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Measuring a Nation’s Income 5711
88. In the economy of Talikastan in 2015, consumption was $3000, exports were $400, GDP was
$5000, imports were $500, and investment was $1400. What were Talikastan’s government
purchases in 2015?
a. $60
b. $500
c. $700
d. $1500
89. In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was
$7500, imports were $200, and investment was $1000. What were Talikastan’s government
purchases in 2015?
a. $1200
b. $1900
c. $2500
d. $4500
5712 Measuring a Nation’s Income
90. In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475,
government purchases were $100, imports were $75, and investment was $100. What were
Talikastan’s net exports in 2015?
a. -$75
b. -$225
c. $225
d. $75
91. In the economy of Talikastan in 2015, consumption was $800, GDP was $2000, government
purchases were $400, and investment was $600. What were Talikastan’s net exports in 2015?
a. -$200
b. $200
c. $1800
d. Net exports cannot be calculated from the information given.
Measuring a Nation’s Income 5713
92. In the economy of Talikastan in 2015, consumption was $1000, GDP was $1950, government
purchases were $500, and investment was $700. What were Talikastan’s net exports in 2015?
a. -$250
b. $250
c. $2200
d. Net exports cannot be calculated from the information given.
93. In the economy of Talikastan in 2015, consumption was $5300, GDP was $8800, government
purchases were $1800, imports were $600, and investment was $2000. What were Talikastan’s
exports in 2015?
a. -$900
b. -$600
c. $200
d. $300
5714 Measuring a Nation’s Income
94. In the economy of Talikastan in 2015, consumption was $3000, GDP was $5500, government
purchases were $1000, imports were $1000, and investment was $1000. What were Talikastan’s
exports in 2015?
a.-$500
b. $500
c. $1500
d. $-1500
95. In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was
$6300, government purchases were $1300, and investment was $1500. What were Talikastan’s
imports in 2015?
a. $500
b. -$700
c. $700
d. $500
Measuring a Nation’s Income 5715
96. In the economy of Talikastan in 2015, consumption was $600, exports were $300, GDP was
$1300, government purchases were $250, and investment was $300. What were Talikastan’s
imports in 2015?
a. -$150
b. -$200
c. $200
d. $150
97. In the economy of Talikastan in 2015, consumption was two-thirds of GDP, government
purchases were $1000 more than investment, investment was one-ninth of GDP, and the value of
exports exceeded the value of imports by $500. What was Talikastan’s GDP in 2015?
a. $1688
b. $9000
c. $13,500
d. $15,000
5716 Measuring a Nation’s Income
98. In the economy of Talikastan in 2015, consumption was 75% of GDP, government purchases
were $200, imports were $50 and 125% of the value of exports, investment was one-sixth of the
value of consumption. What was Talikastan’s GDP in 2015?
a. $218
b. $2500
c. $1520
d. $2100
Table 23-2
The table below contains data for country A for the year 2010.
Household purchases of durable goods
$1293
Household purchases of nondurable goods
$1717
Household purchases of services
$301
Household purchases of new housing
$704
Purchases of capital equipment
$310
Inventory changes
$374
Purchases of new structures
$611
Depreciation
$117
Salaries of government workers
$1422
Government expenditures on public works
$553
Transfer payments
$777
Foreign purchases of domestically produced goods
$88
Domestic purchases of foreign goods
$120
Measuring a Nation’s Income 5717
99. Refer to Table 23-2. What was country A’s GDP in 2010?
a. $6359
b. $7136
c. $7253
d. $8147
100. Refer to Table 23-2. What was country A’s consumption in 2010?
a. $2018
b. $3010
c. $3311
d. $4015
101. Refer to Table 23-2. What was country A’s investment in 2010?
a. $1178
b. $1295
c. $1882
d. $1999
5718 Measuring a Nation’s Income
102. Refer to Table 23-2. What were country A’s government purchases in 2010?
a. $553
b. $1198
c. $1975
d. $2752
103. Refer to Table 23-2. What were country A’s exports in 2010?
a. -$32
b. $32
c. $88
d. $120
104. Refer to Table 23-2. What were country A’s imports in 2010?
a. -$32
b. $32
c. $88
d. $120
Measuring a Nation’s Income 5719
105. Refer to Table 23-2. What were country A’s net exports in 2010?
a. -$32
b. $32
c. $88
d. $120
Table 23-3
The table below contains data for the country of Crete for the year 2010.
Total income
$5731
Household purchases of durable goods
$1108
Household purchases of nondurable goods
$702
Household purchases of non-education services
$203
Household purchases of education services
$302
Household purchases of new housing
$816
Purchases of capital equipment
$333
Inventory changes
$75
Purchases of new structures
$267
Depreciation
$401
Local government spending on goods and services
$236
State government spending on goods and services
$419
Federal government spending on goods and services
$1182
Transfer payments
$707
Foreign purchases of domestically produced goods
$217
Domestic purchases of foreign goods
$129
5720 Measuring a Nation’s Income
106. Refer to Table 23-3. What was Crete’s GDP in 2010?
a. $4623
b. $5731
c. $6037
d. $6839
107. Refer to Table 23-3. What was Crete’s consumption in 2010?
a. $1810
b. $2013
c. $2315
d. $3131
108. Refer to Table 23-3. What was Crete’s investment in 2010?
a. $675
b. $1090
c. $1491
d. $1793
Measuring a Nation’s Income 5721
109. Refer to Table 23-3. What were Crete’s government purchases in 2010?
a. $1130
b. $1601
c. $1837
d. $2544
110. Refer to Table 23-3. What were Crete’s net exports in 2010?
a. -$217
b. -$88
c. $88
d. $217
5722 Measuring a Nation’s Income
111. In 2012, U.S. GDP was almost
a. $16 trillion.
b. $12 trillion.
c. $15 trillion.
d. $14 trillion.
112. In 2012, GDP per person in the United States was almost
a. $14,000.
b. $36,000.
c. $46,000
d. $50,000
113. In the United States in 2012, consumption represented approximately
a. 60 percent of GDP.
b. 70 percent of GDP.
c. 80 percent of GDP.
d. 90 percent of GDP.
114. In the United States in 2012, purchases of capital equipment, inventories, and structures
represented approximately
a. 3 percent of GDP.
b. 7 percent of GDP.
c. 13 percent of GDP.
d. 15 percent of GDP.
5724 Measuring a Nation’s Income
115. In the United States in 2012, government purchases of goods and services were
a. larger than consumption, but smaller than investment.
b. larger than investment, but smaller than consumption.
c. smaller than both consumption and investment.
d. larger than both consumption and investment.
116. In 2012, U.S. net exports were
a. positive and about 3.5 percent the size of GDP.
b. positive and about 6 percent the size of GDP.
c. negative and about 3.5 percent the size of GDP.
d. negative and about 6 percent the size of GDP.
Measuring a Nation’s Income 5725
Multiple Choice – Section 04: Real versus nominal GDP
1. If total spending rises from one year to the next, then
a. the economy must be producing a larger output of goods and services.
b. goods and services must be selling at higher prices.
c. either the economy must be producing a larger output of goods and services, or goods and
services must be selling at higher prices, or both.
d. employment or productivity must be rising.
2. If total spending rises from one year to the next, then which of the following could not be true?
a. the economy is producing a smaller output of goods and services, and goods and services are
selling at higher prices.
b. the economy is producing a larger output of goods and services, and goods and services are
selling at lower prices.
c. the economy is producing a larger output of goods and services, and goods and services are
selling at higher prices.
d. the economy is producing a smaller output of goods and services, and goods and services are
selling at lower prices.
5726 Measuring a Nation’s Income
3. 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?
a. both real GDP and nominal GDP.
b. real GDP but not nominal GDP.
c. nominal GDP but not real GDP.
d. neither nominal GDP nor real GDP.
4. When studying changes in the economy over time, economists want a measure of the total quantity
of goods and services the economy is producing that is not affected by changes in the prices of
those goods and services. In other words, economists want to study
a. nominal GDP.
b. real GDP.
c. the GDP deflator.
d. GNP.
Measuring a Nation’s Income 5727
5. Nominal GDP will definitely increase when
a. prices increase and output increases.
b. prices increase and output decreases.
c. prices decrease and output increases.
d. All of the above are correct.
6. Changes in nominal GDP reflect
a. only changes in prices.
b. only changes in the amounts being produced.
c. both changes in prices and changes in the amounts being produced.
d. neither changes in prices nor changes in the amounts being produced.
5728 Measuring a Nation’s Income
7. Real GDP will increase
a. only when prices increase.
b. only when output increases.
c. when prices increase or output increases.
d. All of the above are correct.
8. Changes in real GDP reflect
a. only changes in prices.
b. only changes in the amounts being produced.
c. both changes in prices and changes in the amounts being produced.
d. neither changes in prices nor changes in the amounts being produced.
Measuring a Nation’s Income 5729
9. Real GDP is the yearly production of final goods and services valued at
a. current prices.
b. constant prices.
c. expected future prices.
d. the ratio of current prices to constant prices.
10. Which of the following statements about GDP is correct?
a. Nominal GDP values production at current prices, whereas real GDP values production at
constant prices.
b. Nominal GDP values production at constant prices, whereas real GDP values production at
current prices.
c. Nominal GDP values production at market prices, whereas real GDP values production at the
cost of the resources used in the production process.
d. Nominal GDP values production at the cost of the resources used in the production process,
whereas real GDP values production at market prices.
5730 Measuring a Nation’s Income
11. Which of the following is always measured in prices from a base-year?
a. both nominal and real GDP.
b. nominal but not real GDP.
c. real but not nominal GDP.
d. neither nominal nor real GDP.
12. Which of the following always uses prices and quantities from the same period?
a. both nominal and real GDP.
b. nominal GDP but not real GDP.
c. real GDP but not nominal GDP.
d. neither nominal or real GDP.
13. Which of the following is correct?
a. Nominal GDP is always less than real GDP.
b. Nominal GDP is always greater than real GDP.
c. Nominal GDP equals real GDP in the base year.
d. Nominal GDP equals real GDP in all years but the base year.
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