Question 1

If you accept a job in Mexico after college, your income will be part of GDP in:
A) Mexico only.
B) the United States only.
C) both Mexico and the United States.
D) neither Mexico nor the United States.

Accepted Answer

GDP refers to the total value of goods and services produced within a particular country's boundaries. Therefore, if you accept a job in Mexico, your income will be part of Mexico's GDP. It will not be part of the United States GDP.

Question 2

Which of the following would be included in U.S. GNP?
A) The purchase of stocks and bonds by a retiree living in Florida.
B) Wages earned by a Canadian teaching at an American university.
C) Cars produced in a Honda (a Japanese Company) plant in Marysville, Ohio.
D) Cars produced in a Ford plant located in Canada.

Accepted Answer

The answer of Which of the following would be included...

Question 3

This summer you have a paid internship at the South Korean carmaker Kia Motors at their offices located in Canada. For which nation, or nations, are you contributing to GDP? Assume you are a U.S. citizen.
A) United States
B) Canada
C) South Korea
D) Canada, South Korea, and the United States.

Accepted Answer

You are physically working in Canada, so you are contributing to their GDP. While Kia Motors is a South Korean company, since you are working at their Canadian offices, your contribution would not directly affect South Korea's GDP. As a U.S. citizen, you are not technically contributing to the GDP of the United States during your internship abroad. Therefore, the best choice is B.

Question 4

What is the term for the value of a nation's entire stock of assets?
A) gross domestic product
B) gross national product
C) national wealth
D) real gross domestic product

Accepted Answer

The term for the value of a nation's entire stock of assets is national wealth. Gross domestic product (GDP) and gross national product (GNP) are measures of a nation's economic output, while real GDP adjusts for inflation. None of these directly measure a nation's total stock of assets.

Question 5

GDP in the United States was $14,119 billion in 2009, and grew to $14,660.4 billion in 2010. This represents an annual growth rate of:
A) $541.4 billion.
B) 1.04%.
C) 3.7%.
D) 3.8%.

Accepted Answer

To calculate the annual growth rate, we use the formula: ((ending value / beginning value)^(1/number of years)) - 1

Plugging in the values, we get: ((14,660.4 / 14,119)^(1/1)) - 1 = 3.8%

Therefore, the correct answer is D.

Question 6

If you accept a job in Mexico after college, your income will be part of GNP in:
A) Mexico only.
B) the United States only.
C) both Mexico and the United States.
D) neither Mexico nor the United States.

Accepted Answer

GNP (Gross National Product) measures the economic output generated by the nationals of a country, regardless of where they are located. So, if you are a U.S. citizen working in Mexico, your income contributes to the U.S. GNP, not Mexico's.

Question 7

The growth rate of GDP tells how rapidly the country's level of _____ is rising or falling over time.
A) spending
B) trade activity
C) investment
D) production

Accepted Answer

GDP (Gross Domestic Product) is a measure of a country's total economic output. The growth rate of GDP indicates how quickly the economy is expanding or contracting, which is primarily a reflection of changes in the level of production of goods and services within the country. Therefore, option D is the correct answer.

Question 8

Gross domestic product (GDP) differs from gross national product (GNP) in that:
A) GNP measures the production of a country's permanent residents and property wherever in the world they are located.
B) GNP measures the production of both permanent residents and foreign workers within a country's borders.
C) GNP measures the production of a country's permanent residents and property within a country's borders.
D) GNP measures only the production of foreign workers within a country's borders.

Accepted Answer

GDP measures the production of goods and services within a country's borders, regardless of who produces them, while GNP measures the production of a country's permanent residents and property wherever in the world they are located. Therefore, A is the correct choice as it accurately describes the difference between GDP and GNP.

Question 9

In general, during any given year:
A) GDP in the United States will exceed wealth in the United States.
B) wealth in the United States will exceed GDP in the United States.
C) U.S. wealth and U.S. GDP will be approximately equal.
D) U.S. wealth and U.S. GDP will be unrelated.

Accepted Answer

Wealth in the United States typically exceeds GDP because wealth includes the accumulation of all assets owned by individuals, businesses, and the government over time, whereas GDP measures the value of all goods and services produced within a country in a specific year. Wealth is a stock variable, reflecting the accumulation of assets, while GDP is a flow variable, indicating economic activity over a period.

Question 10

GDP is calculated by the:
A) Council of Economic Advisors.
B) Federal Reserve Board.
C) Bureau of Economic Analysis.
D) U.S. Treasury.

Accepted Answer

GDP is calculated by the Bureau of Economic Analysis, which is a part of the U.S. Department of Commerce. The Council of Economic Advisors, Federal Reserve Board, and U.S. Treasury are all involved in economic policy-making but do not directly calculate GDP.

Question 11

A country's GDP (in billions) was $5,690 in 2010 and $5,899 in 2011. What is the growth rate of GDP?
A) 1.03%
B) 3.54%
C) 3.67%
D) 9.64%

Accepted Answer

The growth rate can be calculated using the formula: 
((GDP in 2011 - GDP in 2010) / GDP in 2010) * 100%
Substituting the values, we get: 
((5899 - 5690) / 5690) * 100% = 3.67%
Therefore, the answer is choice C, 3.67%.

Question 12

Which of the following would be included in U.S. GDP?
A) The purchase of stocks and bonds by a retiree living in Florida.
B) Wages earned by an American working on an oil rig in Mexico.
C) Cars produced in a Honda (a Japanese Company) plant in Marysville, Ohio.
D) Cars produced in a GM plant located in Canada.

Accepted Answer

Cars produced in a Honda plant in Marysville, Ohio would be included in U.S. GDP because they are produced within the geographic boundaries of the United States.

Answer: B
 Wages earned by an American working on an oil rig in Mexico would also be included in U.S. GDP because they are earned by a U.S. citizen, regardless of their physical location.

Therefore, the correct choices are C and B.

Question 13

You sell your old bedroom set to your roommate for $1,800 and buy new custom-built furniture for $6,000. How much is added to GDP?
A) $1,800
B) $4,200
C) $6,000
D) $7,800

Accepted Answer

The sale of the old bedroom set is not added to GDP because it is a second-hand transaction. Only the purchase of new custom-built furniture, valued at $6,000, is added to GDP as it reflects current economic activity.

Question 14

A car produced by the Japanese company Honda in a plant located in Ohio would be included in:
A) U.S. GDP, but not U.S. GNP.
B) U.S. GNP, but not U.S. GDP.
C) both U.S. GDP and U.S. GNP.
D) neither U.S. GDP nor U.S. GNP.

Accepted Answer

The car produced by Honda in Ohio would be included in the calculation of U.S. GDP because it was produced within the geographic borders of the United States. However, it would not be included in the calculation of U.S. GNP because Honda is a Japanese company, so the profits from its U.S. operations would be counted in Japan's GNP, not in the United States' GNP.

Question 15

How often is GDP reported for the U.S. economy?
A) weekly
B) monthly
C) quarterly
D) annually

Accepted Answer

GDP is reported quarterly for the U.S. economy.

Question 16

Tim buys a house from Betty in 2011 for $200,000. Betty receives $185,000 and $15,000 goes to Mary, the real-estate agent. Betty originally purchased the house in 2007 for $240,000. What value is added to GDP in 2011 for this transaction?
A) -$40,000
B) $15,000
C) $185,000
D) $200,000

Accepted Answer

The value added to GDP in 2011 for this transaction is the real estate agent's commission of $15,000. The sale of used goods (the house, in this case) does not add to GDP, but the services (real estate services) provided in the transaction do.

Question 17

A country has a 2008 growth rate of 4.2% and a 2007 GDP of $8,222 (in billions). What was the GDP in 2008?
A) $7,876
B) $8,355
C) $8,567
D) $8,635

Accepted Answer

To find the GDP in 2008, multiply the 2007 GDP by the growth rate: $8,222 * 1.042 = $8,567.324, which rounds to $8,567.

Question 18

A car produced by the American company GM in a plant located in Canada would be included in:
A) U.S. GDP, but not U.S. GNP.
B) U.S. GNP, but not U.S. GDP.
C) both U.S. GDP and U.S. GNP.
D) neither U.S. GDP nor U.S. GNP.

Accepted Answer

Gross National Product (GNP) measures the value of goods and services produced by the residents of a country, regardless of where they are located. Since the car is produced by an American company (GM), it would be included in the U.S. GNP. Gross Domestic Product (GDP), on the other hand, measures the value of goods and services produced within a country's borders, regardless of who produces them. Since the car is produced in Canada, it would not be included in the U.S. GDP.

Question 19

GDP tells us:
A) how much the nation produced in a year.
B) how much wealth the nation has accumulated in its entire history.
C) the value of the nation's entire stock of assets, excluding financial assets.
D) the value of the nation's entire stock of assets, excluding natural resources.

Accepted Answer

GDP stands for Gross Domestic Product, which measures the total value of goods and services produced within a country's borders in a specific time period, usually a year. Therefore, option A is correct as it correctly defines what GDP tells us. B, C, and D are incorrect as they do not accurately describe the concept of GDP.

Question 20

If nominal GDP in 2007 is $5.43 (in trillions) and in 2008 the level of nominal GDP rises to $6.11 (in trillions), what is the growth rate of nominal GDP?
A) -11.1%
B) -12.5%
C) 11.1%
D) 12.5%

Accepted Answer

To calculate the growth rate of nominal GDP, we use the formula: ((new GDP - old GDP) / old GDP) x 100.
Plugging in the numbers, we get ((6.11 - 5.43) / 5.43) x 100 = 12.5%. Therefore, the growth rate of nominal GDP is 12.5% between 2007 and 2008. 
The correct answer choice is D.

Quiz 6: GDP and the Measurement of Progress

If you accept a job in Mexico after college, your income will be part of GDP in:

Which of the following would be included in U.S. GNP?

This summer you have a paid internship at the South Korean carmaker Kia Motors at their offices located in Canada. For which nation, or nations, are you contributing to GDP? Assume you are a U.S. citizen.

What is the term for the value of a nation's entire stock of assets?

GDP in the United States was $14,119 billion in 2009, and grew to $14,660.4 billion in 2010. This represents an annual growth rate of:

If you accept a job in Mexico after college, your income will be part of GNP in:

The growth rate of GDP tells how rapidly the country's level of _____ is rising or falling over time.

Gross domestic product (GDP) differs from gross national product (GNP) in that:

In general, during any given year:

GDP is calculated by the:

A country's GDP (in billions) was $5,690 in 2010 and $5,899 in 2011. What is the growth rate of GDP?

Which of the following would be included in U.S. GDP?

You sell your old bedroom set to your roommate for $1,800 and buy new custom-built furniture for $6,000. How much is added to GDP?

A car produced by the Japanese company Honda in a plant located in Ohio would be included in:

How often is GDP reported for the U.S. economy?

Tim buys a house from Betty in 2011 for $200,000. Betty receives $185,000 and $15,000 goes to Mary, the real-estate agent. Betty originally purchased the house in 2007 for $240,000. What value is added to GDP in 2011 for this transaction?

A country has a 2008 growth rate of 4.2% and a 2007 GDP of $8,222 (in billions) . What was the GDP in 2008?

A car produced by the American company GM in a plant located in Canada would be included in:

GDP tells us:

If nominal GDP in 2007 is $5.43 (in trillions) and in 2008 the level of nominal GDP rises to $6.11 (in trillions) , what is the growth rate of nominal GDP?