Question 1

Much of macroeconomics attempts to explain

Accepted Answer

Macroeconomics focuses on the overall performance of the economy, including long-run growth and short-run fluctuations in real GDP. Changes in the price of oil and gasoline, growth rate of state government spending, and prices and quantities of individual goods and services are all topics that fall within the realm of microeconomics.

Question 2

Suppose that over the last twenty-five years a country's nominal GDP grew to three times its former size. In the meantime, population grew by 40 percent and prices rose by 100 percent. What happened to real GDP per person?

Accepted Answer

Real GDP per person is calculated by adjusting nominal GDP for inflation and dividing it by population. Since prices have doubled, the inflation rate is 100%, which means that nominal GDP must be divided by 2 to get real GDP. Therefore, the real GDP per person increased by 50% (3/2), which is less than double the initial amount. So, the correct choice is B because real GDP per person increased, but it less than doubled.

Question 3

Suppose that twenty-five years ago a country had nominal GDP of $1,000, a GDP deflator of 200, and a population of 100. Today it has nominal GDP of $3,000, a GDP deflator of 400, and population of 150. What happened to the real GDP per person?

Accepted Answer

The answer of Suppose that twenty-five years ago a country...

Question 4

The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest?

Accepted Answer

According to the information provided, the GDP per person in Argentina was the highest at $8,774 million, followed by Peru at $5,759 million and Bolivia at $1,312 million. Therefore, the correct ordering from highest to lowest would be Argentina, Peru, and Bolivia, making option B the best choice.

Question 5

GDP does not reflect

Accepted Answer

GDP only measures the market value of goods and services produced in an economy, therefore it does not include non-market activities such as household production or the value of leisure. It also does not consider the quality of the environment or the impact of economic activity on social welfare.

Question 6

During a presidential campaign, the incumbent argues that he should be reelected because nominal GDP grew by 12 percent during his 4-year term in office. You know that population grew by 4 percent over the period and that the GDP deflator increased by 6 percent during the past 4 years. You should conclude that real GDP per person

Accepted Answer

Nominal GDP growth does not account for inflation or changes in population, so we need to adjust for these factors by calculating the growth of real GDP per person. Real GDP per person grew by (12% - 6%) - 4% = 2%. Therefore, real GDP per person grew, but by less than 12 percent.

Question 7

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

Accepted Answer

GDP is calculated by measuring the total value of goods and services produced in a country within a given time period. It does not include leisure because leisure is not considered a tangible, marketable good or service. Therefore, if the elimination of holidays leads to an increase in production, it would result in an increase in GDP.

Question 8

GDP per person tells us the income and expenditure of the

Accepted Answer

GDP per person, or per capita GDP, divides the gross domestic product by the population, providing an average economic output or income per person, which represents the average person in the economy.

Question 9

Which of the following is a true statement?

Accepted Answer

International data consistently show that a nation's GDP per person is strongly correlated with its citizens' standard of living. While there are other factors that impact quality of life, such as income distribution, education, and healthcare, GDP per person is a reliable indicator of a country's overall economic well-being.

Question 10

Recessions are not associated with which of the following?

Accepted Answer

Recessions are typically associated with the first three options (increased bankruptcies, falling profits, falling incomes). However, they are not associated with falling unemployment. In fact, during a recession, unemployment typically increases as companies lay off workers and cut back on hiring.

Question 11

GDP is not a perfect measure of well-being; for example,

Accepted Answer

While all three statements are true to some extent, option C is the best choice as GDP does not consider the quality of the environment, which is an important factor affecting well-being. GDP only measures the economic output and does not capture the negative impact economic activity can have on the environment. Therefore, while a country may have a high GDP, the quality of life may still be poor if the environment is polluted or degraded.

Question 12

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

Accepted Answer

GDP per person, also known as GDP per capita, takes into account the population of a country and provides a more accurate measure of the economic well-being of individuals in society. It considers the average income and standard of living, which are important factors in determining the quality of life. A higher GDP per capita means that individuals in the society are better off economically. However, it should be noted that GDP per capita does not take into account income inequality or other social factors that impact well-being.

Question 13

The information for 2008 in millions in the table below was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of real GDP per person from highest to lowest?

Accepted Answer

The answer of The information for 2008 in millions in...

Question 14

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

Accepted Answer

GDP measures the market value of all goods and services produced within a country's borders. It does not take into account the environmental quality. Therefore, if all environmental regulations are eliminated and there is an increase in production, GDP would definitely increase because it is measuring the market value of the increased production. However, this increase in GDP does not account for the negative externalities of increased pollution.

Question 15

A recession is always associated with

Accepted Answer

A recession is a period of declining real GDP, usually signaled by a decrease in economic activity across multiple sectors.

Question 16

GDP is not a perfect measure of well-being; for example,

Accepted Answer

All of the above options are correct. GDP only measures the total value of goods and services produced within a country's borders, and it does not capture non-market transactions, such as volunteer work. Additionally, GDP does not account for income inequality or environmental degradation, which can all affect overall well-being. Therefore, it is important to use other measures in conjunction with GDP to get a more comprehensive view of a country's economic and societal health.

Question 17

The underground economy

Accepted Answer

The underground economy includes legal transactions that are unreported or unrecorded, such as freelance work or unreported income. It is difficult to measure the exact size of the underground economy, but it is believed to be significant in many countries. It may also include some criminal activity, but that is not the defining characteristic of the underground economy.

Question 18

Which of the following statements about recessions is true?

Accepted Answer

While there are common indicators used to identify a recession (such as falling GDP, rising unemployment, and falling consumer spending), there is no strict rule or formula for declaring a recession. Recessions can also vary in length and severity, making them unpredictable.

Question 19

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that

Accepted Answer

While GDP cannot capture all aspects of societal welfare, it is still a useful measure because it reflects a nation's ability to purchase inputs that can be used to produce goods and services that contribute to societal welfare. For example, a higher GDP can provide resources for better education, healthcare, and infrastructure, which can ultimately enhance societal welfare.

Question 20

Which of the following statements regarding GDP is correct?

Accepted Answer

This statement is correct. GDP only measures the value of goods and services produced within a country's borders, it does not account for any negative externalities, such as harm to the environment.

Quiz 23: Measuring a Nations Income

Much of macroeconomics attempts to explain

Suppose that over the last twenty-five years a country's nominal GDP grew to three times its former size. In the meantime, population grew by 40 percent and prices rose by 100 percent. What happened to real GDP per person?

Suppose that twenty-five years ago a country had nominal GDP of $1,000, a GDP deflator of 200, and a population of 100. Today it has nominal GDP of $3,000, a GDP deflator of 400, and population of 150. What happened to the real GDP per person?

The information below for 2008 in millions was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of GDP per person from highest to lowest?

GDP does not reflect

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year) . Based on this scenario, which of the following statements is correct?

GDP per person tells us the income and expenditure of the

Which of the following is a true statement?

Recessions are not associated with which of the following?

GDP is not a perfect measure of well-being; for example,

GDP is used as the basic measure of a society's economic well-being. A better measure of the economic well-being of individuals in society is

The information for 2008 in millions in the table below was reported by the World Bank. On the basis of this information, which list below contains the correct ordering of real GDP per person from highest to lowest?

Suppose the government eliminates all environmental regulations and, as a result, the production of goods and services increases, but there is considerably more pollution. Based on this scenario, which of the following statements is correct?

A recession is always associated with

GDP is not a perfect measure of well-being; for example,

The underground economy

Which of the following statements about recessions is true?

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. It follows that

Which of the following statements regarding GDP is correct?