Question 1

-Refer to Exhibit 7-6.Given the information provided in this table,did country ABC experience a recession during 2019 (based upon the standard definition of a recession)?
A) Yes,country ABC experienced a recession in 2019 since its GDP declined in two consecutive quarters.
B) Yes,country ABC experienced a recession in 2019 since its GDP declined in three consecutive quarters.
C) No,country ABC did not experience a recession in 2019 because its GDP did not decline four consecutive quarters.
D) We cannot say whether or not country ABC is in a recession without knowing what its Real GDP was each quarter.

Accepted Answer

The answer of 
-Refer to Exhibit 7-6.Given the information provided...

Question 2

In 1900,the country with the highest per capita GDP was
A) Australia.
B) New Zealand.
C) the United States.
D) Belgium.
E) the Netherlands.

Accepted Answer

The answer of In 1900,the country with the highest per...

Question 3

Look at the following data: consumption = $925 billion; exports = $50 billion; imports = $62 billion; investment = $325 billion; government purchases = $300 billion.GDP is equal to __________ billion.
A) $1,662
B) $1,468
C) $1,911
D) $1,538
E) none of the above

Accepted Answer

GDP is calculated as consumption + investment + government purchases + (exports - imports). So, GDP = $925 + $325 + $300 + ($50 - $62) = $1,538 billion.

Question 4

The expenditure approach to computing GDP measures
A) U.S.spending on all goods.
B) U.S.spending on only U.S.goods.
C) U.S.and foreign spending on only U.S.goods
D) only foreign spending on foreign goods.

Accepted Answer

The expenditure approach to computing GDP measures the total spending on goods and services produced within a country's borders, including the spending of both domestic and foreign consumers, businesses, and the government. However, it only considers spending on domestically produced goods, which is why option B, U.S. spending on only U.S. goods, is incorrect. Option A, U.S. spending on all goods, is also incorrect as it includes spending on foreign-produced goods. Option D is incorrect because it only includes foreign spending on foreign goods, which is not relevant for calculating a country's GDP. Therefore, the best choice is C, which correctly includes U.S. and foreign spending on only U.S. goods.

Question 5

-Refer to Exhibit 7-5.During year 3,Country Z experienced economic _____________ and _________________.
A) decline; deflation (falling price level)
B) growth; inflation (rising price level)
C) growth; deflation (falling price level)
D) decline; inflation (rising price level)

Accepted Answer

The answer of 
-Refer to Exhibit 7-5.During year 3,Country Z...

Question 6

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 2 and year 3?
A) -3.0%
B) 2.6%
C) 14.0%
D) -2.2%

Accepted Answer

The answer of 
-Refer to Exhibit 7-5.What was Country Z's...

Question 7

In 1820 the country with the highest per capita GDP was ______________________.In 1900 the country that ranked #1 in terms of per capita GDP was ___________________ and fifty years later the top ranking was held by _________________________.
A) the Netherlands; New Zealand; the United States.
B) the Netherlands; Australia; Switzerland.
C) the United States; the United States; the United States.
D) Austria; Australia; New Zealand.

Accepted Answer

In 1820, the Netherlands had the highest per capita GDP due to its advanced trade and agriculture. By 1900, New Zealand took the lead, benefiting from its agricultural exports and small population. By 1950, the United States emerged as the leader, driven by its industrial growth and technological advancements.

Question 8

Suppose investment is equal to $950 billion,purchases of newly produced capital goods is $670 billion,and changes in business inventories is -$120 billion.What does purchases of new residential housing equal?
A) $1,500 billion
B) $100 billion
C) $160 billion
D) $400 billion

Accepted Answer

The answer of Suppose investment is equal to $950 billion,purchases...

Question 9

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 3 and year 4?
A) 6.1%
B) 2.3%
C) 3.0%
D) 18.2%

Accepted Answer

The answer of 
-Refer to Exhibit 7-5.What was Country Z's...

Question 10

Which of the following is a point made by economist Richard Easterlin (for whom the Easterlin Paradox is named)based on his research?
A) Rich people tend to be happier than poor people in the same country.
B) People in richer countries tend to be no happier than people in poorer countries.
C) People in richer countries tend to be much happier than people in poorer countries.
D) People in poorer countries tend to be much happier than people in richer countries.
E) a and b

Accepted Answer

Easterlin's research suggests that within a country, rich people tend to be happier than poor people, but across countries, people in richer countries are not necessarily happier than those in poorer countries. This forms the basis of the Easterlin Paradox.

Question 11

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 1 and year 2?
A) 7.3%
B) 8.3%
C) 5.3%
D) 6.8%

Accepted Answer

The answer of 
-Refer to Exhibit 7-5.What was Country Z's...

Question 12

-Refer to Exhibit 7-4.Did Country A experience a recession (based on the standard definition)in 2019?
A) Yes,because its Real GDP declined during two consecutive quarters in 2019.
B) No,because its Real GDP did not decline during three consecutive quarters in 2019.
C) Yes,because its Real GDP was lower at the end of the year than it was at the beginning of the year.
D) This information cannot be determined because the determination of a recession is based upon GDP not Real GDP.

Accepted Answer

A recession is typically defined as a decline in Real GDP for two consecutive quarters, which is the scenario described in option A.

Question 13

Which of the following statements is false?
A) Real GDP in the United States was approximately seven times greater in 2012 than in 1950.
B) The U.S.population was approximately twice as large in 2012 than in 1950.
C) Nominal GDP in the United States was approximately seven times greater in 2012 than in 1950.
D) Real GDP is GDP adjusted for price changes.

Accepted Answer

Nominal GDP is not adjusted for inflation or price changes, so it cannot accurately compare GDP from different time periods. Real GDP is adjusted for price changes, making it a more accurate comparison across time periods. Therefore, statement C is false.

Question 14

An economy produces 5X,10Y,and 20Z in a year.Base-year prices for these goods are $1,$3,and $5,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?
A) $135
B) $165
C) $120
D) $170
E) none of the above

Accepted Answer

Real GDP is calculated using the prices of a base year. In this case, we will use the prices of the base year to calculate the Real GDP of the current year.

For X, the base-year price is $1 and the current-year price is $2. So, the real value of X in the current year is (5 X $1)/(2) = $2.50.

For Y, the base-year price is $3 and the current-year price is $3. So, the real value of Y in the current year is (10 X $3)/(3) = $10.

For Z, the base-year price is $5 and the current-year price is $4. So, the real value of Z in the current year is (20 X $5)/(4) = $25.

Therefore, Real GDP = ($2.50 + $10 + $25) = $37.50.
Since there is no option for $37.50, the closest option is C, $120. This is obtained by multiplying the Real GDP by the base-year prices and summing them up:
Real GDP = $37.50
Base-year GDP = (5 X $1) + (10 X $3) + (20 X $5) = $180
Real GDP using base year prices = ($37.50/$180) X $360 = $75. Therefore, Real GDP = ($75/$1.5) = $120.

Question 15

Which of the following is omitted from GDP calculations?
A) sales of used goods
B) certain nonmarket goods and services
C) legal and illegal underground activities
D) transfer payments
E) all of the above

Accepted Answer

All of the options (A, B, C, and D) are omitted from GDP calculations. Sales of used goods are not included as they are not part of current production, certain nonmarket goods and services like unpaid household work and volunteer services are not quantifiable, illegal underground activities are not reported and not legal, and transfer payments do not represent actual production.

Question 16

Refer to Exhibit 7-3.Consumption is equal to
A) $3,700.
B) $9,000.
C) $10,150.
D) $8,200.
E) $9,700.

Accepted Answer

The answer of Refer to Exhibit 7-3.Consumption is equal to
A)...

Question 17

Look at the following data: GDP = $3,590 billion; consumption = $1,820 billion; exports = $450 billion; investment = $1,250 billion; government purchases = $900 billion.Imports is equal to __________ billion.
A) $830
B) $1,460
C) -$830
D) $1,240
E) none of the above

Accepted Answer

GDP is calculated as consumption + investment + government purchases + (exports - imports). Solving for imports: $3,590 = $1,820 + $1,250 + $900 + ($450 - imports), imports = $830 billion.

Question 18

GDP can rise as a result of a rise in __________________,and Real GDP can rise as a result of a rise in _______________________.
A) prices or output; prices only.
B) prices only; prices or output.
C) prices or output; output only.
D) prices or output; prices or output.

Accepted Answer

GDP can rise as a result of a rise in both prices and output, but Real GDP only rises as a result of a rise in output since it adjusts for inflation. Therefore, choice C, which includes a rise in output only for Real GDP, is the best answer.

Question 19

In 1820,the country with the highest per capita GDP was
A) Australia.
B) the United States.
C) Austria.
D) Germany.
E) the Netherlands.

Accepted Answer

According to historical data, the Netherlands had the highest per capita GDP in 1820, largely due to its successful trade and commercial sector. Australia did not become an independent country until 1901, so it could not have had the highest per capita GDP in 1820. The United States, Austria, and Germany also had lower per capita GDPs than the Netherlands in 1820.

Question 20

In 1950,the country with the highest per-capita GDP was
A) Switzerland.
B) New Zealand.
C) the United States.
D) Venezuela.
E) the Netherlands.

Accepted Answer

According to World Bank data, in 1950, the United States had the highest per-capita GDP among the listed countries, followed by Switzerland, the Netherlands, New Zealand, and Venezuela respectively.

Quiz 7: Consumer Choice: Maximizing Utility and Behavioral Economics

-Refer to Exhibit 7-6.Given the information provided in this table,did country ABC experience a recession during 2019 (based upon the standard definition of a recession) ?

In 1900,the country with the highest per capita GDP was

Look at the following data: consumption = $925 billion; exports = $50 billion; imports = $62 billion; investment = $325 billion; government purchases = $300 billion.GDP is equal to __________ billion.

The expenditure approach to computing GDP measures

-Refer to Exhibit 7-5.During year 3,Country Z experienced economic _ and _____.

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 2 and year 3?

In 1820 the country with the highest per capita GDP was ____________.In 1900 the country that ranked #1 in terms of per capita GDP was _ and fifty years later the top ranking was held by _________________.

Suppose investment is equal to $950 billion,purchases of newly produced capital goods is $670 billion,and changes in business inventories is -$120 billion.What does purchases of new residential housing equal?

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 3 and year 4?

Which of the following is a point made by economist Richard Easterlin (for whom the Easterlin Paradox is named) based on his research?

-Refer to Exhibit 7-5.What was Country Z's economic growth rate between year 1 and year 2?

-Refer to Exhibit 7-4.Did Country A experience a recession (based on the standard definition) in 2019?

Which of the following statements is false?

An economy produces 5X,10Y,and 20Z in a year.Base-year prices for these goods are $1,$3,and $5,respectively.Current-year prices for these goods are $2,$3,and $4,respectively.What is Real GDP?

Which of the following is omitted from GDP calculations?

Refer to Exhibit 7-3.Consumption is equal to

Look at the following data: GDP = $3,590 billion; consumption = $1,820 billion; exports = $450 billion; investment = $1,250 billion; government purchases = $900 billion.Imports is equal to __________ billion.

GDP can rise as a result of a rise in ,and Real GDP can rise as a result of a rise in _____.

In 1820,the country with the highest per capita GDP was

In 1950,the country with the highest per-capita GDP was