei nc

ludedi nGDP: A.
Thee s
timat
edrent
alvalueofowne
r-oc
cupi
edhous
ing,and
B.Purchasesofne wlycons t
ructe
dhome s.
a. BothAandBar eincludedasc onsumption.
b.A i si
nclude dasc ons umption,whileBisincl
udedasinves
tment.
c. Bisincludedasc onsumpt i
on, whileAisincl
udedasinves
tment.
d.Onl yBi sinclude dinGDPandi ti
si nc
ludedasinves
tment.
ANSWER: b.A isi ncl
ude dasconsumption,
whi l
eBisincl
udedasinve
stment.
TYPE:
M DI FFICULTY:2SECTI ON:10. 3

79.Whe nafirm produce

sc onsumergoodsandaddss omet oinvent
oryr
athert
hans
ell
ingi
t.I
tis
a. notcountedinthecurrentquar
terGDP.
b.c ounte
dint hecurrentquart
erGDPasi nvest
me nt.
c.c ounte
dint hecurrentquart
erGDPasc onsumpt i
on.
d.c ounte
dint hecurrentquart
erGDPasas t
ati
sti
caldis
crepancy
.
ANSWER: b.countedinthecurr
entquarterGDPasi nves
tment.
TYPE:
M DIFFI CULTY:1SECTI ON:10.3

80.A fir
m producescons ume rgoodsandaddss omet oinve
ntor
yint het
hir
dquarte
r.Inthef
ourt
hquarte
rthefir
ms el
ls
thegoodsa taret
ailout l
etwhi chlea
vestheirinvent
orydiminis
hed.Asar e
sul
tofthes
eacti
ons,wha
tcompone nt
(s)
ofrealGDPc hangeint hef ourt
hquar te
r?
a. onlyinvest
me ntandi tde cr
eases
b.onl yconsumpt i
onandi tincre
ases
c.I nves
tme ntdecreasesandc onsumpt i
oninc r
eases.
d.Noneoft heabovei scor r
ect.
ANSWER: c .i nvestmentde c
reasesandc onsumpti
onincre
ases
.
TYPE:
M DI FFICULTY:3SECTI ON:10. 3

81.A U.
S.publi
she
rpurchase
sne wcomputers
.Thispurc
has
ebyi
tse
lfmake
s
a.invest
mentandGDPhi ghe r.
b.invest
menthighe
randl e
a vesGDPunc hanged.
c.invest
menthighe
randr educesGDP .
d.neithe
rinve
stmentnorGDPhi ghe
r.
ANSWER: a.inves
tme ntandGDPhi gher.
TYPE:
M DIFFICULTY:1SECTION:10. 3

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  289

82.A Minnesot
afar
me rbuysane wtract
ormadei nI
owabyaGe r
manc ompany.Asar esul
t
a. U.S.i
nves
tmentandGDPi ncr
ease,butGer
manGDPi sunaffec
ted.
b.U. S.i
nves
tmentandGe rmanGDPi ncre
ase
,butU. S.GDPi sunaffect
ed.
c. U.S.i
nves
tment,U.
S.GDP ,andGe rmanGDPar euna ffe
cted,becausetr
actor
sar ei
nterme
dia
tegoods
.
d.U. S.i
nves
tment,U.
S.GDP ,andGe rmanGDPal lincrease
.
ANSWER: a.U. S.i
nvestmentandGDPi ncr
e ase,butGe r
manGDPi sunaffe
cte
d.
TYPE:
M DI FFICULTY:2SECTION:10.3

83.IfaU.S.
cit
izenbuysatelevi
sionmadei nKor eabyaKor eanfir
m,
a. U.
S.netexport
sdecrease,andU. S.GDPde cre
ases.
b.U.S.netexport
sareunaffec t
ed,andU. S.GDPde cr
eases
.
c. U.
S.netexport
sareunaffec t
ed,andU. S.GDPi sunaffec
ted.
d.U.S.netexport
sdecreasebutU. S.GDPi sunaffe
cted.
ANSWER: d.U. S.nete xport
sde cr
e asebutU.S.GDPi sunaffe
cte
d.
TYPE:
M DI FFICULTY:2SECTI ON:10.3

84.IfaU.S.householdbuysa$75handba gf
rom It
aly,U.S.cons
umpt i
oni ncr
eas
esby$75
,U.
S.
a.i mportsincr
easeby$75,andU. S.GDPi nc
reasesby$75 .
b.i mportsincr
easeby$75,butU.S.GDPi sunaffected.
c.i mportsareunaffe
cte
d,andU. S.GDPi sunaffe
c t
ed.
d.e xport
sincreaseby$75,andU. S.GDPincreasesby$75.
ANSWER: b.importsinc
reaseby$75,butU. S.GDPi sunaffe
cted.
TYPE:
M DI FFICULTY:2SECTI ON:10.3

85.Ste
phbuysade signerdressproduc edbyanAme ri
can-ownedfashi
ons hopinFr
anc
e.Asar
esul
t,U.
S.c
ons
umpt
ion
inc
reases
,U. S.ne texpor
ts
a. decre
ase,U. S.GDPi sunaffected,butU.S.
GNPi ncreas
es.
b.de cre
ase,U. S.GDPi ncreases
,butU. S.GNPi sunaffect
ed.
c. decre
ase,U. S.GNPi ncreases
,butFr enchGDPi sunaffect
ed.
d.ar eunaffect
e d,U.S.GDPi sunaffecte
d,butFrenchGDPi ncr
ease
s.
ANSWER: a.de cr
ease,U.S.GDPi sunaffec
ted,butU.S.GNPi nc
rease
s.
TYPE:
M DI FFICULTY:3SECTI ON:10. 3

86.A Germanc iti

zenbuysanaut omobi l
epr oducedi nt heUnitedSta t
esbyaJ apanesec ompany.Asar esult,(
???)
a. U.
S.ne texport
sincre
as e
,U.S.GNPandGDPar eunaffect
ed,Japanes eGNPi ncreases,Germannete xports
dec
rease,andGe rmanGNPandGDPar eunaffec t
e d.
b.U.S.ne texport
s,GNP ,andGDPi ncre
as e
,Japane seGDPi ncreases,Ge r
manne te xportsdecr
ease
,andGe rman
GDPi sunaffe
cted.
c. U.
S.ne texport
sandGDPi ncrease,J
apane seGNPi ncreas
es,Ge rmanne texportsde cre
ase
,andGe rmanGDPand
GNPar eunaffecte
d.
d.U.S.ne texport
s,GNP ,andGDPar eunaffected,JapaneseGNPi ncreases
,Ge r
manne texport
sdecrease,and
GermanGDPandGNPf al
l.
ANSWER: c.U. S.netexportsandGDPi ncrease,J
apaneseGNPi nc
reases
,Ge rmanne texport
sde cre
ase,and
GermanGDPandGNPar eunaffected.
TYPE:
M DI FFICULTY:3SECTI ON:10.3

87.Aft
e rthet er
roris
tatt
ackonSe ptember11,gover
nme ntsraisedexpendit
urestoincreas
esecuri
tyatai
rpor
ts.The
se
purchas esofgoodsands ervi
cesare
a. noti ncl
ude dinGDPs incetheyarenotproduc t
ive.
b.noti ncl
ude dinGDPs incethegovernmentwillha vetor ai
setaxest
opa yforthem.
c.i ncludedi nGDPs inc
egove rnmentexpendit
ur esareinc l
udedinGDP .
d.i ncludedi nGDPonl ytothee xt
enttha
ttheFede ral,andnots t
ateorlocalgover
nme nt
s,paidf
orthem.
ANSWER: c.incl
ude dinGDPs incegovernme nte xpendit
uresareincl
udedi nGDP.
TYPE:
M DI FFI
CULTY:2SECTI ON:10.3

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

290  Chapter 10/Measuring a Nation’s Income

88.TheU. S.AirForc
epaysaTur kishciti
zen$30,000toworkonaU. S.baseinTurke
y.Asare sul
t,
a. U.S.governmentpurchasesincreaseby$30,000andU.S.
nete xpor
tsdecre
aseby$30,000.U.S.
GDPandGNPar e
unaffec
ted.
b.U. S.governmentpurchasesincreaseby$30,000andU.S.
GNPi ncr
easesby$30,
000.
U. S.GDPandne texport
sare
unaffec
ted.
c. U.S.governmentpurchases,netexport
s,GDP ,andGNPar eunaffect
ed.
d.U. S.governmentpurchasesincreaseby$30,000andU.S.
nete xpor
tsdecre
aseby$30,000.U.S.
GNPi nc
reasesby
$30,000
,butU.S.GDPi sunaffected.
ANSWER: a.U.S.governme ntpurchasesincr
eas
eby$30,000andU. S.ne
texpor
tsde cre
aseby$30,
000.U.S.
GDPandGNPar eunaffe ct
ed.
TYPE:M DI FFICULTY:2SECTI ON:10. 3

89.A windfarmi nI
owabuysal argeturbi
nege ner
atorfrom aS wedi
sh-ownedf ac
toryloc
ate
dinConnec
tic
utthatuses
loc
alwor ke
rs.
a. U.S.i
nvestment,
GDP ,andGNPal linc
r e
asebyt hesameamount .
b.U. S.i
nvestmentinc
reases
,butGDPandGNPar eunaffe ct
edbyt hepur
chas e
.
c. U.S.i
nvestmentandGDPi ncre
asebyt hesameamount ,butU.S.GNPinc re
asesbyasmall
eramount.
d.U. S.i
nvestmentandGNPi ncreas
ebyt hesameamount ,butU.S.GDPinc re
asesbyasmall
eramount.
ANSWER: c.U. S.i
nvestmentandGDPi ncreasebyt hesameamount ,butU.S.GNPinc
reas
esbyas mall
er
amount.
TYPE:M DI FFI
CULTY:3SECTI ON:10.3

90.A t
ransf
erpaymenti s
a. apaymentformovi ngexpensesawor kerr
eceiveswhenheors heistransfer
redbyane mployertoanewl oca
tion.
b.apa ymentthatisautoma t
ical
lyt
r ansfer
redfrom yourbankaccounttopa yyourut il
it
ybill
.
c.thetermthatisusedt oindica
tethatyourpa ycheckhasbeenautoma t
icall
yde posit
edtoyourbankac count.
d.af or
m ofgovernme ntspendingtha ti
snotmadei nexc
hangeforac urrent
lypr oducedgoodors ervi
ce.
ANSWER: d.af orm ofgover
nme ntspendingthati
snotmadei ne xchangef oracurr
entlyproducedgoodor
ser
vice.
TYPE:
M DI FFI
CULTY:1SECTI ON:10.3

91.Whi chofthefollowingr epresent

sat ransf
e rpayment?
a. yout r
ansfer$1 ,
000from yourbankac counttoamut ualfund.
b.t hegovernme nts endsyourgr andfatherhisSocialSecur
itycheck.
c.t hebankt ransfer
s$10quar terl
yi nte
resttoyours avi
ngsaccount.
d.youre mploye rautoma t
ical
lytransfer
s$100e ac
hmont hfrom yourwagest
oanon-t
axabl
eme
dic
als
pendi
ng
account.
ANSWER: b.thegove rnme ntsendsyourgr andfathe
rhisSoc i
alSe
curi
tyc
hec
k.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 3

92.IftheU. S.gove rnme ntpa ysane conomi statt

heU.S.Depart
me ntofComme rce$50,
000insalaryin2003,and$30,000
inre ti
reme ntbe nefit
sin2004
a.e achpa yme ntwi llbei nclude dinGDPasgove rnmentpurchasesf
ortherespect
iveyear
s.
b.t he2003pa yme ntisinc l
ude di n2003GDPasgove r
nme ntpurchas
e s
,butthe2004payme ntisnotinclude
din
2004GDP .
c.t he2003pa yme ntisinc l
ude di n2003GDPasgove r
nme ntpurchas
e s
,andthe2004pa ymentisincl
ude din2004
GDPasgove rnme nttrans ferpayme nt s
.
d.t he2003pa yme ntisinc l
ude di n2003GDPasgove r
nme ntpurchas
e s
,andthe2004pa ymentisall
oc a
tedto
previousye ars'GDPac c
or dingtotheamountofwor kperf
orme deachyear.
ANSWER: b.t he2003pa yme ntisincl
ude
di n2003GDPasgove r
nme ntpurchas
es,butthe2004pa ymentis
notincludedi n2004GDP .
TYPE:
TFDI FFICULTY:2SECTI ON:23 .
3

93.Toencouragef
ormat
ionofsmallbusi
ness
es,thegove rnmentcouldpr ovi
des ubsi
die
s;t
hes
esubs
idi
eswoul
d
a. beinc
ludedinGDPbe c
ausetheyarepartofgove rnmentexpe ndi
tures.
b.bei nc
ludedinGDPbe c
ausetheyarepartofi nves
tmentexpe ndit
ures.
c. notbeincl
udedi
nGDPbe c
ausetheyaretrans f
erpayments.
d.notbei ncl
udedi
nGDPbe c
ausethegovernme ntr
aise
staxestopa yforthem.
ANSWER: c.notbeincludedinGDPbe causetheyaretransfe
rpa yme nt
s.
TYPE:
M DI FFICULTY:1SECTION:10.3

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  291

94.Transf
erpayment
sare
a.i ncl
udedinGDPbecaus
et heyrepre
sentincomet oi ndivi
duals.
b.noti nc
ludedi
nGDPbe causetheyarenotpa yme nt
sf orcurrentl
yproduce
dgoodsorser
vic
es.
c.i ncl
udedinGDPbecaus
et heincomewillbes pentforc onsumption.
d.noti nc
ludedi
nGDPbe causetaxeswil
lhavet ober aisedtopa yfort
hem.
ANSWER: b.notinc
ludedi nGDPbe caus et
he yar enotpayme nt
sforcur
rent
lypr
oduce
dgoodsors
ervi
ces
.
TYPE:
M DI FFICULTY:1SECTION:10.
3

95.Soc
ialSecur
itypayme nt
sar e
a.includedinGDPbe causetheyrepre
sentpayme ntforworkpe r
formedinthepast.
b.includedinGDPbe causetheyrepre
sentpotent
ialconsumption.
c.e x
cludedfrom GDPbe c
aus ethe
ydonotr epres
e ntcur
rentgovernmentpurchas
esofgoodsandservi
ces
.
d.e x
cludedfrom GDPbe c
aus ethe
yarenotpr i
vat
epe nsi
ons.
ANSWER: c.ex c
ludedf rom GDPbecausethe ydonotrepresentc
urre
ntgovernmentpurchas
esofgoodsand
servi
ces.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 3

96.Unemploymentcompensa t
ionis
a. par
tofGDPbe caus
ei trepr
e se
ntsincome .
b.notpartofGDPbe causeitisatransferpayment
.
c. par
tofGDPbe caus
et herecipie
ntsmus thaveworkedinthepas tt
oqual
if
y.
d.notpartofGDPbe causethepa yme nt
sr e
ducebusine
ssprofit
s.
ANSWER: b.notpar tofGDPbe causeiti
satrans
ferpayme nt.
TYPE:
M DI FFICULTY:1SECTION:10. 3

97.Whichoft hefol
lowingisincl
udedinU.S.GDP?
a. U.
S.e xport
sofgoodsands ervi
ces
b.SocialSe c
urit
ypa yments
c.thes aleofusedgoods
d.Noneoft heabovearecorrec
t.
ANSWER: a
.U. S.export
sofgoodsands
ervi
ces
TYPE:
M DIFFICULTY:1SECTI ON:10.3

98.Whi c
hoft hefol
lowingisinc
ludedi ntheConsumpti
oncompone
ntofGDP?
a. Soci
alSecurit
ypa yments
b.pur chasesoffor
eigngoodsands ervi
ces
c. purchasesofnewlyconst
ructedhome s
d.Al loftheabovear ec
orre
ct.
ANSWER: b.purchasesoffore
igngoodsandser
vic
es
TYPE:
M DIFFICULTY:1SECTI ON:10.3

99.Whichoft hefoll
owingi sincl
udedintheinvest
me ntcomponentofGDP?
a. purchasesofnewl yconstr
uctedhomes
b.pur chasesoffore
ignc apit
algoodssuc
hasi ndustr
iale
quipment
c.c hangesininventory
d.Al loftheabovear ecorrec
t.
ANSWER: d.Al loftheabovearecorr
ect.
TYPE:
M DIFFICULTY:2SECTI ON:10.3

100. Whi chofthefollowingisincl

udedint heinves
tmentcomponentofGDP?
a. purc
hasesofstocksandbonds
b.pur c
hasesofcapi t
alequi
pme nttha
twe remanufac
turedi
naforei
gnc ount
rybyafor
eignfir
m
c.t hees
timat
edr entalval
ueofowne r-oc
c upi
edhousing
d.Noneoft heabovear ecorrec
t.
ANSWER: b.pur chasesofcapi
talequipmentthatwer
emanuf ac
turedi
nafore
igncountrybyaf
ore
ignfir
m.
TYPE:
M DI FFI
CULTY:2SECTI ON:10. 3

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

292  Chapter 10/Measuring a Nation’s Income

101. Whi chofthes

ewoul dNOTbei ncl
udedi nthecomponent(s)list
edafterthe
m?
a. Marybuysaskateboardmanufacture
di nGe rmany—U.S.cons umptionandU. S.
imports.
b.Shell
yaddsDVDspr oducedintheUni tedStat
estoheri
nvent ory—U. S.i
nvest
ment.
c. Emil
yrecei
vesherSocialSec
urit
yc heck—U.S.governmente xpendit
ur e
s.
d.Noneoft heabovearecorre
ct.
ANSWER: c.Emi l
yrecei
veshersoc i
alse
curit
ycheck—U. S.gove
rnme ntexpendi
tur
es.
TYPE:
M DI FFICULTY:1SECTION:10. 3

102. Whi chofthesethingswouldNOTbei ncludedinthecompone ntsli

stedaftert
hem?
a. Ruthbuysamot orcycl
emadei nJapantor i
deonhe rwee kendsoff—U. S.consumptionandU.
S.i
mport
.
b.Shi r
leyownsherownhomewhi c
hhasane sti
ma t
edrentalvalue —U.S.consumpt i
on
c. Beverl
ybuysane wlyissue
ds t
ockinaU. S.corpor
ati
on—U. S.inves
tme nt.
d.Samant haproducessomear tworkbutdoe sn’
tsel
lthem allint hecurre
ntquar t
erandsoaddst
hemtoher
i
nventory—i
nve st
me nt
.
ANSWER: c.Be ver
lybuysane wlyis
s uedstoc
kinaU. S.corporat
ion—U. S.i
nvestment
.
TYPE:
M DIFFICULTY:1SECTI ON:10. 3

103. I n2001,U.S.
GDPwasabout
a. $10.
1tril
li
on.
b.$101t r
ill
ion.
c. $10.
1bill
ion.
d.$101bi l
li
on.
ANSWER: a.$10.
1tri
ll
ion.
TYPE:
M DI FFICULTY:2SECTI ON:10.
3

104. I n1998 ,GDPperper

sonint
heUni
tedSt
ate
swa
sabout
a. $104,000.
b.$63, 000.
c. $36,000.
d.$24, 000.
ANSWER: c.$36,
000
TYPE:
M DI FFICULTY:2SECTI ON:10.
3

105. I nt
heUnitedSt
ate
sin2001,cons
umpti
onr
epr
ese
nte
dappr
oxi
mat
ely
a. 40per
centofGDP.
b.50pe r
centofGDP.
c. 60per
centofGDP.
d.70pe r
centofGDP.
ANSWER: c.60percentofGDP.
TYPE:
M DI FFICULTY:2SECTION:10.
3

106. I n2001,U.S.
netexport
swe re
a. negat
iveandabout10pe rcentthesi
zeofGDP .
b.ne gat
iveandabout3pe rcentthesi
zeofGDP .
c. posi
tiveandabout3pe rc
entt hesi
zeofGDP .
d.pos i
tiveandabout10pe rc
e ntthes
izeofGDP.
ANSWER: b.ne ga
tiveandabout3pe rc
entthes
izeofGDP
.
TYPE:TFDI FFICULTY:2SECTI ON:23 .3

107. I n2001,U.S.i
nve
stme
ntwasabout
a. 4perce
ntofGDP .
b.8pe rce
ntofGDP .
c. 12percentofGDP.
d.16pe rc
e ntofGDP.
ANSWER: d.16perc
entofGDP.
TYPE:
M DIFFICULTY:2SECTI ON:10.3

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  293

108. I n2001,U.S.gove
rnmentpurchas
esofgoodsands
ervi
ceswe
reabout
a. 6perce
ntofGDP .
b.12pe rcentofGDP .
c. 18percentofGDP .
d.24pe rc
e ntofGDP .
ANSWER: c.18per
centofGDP .
TYPE:
M DIFFICULTY:2SECTI ON:10.
3

109. I finagivenyearaneconomyhasc onsumptionof$3000,

inve
stmentof$2000
,governmentpurc
hasesof$1500,
exportsof$500,
importsof$600,t
axesof$1200
,trans
ferpaymentsof$400,
andde pr
eci
ati
onof$300,t
henGDPwi ll
equal
a. $6400.
b.$7000.
c. $7600.
d.$8900.
e. $9500.
ANSWER: a. $6400.
TYPE:
M DI FFICULTY:2SECTI ON:10.3

110. In2001governmentpurchasesofgoodsands ervi

ceswe r
e
a.lar
gerthanconsumption,butsmall
e rt haninvestment.
b.lar
gerthaninves
tment,butsmalle
rt hanc onsumption.
c.small
erthanbothconsumpt i
onandi nve s
tme nt
.
d.lar
gerthanbothconsumpt i
onandi nve stme nt
.
ANSWER: b.largerthaninve
stme nt,butsmallerthancons
umpt
ion.
TYPE:
M DI FFI
CULTY:2SECTI ON:10.3

111. Ift
otals pe
ndi ngrisesf
rom oneye artothene xt,then
a.theec onomymus tbeproducingal arge
rout putofgoodsands ervi
ces
.
b.price
sa twhi chgoodsands ervicesaresoldmus tbehighe
r.
c.eit
hert heeconomymus tbepr oduc i
ngal ar
ge routputofgoodsandservi
ces
,orthepr
icesa
twhichgoodsand
servi
c esaresoldmus tbehighe r
,orboth.
d.empl oyme ntorproduc t
ivi
tymus tberi
sing.
ANSWER: c.e i
thertheeconomymus tbepr oduci
ngalarge
routputofgoodsandser
vic
es,ort
hepric
esat
whichgoodsands e
rvicesaresoldmus tbehigher
,orboth.
TYPE:
M DI FFI
CULTY:1SECTI ON:10.4

112. RealGDP
a.eval
uatescurr
entproducti
onatc ur
rentpri
c es.
b.eval
uatescurr
entproducti
onatthepr i
cesthatprevail
edi nsomes pecificyearinthepast.
c.isnotavali
dme asureoftheeconomy’sperformance,sincepric
esc hangef r
om ye artoyear.
d.isame as
ureofthevalueofgoodsonly,henc e
,ite
x cl
ude sthevalueofs ervi
c e
s .
ANSWER: b.evaluate
sc ur
rentproductionatthepricesthatprevailedins omes pec
ificye
ari
nthepas
t.
TYPE:
M DI FFI
CULTY:1SECTI ON:10.4

113. Whi choft hefoll

owings tate
me nt
saboutGDPi smos taccurat
e?
a. Nomi nalGDPval uespr oducti
ona tcur
rentpri
ces,whilerealGDPvaluesproduct
iona tconstantpr
ices.
b.Nomi nalGDPval uespr oducti
ona tc
onstantpri
ces,whilerealGDPvaluesproducti
ona tcurrentpr
ices.
c. Nomi nalGDPval uespr oducti
ona tmarketpri
ces,whilerealGDPvaluesproduct
ionatt hecostoft
her es
ource
s
usedintheproduc t
ionpr ocess
.
d.Nomi nalGDPc onsi
st e
nt l
yunde r
esti
ma t
esthevalueofpr oducti
on,whil
erealGDPc onsiste
ntlyovere
sti
ma t
es
thevalueofproduction.
ANSWER: a .Nomi nalGDPval uesproducti
ona tcurrentpri
ces
,whil
erealGDPval ue sproduct
ionat
cons
tantprices.
TYPE:
M DI FFICULTY:1SECTI ON:10. 4

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

294  Chapter 10/Measuring a Nation’s Income

114. IfrealGDPdoublesandt
heGDPde fla
tordoubl
es,
the
nnomi
nalGDPwi
ll
a.staythes ame.
b.doubl e.
c.tri
ple.
d.quadr uple.
ANSWER:d. quadr
upl
e.
TYPE:M DIFFICULTY:2SECTION:10.
4

115. Cons
ide
rthef
oll
owi
ngt
abl
efort
hec
ount
ryofOphi
r:

Year Nomi nalGDP GDPDefla

tor RealGDP
2000 $4000 100 $4000
2001 $4100 105 $3904.8
2002 $4200 110 $3818.
2

From thi
sinformati
onwec anconcl
udet ha
trealGDPwashi gherin
a. 2002thanin2001,andrealGDPi n2001washi ghe
rthanin2000.
b.2001t hanin2000,andrealGDPi n2001washi ghe
rthanin2002.
c. 2000thanin2001,andrealGDPi n2001washi ghe
rthanin2002.
d.2000t hanin2002,andrealGDPi n2001washi ghe
rthanin2000.
ANSWER: c. 2000thanin2001,andrealGDPin2001washi
ghe
rthani
n2002
.
TYPE:
M SECTI ON: 10.
4DI FFI
CULTY:3

116. Suppos eGDPc onsi

stsofwhe atandric
e.In2002 ,20bushe
lsofwhe atar
esol
da t$4perbus
hel
,and10bushel
sof
ric
earesoldat$2perbushel.Ift
hepr i
ceofwhe atwas$2pe rbushelandthepri
ceofric
ewas$1perbushe
lin2001,
thebaseyear
,nominal2002GDPi s
a. $100,r
eal2002GDPi s$50,andtheGDPde fla
toris50.
b.$50, r
eal2002GDPi s$100,andtheGDPde fla
toris200.
c. $100,r
eal2002GDPi s$50,andtheGDPde fla
toris200.
d.$40, r
eal2002GDPi s$100,andtheGDPde fla
toris50.
ANSWER: c.$100,real2002GDPi s$50,andt heGDPde fla
toris200
.
TYPE:
M DI FFICULTY:2SECTI ON:10.4

117. Supposetha tt
hecountryofSami am producesonlye ggsandham.I n2002i tproduced100unit
sofeggsa
t$3
eac
hand50uni tsofham at$4eac h.I
n2001 ,t
hebaseye ar,eggss
oldfor$1. 50pe runitandham f
or$5.
a. Nominal2002GDPi s$500,real2002GDPi s$400,andt heGDPde fla
tori s80.
b.Nomi nal2002GDPi s$500,real2002GDPi s$400a ndt heGDPde flatoris125.
c. Nominal2002GDPi s$400,real2002GDPi s$400,andt heGDPde fla
tori s100.
d.Nomi nal2002GDPi s$400,real2002GDPi s$500,andt heGDPde fla
tori s125.
ANSWER: b.Nomi nal2002GDPi s$500,
real2002GDPi s$400andt heGDPde fla
tori
s125.
TYPE:
M DI FFICULTY:2SECTI ON:10.4

Nomi
nal Re
al De
fla
tor

2001 2000 2000 100

2002 2000 2000 100

118. I nt hecountryofMai nia,GDPc onsis

tsofcranbe rriesandmapl es yrup.In2002,50unit
sofcr
anbe
rri
esar
esol
dat
$20pe runit,and100uni tsofmapl es yr
upar esolda t$10pe runit
.Ift hepriceofcranber
rie
swas$10peruni
tand
thepriceofmapl esyr
upwas$15 .
00pe runiti
n200 1 ,thebas eyear,the nnomi nal2002GDPi s
a. $2,000,real2002GDPi s$2,000,andtheGDPde flatoris100.
b.$2, 000,real2002GDPi s$2,500,andtheGDPde flatoris125.
c. $2,500,real2002GDPi s$2,000,andtheGDPde flatoris83.3.
d.Noneoft heabovear ecorrect.
ANSWER: a.$2,000,real2002GDPi s$2,000, andt heGDPde fla
toris100.
TYPE:M DI FFICULTY:2SECTI ON:10. 4

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  295

Nomi
nal Re
al De
fla
tor

2002 500 800 160

2001 800 800 100

119. Suppos etha tWisc

onsinproduc eschees
eandfis h.In2002,20unit
sofc he
eseares
olda t$5eac
h,and8unit
sof
fis
haresolda t$50each.
In2001,thebas eyear,thepriceofchees
ewas$10pe runit
,andt hepri
ceoffis
hwas$75pe
r
unit.
a. Nomi nal2002GDPi s$800,real2002GDPi s$500,andtheGDPde fla
tori
s160.
b.Nomi nal2002GDPi s$500,real2002GDPi s$800,andtheGDPde fla
tori
s160.
c. Nomi nal2002GDPi s$500,real2002GDPi s$800,andtheGDPde fla
tori
s62.
5.
d.Nomi nal2002GDPi s$800,real2002GDPi s$500,andtheGDPde fla
tori
s62.
5.
ANSWER: c.Nomi nal2002GDPi s$500, r
eal2002GDPi s$800,andtheGDPde flat
oris62
.5.
TYPE:
M DI FFICULTY:2SECTI ON:10.4

120. RealGDPi sthepr oducti

onoffinalgoodsandser
vice
sval
ueda
t
a.cur r
entyearprices.
b. c
ons t
antpri
ce s
.
c. f
utureyearpr i
ces.
d. t
her at
ioofcurrentyearpri
cestoconstantye
arpri
ces
.
ANSWER: b.c onst
antpri
ces.
TYPE:M DIFFICULTY:1SECTI ON:10.4

121. Whi chstat

eme ntrepre
s e
ntsmostcorre
c t
lytherelat
ionshipbetweennomi nalGDPandr e
alGDP?
a. NominalGDPme asuresbase-
yearproduc t
ionusingbase-yearprices
,whi lerealGDPme asure
scurrent
pr
oducti
onus i
ngcurrentpri
ces.
b.Nomi nalGDPme asurescurr
entproduc t
ionusingbas e-
yearpric
e s,
whi l
er ealGDPme asurescurr
entpr oducti
on
us
ingcurrentpric
e s
.
c. NominalGDPme asurescurr
entproduc t
ionusingc urr
entpr i
ces
, whilerealGDPme as
urescurre
ntpr oducti
on
us
ingbase-yearpric
es.
d.Nomi nalGDPme asurescurr
entproduc t
ionusingc urr
entpr i
ces
, whilerealGDPme as
uresbase-
yearpr oducti
on
us
ingbase-yearpric
es.
ANSWER: c.Nomi nalGDPme asurescurrentproductionusingc urr
entpr ice
s,whi
lerealGDPme asures
currentproducti
onusingbase-yearpri
ces.
TYPE:
M DI FFICULTY:2SECTI ON:10. 4

122. Whi chofthefoll

owi ngst
atementsaboutnomi nalGDPandr ealGDPi smostac c
ur at
e?
a. NominalGDPi sabe tt
ergaugeofe conomicwe l
l-
beingthanisrealGDP .
b.Re alGDPisabe tt
ergaugeofe conomi cwel
l-bei
ngthanisnomi nalGDP .
c. RealGDPandnomi nalGDPar ee quall
ygoodme as
uresofeconomi cwell
-being.
d.Whe t
herrealGDPornomi nalGDPi sabe t
terme as
ureofeconomi cwe l
l-
beingde pendsonwha
tsor
tofgoods
ar
epr oduc
e d.
ANSWER: b.Re alGDPi sabe tt
ergaugeofeconomicwe l
l-bei
ngt hanisnomi nalGDP.
TYPE:
M DI FFICULTY:1SECTI ON:10.4

123. Whe ne
conomist
stalkaboutgrowthint
hee c
onomy
,the
yme
asur
etha
tgr
owt
hwi
tht
he
a. abs
olut
echangeinnomi nalGDP.
b.pe r
cent
agechangeinrealGDP .
c. abs
olut
echangeinrealGDP .
d.pe r
cent
agechangeinnomi nalGDP.
ANSWER: b.pe r
centagechangei
nrealGDP.
TYPE:
M DI FFICULTY:1SECTION:10.4

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

296  Chapter 10/Measuring a Nation’s Income

124. TheGDPde flat

orist
herat
ioof
a.r ealGDPt onomi nalGDP.
b. realGDPt onomi nalGDPmul t
ipl
iedby100
.
c. nomi nalGDPt orealGDP.
d. nomi nalGDPt orealGDPmul t
ipl
iedby100
.
ANSWER: d.nominalGDPtorealGDPmult
ipl
iedby100.
TYPE:M DIFFICULTY:1SECTI ON:10.
4

125. I fnominalGDPis$10tr
il
li
onandr
ealGDPi
s$8t
ril
li
on,t
heGDPde
fla
tori
s
a. 0.8.
b.1. 25.
c. 80.
d.125.
ANSWER: d.125.
TYPE:
M DI FFICULTY:1SECTI ON:10.
4

126. I ftheGDPde fla

tori
s200andnomi
nalGDPi
s$1
0,000bi
ll
ion,t
henr
ealGDPi
s
a. $5,000bil
li
on.
b.$2, 000bil
li
on.
c. $50bill
ion.
d.Noneoft heabovearecor
rect
.
ANSWER: a.$5,000bil
li
on.
TYPE:M DI FFICULTY:1SECTI ON:10.
4

127. I fasmallcount
ryhasc
urrentnomi
nalGDPof$
20bi
ll
ionandaGDPde
fla
torof50,
wha
tisi
tsr
ealGDP?
a. $100bil
li
on
b.$40bi l
li
on
c. $10bil
li
on
d.$4bi l
li
on
ANSWER: b.$40bi
ll
ion
TYPE:
M DIFFI CULTY:1SECTION:10.4

128. I fas mallcount

ryhasc
urrentnomi
nalGDPof$
25bi
ll
ionandt
heGDPde
fla
tori
s125,
wha
tisr
ealGDP?
a. $312.5bill
ion
b.$207. 5bill
ion
c. $31.25bill
ion
d.$20bi l
li
on
ANSWER: d.$20bi
ll
ion
TYPE:
M DIFFI CULTY:1SECTI ON:10.4

N R D

2001 75 62
.5 120

2002 100 80 125

129. I facountryreportednominalGDPof100bil
li
oni n2002and75bil
li
onin2001andr
epor
tedaGDPde
fla
torof
125in2002andade flat
orof120i
n2001t
henfrom 2001to2002re
aloutput
a. andpr i
cesbothros e
.
b.r oseandpr i
cesfell
.
c.f el
landpr i
cesrose.
d.andpr i
cesbothfell.
ANSWER: a.andpr ic
esbothr
ose
.
TYPE:
M DI FFICULTY:2SECTI ON:10.4

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  297

N R D

2001 180 171

.4 105

2002 200 160 125

130. I facountryreport
ednominalGDPof200bil
li
onin2002and180bi
ll
ioni
n2001andr
epor
tedaGDPde
fla
torof
125in2002andof105i n2001
,thenfr
om 2001t
o2002re
aloutput
a. andpr ic
esbothrose.
b.r oseandpr i
cesfe
ll.
c.f el
landpr ic
esrose.
d.andpr ic
esbothfel
l.
ANSWER: c
.f el
landpri
cesr
ose.
TYPE:M DI FFICULTY:2SECTION:10.
4

N R D

2001 125 125 100

2002 115 135 85

131. I facountryrepor t
edanomi nalGDPof115bi
lli
onin2002and125bil
li
oni
n2001andr
epor
tedaGDPde
fla
torof
85in2002andade flat
orof100in2001,t
henfr
om 2001t
o2002realout
put
a. andpr i
cesbothr ose.
b.r oseandpr i
cesfell
.
c.f el
landpr i
cesros e
.
d.andpr i
cesbothf el
l.
ANSWER: b.r oseandprice
sfel
l.
TYPE:
M DI FFICULTY:2SECTI ON:10.4

N R D

2001 100 95
.2 105

2002 85 85 100

132. I facountryreport
edanomi nalGDPof85bill
ioni
n2002and100bi
ll
ioni
n2001andr
epor
tedaGDPde
fla
torof
100in2002andof105i n2001,thenfr
om 2001t
o2002realout
put
a. andpr i
cesbothrose.
b.r oseandpr i
cesfe
ll.
c.f el
landpr i
cesrose.
d.andpr i
cesbothfel
l.
ANSWER: d.andpric
e sbothf
ell
.
TYPE:
M DI FFICULTY:2SECTI ON:10.4

133. TheGDPde fla

torc anbeus edtoidentif
yt he
a.incre
aseinnomi nalGDPt hati
sduet oani ncreaseinpr i
cesrat
he rt
hananincreas
einpr oduc
tion.
b.incre
aseinrealGDPt hatisduetoani ncreaseinpr i
cesrathe
rthanani nc
reaseinproducti
on.
c.incre
aseinthec ostofli
vingfortypicalU.S.consume rs.
d.reducti
oningove r
nme ntspendingrequiredtobal ancethefeder
albudget.
ANSWER: a.i ncr
easeinnomi nalGDPt hatisduet oanincreasei
npricesra
therthananincreas
ein
production.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 4

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

298  Chapter 10/Measuring a Nation’s Income

134. Da ve
,as t
udentwhokni tss kic apswi t
ht asselsands e
llsthem ont heQuad,sell
sthes amenumbe rofcapsthi
s
yearasl
astyear
,butat20pe rc
e nthi gherpr i
ce s.
a. Hemus tbebett
erofft
hanl as tye arbecaus ehisincomei shigher.
b.Hec annotbebette
roffthanl as tyearbe c
aus ehes oldthes amenumbe rofcapsbothye ar
s.
c. Wedonotha veenoughi nforma ti
ontot ellwhe t
herhei sbe t
teroffthi
syearthanlastyear.
d.Hei sbett
erofft
hisyearonl yi ftherewasnoi nflat
ionove rthepas tye
ar.
ANSWER: c
.Wedonotha vee noughi nforma t
iontot el
lwhe therheisbett
eroffthisyeart
hanlastyear
.
TYPE:
M DI FFICULTY:1SECTI ON:10.4

135. A f a
r merproducesthesameout puti
n2004asi n2003.Hisinputpr
ice
sinc
reaseby50perce
nt,butsodoeshi
s
productprice
.Wec anconcludet hat
a.t hefarmerisbett
eroffin2004 .
b.t hefarmerwasbe tt
eroffin2004 .
c.t hefarmerisequall
ywe lloffi
n2004asi n2003.
d.wec annottel
lwhe t
herthef armerisbet
teroffi
n2004orin2003wi t
houtaddit
ionali
nfor
ma t
ion.
ANSWER: d.wec annott e
llwhe t
herthefar
me risbet
teroffi
n2004ori
n2003wi t
houtadditi
onali
nfor
mation.
TYPE:
M DI FFICULTY:2SECTI ON:10.4

136. Whi chofthefol

lowi ngisacorrectsta
teme ntaboutthegrowthofrealGDPintheU.S.economy?
a. RealGDPin2001wasmor ethantwi c
eitslevelin1970.
b.Theout putofgoodsands er
vicesgrew ona vera
geabout3pe rc
entperyearfr
om 1970to2001.
c. Conti
nuedgrowt hinrealGDPe nablesthetypicalAmericant
oe nj
oygreat
ereconomicprospe
rit
ythandi
dhi
sor
herpare
ntsandgr andparents.
d.Al loft
heabovear ecorr
e c
t.
ANSWER: d.Al loftheabovear ecorre
c t
.
TYPE:
M DI FFICULTY:1SECTI ON:10.4

137. Whi chofthefol

lowings t
ate
me ntsaboutthegrowthofrealGDPi ntheU.
S.economyi
sinc
orr
ect
?
a. RealGDPgrew ona ve
ragea bout3pe rc
entperyearfr
om 1970to2001.
b.Thegr owthinrealGDPme asuresthegrowthintheoutputofgoodsandser
vices.
c. ThegrowthofrealGDPhasbe ens t
eadyoverti
me .
d.Noneoft heaboveiscorrect
.
ANSWER: c.Thegr owthofr ealGDPhasbe enste
adyovertime.
TYPE:
M DI FFICULTY:1SECTION:10. 4

138. Recess
ionsar eass
ociate
dwi thwhic
hofthefol
lowi
ng?
a.inc
reasedbankr uptci
es
b.fal
li
ngpr ofit
s
c.fal
li
ngout put
d.Alloftheabovear ecorrec
t.
ANSWER: d.Al loftheabovear
ecor
rect
.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 4

139. GDPi susedast hebas icme asureofasoc

iet
y'se
conomi
cwe
ll-
bei
ng.
A be
tte
rme
asur
eoft
hee
conomi
cwe
ll-
bei
ngofi ndividualsins ociet
yis
a. GDPpe rpe r
son.
b.t heconsumpt ionc ompone ntofGDP .
c. gove
r nme ntexpe nditurespe rperson.
d.t hel
e velofbus i
ne ssinvest
me nt.
ANSWER: a.GDPpe rpe rson.
TYPE:
M DI FFICULTY:1SECTI ON:10. 5

140. Dur ingapr e

sidenti
alcampaign,t heincumbentarguestha
thes houl
dber eel
ecte
dbe c
auseGDPgr ew by12
per
centdur i
nghis4 -
yearte
rmi noffice.Youknow thatpopulat
iongrew by4percentove
rtheper
iod,andt ha
tthe
GDPde flatorincr
easedby6pe rcentdur ingthepast4years
.Yous houl
dc onc
ludethatre
alGDPpe rpers
on
a. grew bymor ethan12pe rc
ent.
b. grew, butbyl es
sthan12pe rcent.
c. wasunc hanged.
d. decreas e
d.
ANSWER: b.gr ew,butbyle ssthan12pe r
cent.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 5

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  299

141. Thei nfor

mationbel
ow wasr
epor
tedbyt
heWorl
dBank.Onthebasi
soft
hisi
nfor
mat
ion,whi
chl
is
tbe
low
cont
ainsthecor
rector
deri
ngofGDPperper
sonf
rom hi
ghe
stt
olowest
?

Countr
y Nomi nalGDP2000 Popul
ati
on200
J
apan $4,
800,000mi
lli
on 127mil
li
on
Swit
zerl
and $240,
000mill
ion 7.
2mill
ion
Unit
edStat
es $9,
800,000mi
lli
on 280mil
li
on

a
. Japan,Swit
zerl
and,Uni t
edSt at
es
b.J apan,Unit
edSt at
es,Switze
rland
c. Uni t
edSta
tes,Switze
rland,Japan
d.Uni t
edSta
tes,Japan,Switze
rland
ANSWER: b.Japan,Uni t
edStat
es,
Swi
tze
rland
TYPE:
M DI
FFICULTY:2SECTI ON:10.5

142. Thei nfor

mationbel
ow wasr
epor
tedbyt
heWorl
dBank.Onthebasi
soft
hisi
nfor
mat
ion,whi
chl
is
tbe
low
cont
ainsthecor
rector
deri
ngofGDPperper
sonf
rom hi
ghe
stt
olowest
?

Country Nomi nalGDP2000 Popul

ati
on2000
Kenya $10
,400mi l
li
on 30.
1mill
ion
Tanzani
a $9,
000mi l
li
on 33.
7mill
ion
Zimbabwe $7,
200mi l
li
on 12.
6mill
ion

a. Kenya
,Tanzania,Zimbabwe
b.Ke nya
,Zimbabwe ,Tanzania
c. Zi
mbabwe ,KenyaTanzani a
d.Zimbabwe ,Tanzania,Kenya
ANSWER: c.Zimbabwe ,Ke
nyaTanzani
a
TYPE:
M DI
FFICULTY:2SECTI ON:10.5

143. Manyt hingstha ts

ocietyvalues,s
uchasgoodhe alt
h,high- quali
tye duc ati
on,enjoyablerecrea
tionoppor t
uniti
es,
andde si
rablemor alat
tri
but esofthepopulat
ion,arenotme asuredaspar tofGDP .
a. The r
efore ,GDPi snotaus efulmeasureofsociety'
swe lf
are.
b.Howe ver,GDPi ss
til
laus efulmeasureofsociet
y'swe lf
arebe causepr ovidingthe s
eot heratt
ributesi
sthe
respons i
bi l
it
yofgove rnme nt.
c. Howe ver,GDPi ss
til
laus efulmeasureofsociet
y'swe lf
arebe causeitme asure
sana t
ion'sabil
itytopurchasethe
inputstha tcanbeus edt ohe l
pproducethethingst hatcontributetowe l
fare.
d.Howe ver,GDPi ss
til
lthebe stmeasureofsocie
ty’swe lf
arebe causethe seothervaluesc annotactuall
ybe
me asured.
ANSWER: c.Howe ver
,GDPi sstil
lausefulme asureofs ociet
y'swe lfarebecauseitme asuresana t
ion'
sa bi
li
ty
t
opur chaset
hei nputsthatcanbeuse dtohe l
ppr oduc ethet hingst ha
tc ontr
ibutetowe lf
are.
TYPE:
M DI FFICULTY:2SECTI ON:10. 5

144. Suppos ethattwenty-fiveyearsagoacountryhadnomi nalGDPof1,000

,aGDPde fla
torof200
,andapopul
ati
on
of100.Todayt heyhavenomi nalGDPof3 ,000,
ade fla
torof400
,andpopulat
ionof150?Wha thappene
dtother
eal
GDPpe rperson?
a.I tmor ethandoubl ed.
b.I trose
,butl es
sthandoubl ed.
c.I twasunc hanged.
d.I tf
e l
l.
ANSWER: c.I twasunc hanged.
TYPE:
M DI FFICULTY:1SECTI ON:10. 5

145. Suppos ethatove rthelasttwenty-

fiveye
arsacountr
y’snominalGDPgrewtot
hreeti
mesi
tsf
ormersi
ze.I
nthe
meanti
mepopul a
tiongr e
w 50pe r
centandpr i
cesr
ose100perc
ent.Whathappe
nedtore
alGDPperpe
rson?
a.Itmor ethandoubl ed.
b.Itrose
,butle s
st handoubl ed.
c.Itwasunc hange d.
d.Itfel
l.
ANSWER: c.I twasunc hanged.
TYPE:
M DIFFICULTY:1SECTI ON:10. 5

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

300  Chapter 10/Measuring a Nation’s Income

146. RealGDPi ntheUni t

edSt atesi
sfivetimesasgreatasitwas50ye arsago,yetGDPwe i
ghsalmos
tthesameasi
t
di
dahal fc
enturyagoandt hepopul ati
onhasl e
ssthandoubl ed,thes
ef ac
tssuggestt
hat
a.consume r
sarebeingrippe doffwithlowerqualit
ygoods .
b.wear enolongeri
ndange rofrunningoutofr aw mate
r i
als.
c.eachU.S.workeri
smor eproductive,andint
e r
nati
onaltradeislessexpensi
vetoconduc t
.
d.Ame ric
ansareactual
lyc onsumingf e
we rgoodspe rpers
ont hantheydi d50yearsago.
ANSWER: c.e achU. S.workerismor eproducti
ve,andinternati
onaltr
adeislessexpens
ivet
oconduct
.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 5

147. I nternationals t
udi esofthere l
ati
ons hi
pbe t
we enGDPpe rpersonandqual ityofli
feme asuressuc
hasl
if
e
expectanc yandl iter
ac yratesshow thatlargerGDPpe rpersonisas soci
atedwi t
h
a.l onge rlif
ee xpectanc yandal owe rpe r
centa
geoft hepopul at
iont hatisli
ter
ate.
b.l onge rlif
ee xpectanc yandahi ghe rpercent
a geoft hepopul a
tiont hatisl
ite
rate
.
c. veryne arl
yt hesamel i
feexpe ct
anc yandal owe rpe rc
entageoft hepopul at
ionthatislit
erat
e.
d.ve ryne arl
yt hesamel i
feexpe ct
anc yandahi gherpe r
centageoft hepopul a
tionthatisli
ter
ate.
ANSWER: b.l ongerlif
ee xpectancyandahi ghe rpercent
ageoft hepopul ati
ontha ti
slit
erat
e.
TYPE:
M DI FFICULTY:2SECTI ON:10. 5

148. Whi choft hefollowingsta t

eme ntsi
sac cura
te?
a.I nrichc ountrie
s,peoplet ypic
allyli
vei ntothe
irlat
eseventi
es,
whil
einpoorc ountri
es,peopletypi
call
yli
veonl
y
untiltheirfif
ti
esore ar
lys ixt
ies.
b.I nrichc ountrie
s,almostal lt
hepopul ationcanread,whilei
npoorcountri
es,abouthalft
hepopul at
ionis
il
li
te r
ate.
c. Poorc ountriestendtoha vehighe ri
nfantmor tal
it
yr a
tes
, hi
gherma
ternalmortali
ty,
andhi gherrat
esofchil
d
mal nutrit
ionthandor ichc ountries
.
d.Al loft heabovear ecorrect.
ANSWER: d.Al loftheabovear ecorrec
t.
TYPE:M DI FFICULTY:1SECTI ON:10. 5

149. I nternat
ionalGDPands ocioeconomi cdata
a. areinconclusiveaboutt herelat
ionshipbe t
we enGDPandt hee conomicwell-
beingofc i
tizens
.
b.s ugge s
tthatpoorna t
ionsactuall
ymi ghtenjoyahigherstandardoflivi
ngthandor ichna ti
ons.
c.l eavenodoubtt hatana ti
on’sGDPi sclos
elyas s
oci
atedwi thit
sc i
ti
zens’s
tandardofliving.
d.i ndicat
etha ttherearefewr ealdiffe
rencesinlivi
ngstandardsaroundt heworld,inspit
eoft helar
gedi
ffe
rencesi
n
GDPbe twee nna t
ions.
ANSWER: c.l ea
venodoubtt ha tanation’
sGDPi scloselyassoci
atedwithit
sc i
ti
zens ’s
tandar
dofli
ving.
TYPE:M DI FFICULTY:1SECTI ON:10. 5

150. Beingabl etome asurethebehavi oroftheec onomywi t

hstati
stic
ssuchasGDP
a.isusefulonlyint heaccounti
ngs e nse.
b.isallt
ha tisnece
s sar
yinor derforust obeabl etounderst
andt hemac r
oeconomy.
c.canbehe l
pfulinde vel
opingmac roeconomics ci
ence
,butisnotus e
fulforpoli
cymaki
ng.
d.isac r
ucialste
pt owardde vel
opi ngt hesci
enc eofmacroec
onomi cs.
ANSWER: d.i sac r
uc i
alste
pt owardde velopi
ngthescie
nceofmac roeconomic
s.
TYPE:
M DI FFI
CULTY:1SECTI ON:10. 5

Tr
ue/
Fal
se

1. Macroe
conomi
cst
ati
sti
csi
ncl
udet
hei
nfla
tionr
ate
,theune
mpl
oyme
ntr
ate
,GDP
,andr
etai
lsal
es.
ANSWER:T
TYPE:TF DI
FFICULTY:1SECTION:23.
0

2. Thebas i
ctool
sofsupplyandde
mandanal
ysi
sar
easc
ent
ralt
omac
roe
conomi
canal
ysi
sast
heyar
eto
microe
c onomicanal
ysi
s.
ANSWER:T
TYPE:TF DIFFICULTY:1SECTI ON:23.0

3. I
ncomeex
cee
dspr
oduct
ion.
ANSWER:F
TYPE:TF DI
FFI
CULTY:1SECTI
ON:23.
1

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  301

4. GDPma ybecomput
edase i
the
rthepr
oduc
tionof
,ort
hei
ncomege
ner
ate
dby
,theval
ueoffinalgoodsands
ervi
ces
produc
edwi t
hinaneconomy
ANSWER:T
TYPE:TF DIFFI
CULTY:1SECTI ON:23.1

5. U.S.GDPi
nclude
ses
timat
esoft
hingss
uchasunpai
dhous
ewor
kandc
armai
nte
nanc
e.
ANSWER:F
TYPE:TF DIFFI
CULTY:1SECTION:23.2

6. U.S.GDPex
clude
sthepr
oduc
tionofi
ll
egalgoods
.
ANSWER:T
TYPE:TF DIFFI
CULTY:1SECTION:23.2

7. WhenanAmeri
candoc
torope
nsapr
act
icei
nBe
rmuda
,hi
spr
oduc
tiont
her
eispar
tofU.
S.GDP
.
ANSWER:F
TYPE:TF DI
FFI
CULTY:1SECTION:23 .
2

8. Thegove r
nmentc
omput
esme
asure
sofi
ncomeot
hert
hanGDP
,butt
heyal
mos
tal
waysal
lte
llt
hes
ames
tor
yabout
theeconomy.
ANSWER:T
TYPE:TF DIFFICULTY:1SECTI
ON:23.
2

9. Expendi
tur
esbyhous
ehol
dsoneduc
ati
ons
ervi
cesar
einc
lude
dint
hec
ons
umpt
ionc
ompone
ntofGDP
.
ANSWER:T
TYPE:TF DIFFI
CULTY:1SECTION:23.
3

10.New homecons
truc
tioni
sinc
ludedi
nthec
ons
umpt
ionc
ompone
ntofGDP
.
ANSWER:F
TYPE:TF DI
FFICULTY:2SECTI ON:23.3

11.Thegovernmentc
omponentofGDPi
ncl
ude
ssal
ari
espai
dtoAr
myge
ner
alsbutnotSoc
ialSe
cur
itybe
nefit
stot
he
el
derly
.
ANSWER:T
TYPE:TF DIFFICULTY:1SECTION:23.3

12.I
fsomeoneint
heUnit
edState
sbuysasurf
boar
dproduce
dinAustral
ia,
thatpur
chas
eisi
ncl
ude
dinbot
hthe
c
onsumpti
oncomponentofU.S.GDPandthei
mportc
omponentofU.S.GDP.
ANSWER:T
TYPE:TF DI
FFICULTY:2SECTION:23 .
3

13.Changesi
ninve
ntor
yar
einc
lude
dint
hei
nve
stme
ntc
ompone
ntofGDP
.
ANSWER:T
TYPE:TF DIFFI
CULTY:2SECTION:23.
3

14.Ani nc
reasei
nnominalU.
S.GDPne
ces
sar
il
yimpl
iest
hatt
heUni
tedSt
ate
sispr
oduc
ingal
arge
rout
putofgoodsand
ser
vices.
ANSWER:F
TYPE:TF DIFFICULTY:2SECTION:23.
4

15.I
fnomi
nalGDPi
s10,
000andr
ealGDPi
s8,
000t
heGDPde
fla
tori
s125.
ANSWER:T
TYPE:TF DI
FFI
CULTY:2SECTI
ON:23 .
4

16.I
n2001thel
evelofU.
S.r
ealGDPwasmor
ethandoubl
eit
s1970l
eve
l.
ANSWER:T
TYPE:TF DI
FFICULTY:2SECTION:23.4

17.I
fGDPi shi
gheri
nonec ount
ryt
hananot
her
,wec
anbepr
ett
ysur
etha
tthes
tandar
dofl
ivi
ngi
shi
ghe
rint
he
c
ountr
ywi t
hthehighe
rGDP .
ANSWER:F
TYPE:TF DI
FFICULTY:2SECTI ON:23.
4

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

302  Chapter 10/Measuring a Nation’s Income

18.GDPdoesnotmakeadj
ust
ment
sfort
hingsl
ikel
eis
uret
imeande
nvi
ronme
ntalqual
it
y.
ANSWER:T
TYPE:TF DI
FFI
CULTY:2SECTI ON:23.
4

19.EventhoughGDPisnott
heonl
ythingthataffe
ctst
hequal
it
yofli
fe,
itisause
fulmeasur
ebecaus
eitmeas
uresa
nat
ion’sabi
li
tyt
opur
chaset
hei
nputsthatcanbeus edt
oproduc
ethingsli
kegoodheal
thandquali
tye
ducat
ion.
ANSWER:TTYPE:TF DIFFI
CULTY:2SECTI ON:23.4

SHORTANSWER

1. GDPi sde fine

dast hemar ke tvalueofallfinalgoodsands er
vic
e sproduc edwit
hinacount r
yinagive npe r
iodof
ti
me. I
ns piteofthisde finition,s omeproduc ti
oni sle
ftoutofGDP .Expl ai
nwhys omefinalgoodsands e
r vi
cesare
notincl
ude d.
ANSWER: GDPe x
c l
ude ss omepr oduct
sbe causetheyaresodiffic
ulttome as
ure.Thes
epr oductsi
ncludes er
vic
e s
perf
orme dbyi ndividual sf ort hems e
lve
sandt hei
rfamili
es,andmos tgoodstha
tareproducedandc onsume dat
homeand, there
fore,ne ve re nterthemarke t
place.Inaddit
ion,i
llegalproduct
sarenotincludedinGDPe venifthey
canbeme asuredbe caus e,bys oc ie
ty’
sde finit
ion,theyarebads,notgoods .
TYPE:SDI FFICULTY:2SECTI ON:10. 2

2. Explainwhyt heval ueofi nte

rme diategoodspr oducedands olddur i
ngt heye ararenotinc l
udeds e
paratel
yaspar
t
ofGDP ,butinter
me di
ategoodspr oduce dandnots oldareincludedsepar at
elyaspar tofGDP .
ANSWER: I
nterme dia
tegoodspr oduc e
dands olddur i
ngtheye ararenotinclude ds e
paratel
yaspar tofGDP
becausethevalueoft hos egoodswi llbei ncludedint heval
ueoft hefinalgoodspr oducedfrom them.Ifthe
int
erme di
a t
egoodi spr oduc edbutnots ol ddur i
ngt heyear
,itsvalueisinclude dasinventoryinvest
me ntfort
heye
ar
inwhi chitwaspr oduce d.Ifi
nve nt
oryi nve s
tme ntwasnotinc l
ude daspar tofGDP ,tr
uepr oducti
onwoul dbe
unde r
esti
ma te
df ortheye arthei nt
erme diategoodwe ntint
oinve ntor
y,andove re
stimatedfortheyearthe
int
erme di
a t
egoodi sus edors old.
TYPE:SDI FFICULTY:2SECTI ON:10. 2

3. Sinceitiscountedasi nvest
me nt
,whydoe s
n'tthepur c
haseofeart
hmovi ngequipmentfrom Chi
nabyaU. S.
corporati
oni nc
reaseU. S.GDP?
ANSWER: Thepur chaseofforei
gne qui
pmenti scountedasi
nvest
me nt,butGDPme as
ur e
sonlythevalueof
produc t
ionwi t
hint hegeographicborde
rsoftheUni te
dStates
.Inordertoavoidincl
udingthevalueoftheimpor
ted
equipme nt,i
mpor tsaresubtract
edfrom GDP.He nce,t
hevalueoftheequipme nti
ninvestmentiscanc
eledby
subtract
ingitsvalueasani mpor t
.
TYPE:SDI FFICULTY:2SECTI ON:10.3

4. Identif
yt heimme di
a t
ee ffe
c tofeachofthef ol
lowingcircums t
ancesonU.S.GDPandi tscomponents
.
a.J
ame srecei
vesaSoc i
alSe curitycheck.
b.JohnbuysanI t
ali
ans por tscar.
c.He nrybuysdome s t
icall
ypr oduc edtoolsforhisconst
ructioncompany.
ANSWER:
a.Si
ncethisisat ransferpayme nt,t
hereisnoc hangetoGDPort oanyofi t
scomponents.
b.Consumpt i
onandi mportswi l
lris
eandc anceleachotheroutsothatt
hereisnochangeinU.
S.GDP
.
c.Thisi
ncreasesthei nvestmentc omponentofGDPands oincr
easesGDP
TYPE:SDI FFI CULTY:2SECTI ON:10. 3

5. Between1929and1933NNPme asuredincurr
entprice
sfellfr
om $96bill
iont o$48bi
ll
ion.Ove rt
hesamepe ri
od,the
re
levantpri
ceinde
xfellfr
om 100to75 .
a.Wha twasthepe rc
entagedecli
neinnominalNNPf rom 1929to1933?
b.Wha twasthepe rc
entagedecli
neinrealNNPf rom 1929to1933?Show yourwor k.
ANSWER:
a.NNPme asuredincurrentpri
cesi
snomi nalNNP .Nomi nalNNPf el
lfr
om $96bill
ionto$48bil
li
on,a
decl
ineof50perc
ent.
b.RealNNPi snomi nalNNPdi vide
dbyt hepr i
ceindexandmul t
ipli
edby100. Re
alNNPi n1929was($96
b/100)x100=$96b.Re alNNPi n1933was( $48b/75)x100=$64b. RealNNPf el
lfrom $96bil
li
onto$64bill
ion,
adecli
neof33percent.
TYPE:SDI FFI
CULTY:2SECTI ON:10. 4

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)

 lOMoARcPSD|7167470

Chapter 10/Measuring a Nation’s Income  303

6. Youfindt hatyourpa yche ckfortheyearishigherthi

syearthanl as
t. Doest
ha tme ant
hatyourr ealincomehas
incre
as e
d?Expl aincar efully.
ANSWER: Realincomei snomi nalincomeadj ust
edforgeneralincr
e asei
npr i
c es
.Ifmypa ychec
ki shighe rt
hisyear
thanlast,mynomi nalinc omehasi ncreas
e d.Whe t
hermyr e
ali ncomehasi ncreasedornotde pendsonwha thas
happe nedsincelastye art othelevelofpri
c e
softhingsIbuywi thmyi nc
ome .Iftheperc
entageincreaseinpr i
cesis
lesst
hant hepe rcentagei ncreaseinmynomi nali
ncome,thenmyr ealinc
omehasi ncr
eased.Othe r
wi s
e ,myreal
incomehasnoti ncreased.
TYPE:SDI FFICULTY:2SECTI ON:10. 4

7. U.S.realGDPi ss ubstanti
all
yhi ghertodayt hani twas60ye arsago. Wha tdoe sthistellus ,
andwha tdoe sitnottel
l
us,aboutt hewe l
l-bei
ngofU. S.r e
sidents?
ANSWER: Si
nc ethisisinrealterms,ittel
lsust ha ttheU. S.isa bl
et omakeal otmor estuffthani nthepas t
.Someof
theinc r
eas einrealGDPi sprobablyduet oani ncr e
as einpopul at
ion,s owec oulds a ymor eifwekne w wha thad
happe nedt or e
alGDPpe rperson.
Suppos ingthattherewasal soani ncr
eas einr ealGDPpe rpe rson,wec ans ayt hatthestandardofl ivi
nghas
ris
en.Ma teri
althingsar eanimpor tantpar tofwe ll-
be ing.Ha vings uffic
ientamount soft hi
ngss uchasf ood,shelt
er,
andc lothingaref undame ntaltowe ll
-being. Othert hingss uchass ecur it
y ,asafee nvironme nt,accesstosafewa te
r,
accesstome dicalcare,j
usti
ce,andf reedom al s
oma tter.Howe vermanyoft he s
et hingsar emor ee as
ilyobtainedby
beinga bletopr oduc emor eusingf e
we rresour ce
s .Count rieswi t
hhi ghe rr ealGDPpe rpe rs
ont endtoha velonger
li
fespans ,lessdiscri
mi nati
ontowar dswome n,lessc hil
dl abor,andahi ghe rrateofl ite
rac y
.
TYPE:SDI FFI CULTY:2SECTI ON:10. 5

Downloaded by Phuong Vu Hong (31201028886@student.isb.edu.vn)