Econ 252 Quizzes Questions with Correct Answers (Grade A+)
Question 1: The value of a car produced and sold in 2015 and sold again in 2023 is included in: both
2015's GDP and 2023's GDP. 2023's GDP only. 2015's GDP only. neither 2015's nor 2023's GDP.
Answer: c
Question 2: Birmingham Steel sells steel to Winston Golf Club Manufacturers for $300,000. Winston
sells its golf clubs to Academy Sports for $1,000,000. Academy Sports sells these golf clubs to consumers
for $1,500,000. How much is added to GDP? Assume that all firms are located in the country.
Answer: $1,500,000
Question 3: If you accept a job in Mexico after college, your income will be part of GDP in: both
Mexico and the United States. the United States only. Mexico only. neither Mexico nor the United
States.
Answer: c
Question 4: Why are transfer payments not counted as part of GDP? Counting transfer payments
would constitute double-counting as transfer payments will be used by the recipients to purchase final
goods and services. Transfer payments are always paid back and so they cannot be counted twice.
Spending by the unemployed and senior citizens is not counted as part of GDP. Most transfer payments
are not spent within the United States.
Answer: a
Question 5: Identify what would generally lower the quality of life that would not be counted in GDP. a
decrease in water quality a decrease in the crime rate an increase in influenza vaccines an increase
home production of child care
Answer: a?
Question 6: From the perspective of economic growth, which of the below reasons explain why South
Korea has a higher level of physical and human capital when compared with North Korea? I. Markets
constitute much more of the primary organizations of economic activity in South Korea than they do in
North Korea. II. Economic incentives are better aligned from the institutions in South Korea than they
are in North Korea. III. South Korea started with and maintained a very different culture from North
Korea. Only II Only III I, II, and III I and II Only I
Answer: I and II
Page 1
, Question 7: The institution that focus on __________ is the institution that most directly effects the
ability to collect on a debt in a timely manner. Hint: Other institutions can erode this ability but are not
the institutions that directly afford the ability to collect. property rights political stability a dependable
legal system honest government competitive and open markets
Answer: a dependable legal system
Question 8: The institutions that focus on ______________ are the institutions that most directly affect
the incentive of individuals to obtain assets and engage in economic activity. Hint: Other institutions
can erode or enhance this incentive but are not the institutions that initiate the initial incentive to
engage. political stability property rights competitive and open markets honest government a
dependable legal system
Answer: property rights
Question 9: A firm that pays for workers to attend a technical college is increasing its
______________________. human capital gains from trade technical knowledge physical capital
Answer: human capital
Question 10: In general, increases in a country's wealth will cause infant survival rates to: increase.
become unpredictable. remain unchanged. decrease.
Answer: Not provided in source document.
Question 11: Which statement best describes the cross-country evidence on the relationship between a
nation's GDP per capita and standard measures of societal well-being? There is no relationship
between GDP per capita and measures of societal well-being. GDP per capita is negatively related to
measures of societal well-being. GDP per capita is positively related to measures of societal well-being.
The relationship between GDP per capita and societal well-being is positive at times and negative at
times.
Answer: The relationship between GDP per capita and societal well-being is positive at times and negative
at times.
Question 12: When an economic system changes from using a collective property rights system to
something closer to private property rights, the immediate effect is: to increase regulation, resulting in
less market activities. to decrease investment, work effort, and productivity. to increase investment,
work effort, and productivity. less efficient organization of resources.
Answer: to increase investment, work effort, and productivity.
Page 2
Question 1: The value of a car produced and sold in 2015 and sold again in 2023 is included in: both
2015's GDP and 2023's GDP. 2023's GDP only. 2015's GDP only. neither 2015's nor 2023's GDP.
Answer: c
Question 2: Birmingham Steel sells steel to Winston Golf Club Manufacturers for $300,000. Winston
sells its golf clubs to Academy Sports for $1,000,000. Academy Sports sells these golf clubs to consumers
for $1,500,000. How much is added to GDP? Assume that all firms are located in the country.
Answer: $1,500,000
Question 3: If you accept a job in Mexico after college, your income will be part of GDP in: both
Mexico and the United States. the United States only. Mexico only. neither Mexico nor the United
States.
Answer: c
Question 4: Why are transfer payments not counted as part of GDP? Counting transfer payments
would constitute double-counting as transfer payments will be used by the recipients to purchase final
goods and services. Transfer payments are always paid back and so they cannot be counted twice.
Spending by the unemployed and senior citizens is not counted as part of GDP. Most transfer payments
are not spent within the United States.
Answer: a
Question 5: Identify what would generally lower the quality of life that would not be counted in GDP. a
decrease in water quality a decrease in the crime rate an increase in influenza vaccines an increase
home production of child care
Answer: a?
Question 6: From the perspective of economic growth, which of the below reasons explain why South
Korea has a higher level of physical and human capital when compared with North Korea? I. Markets
constitute much more of the primary organizations of economic activity in South Korea than they do in
North Korea. II. Economic incentives are better aligned from the institutions in South Korea than they
are in North Korea. III. South Korea started with and maintained a very different culture from North
Korea. Only II Only III I, II, and III I and II Only I
Answer: I and II
Page 1
, Question 7: The institution that focus on __________ is the institution that most directly effects the
ability to collect on a debt in a timely manner. Hint: Other institutions can erode this ability but are not
the institutions that directly afford the ability to collect. property rights political stability a dependable
legal system honest government competitive and open markets
Answer: a dependable legal system
Question 8: The institutions that focus on ______________ are the institutions that most directly affect
the incentive of individuals to obtain assets and engage in economic activity. Hint: Other institutions
can erode or enhance this incentive but are not the institutions that initiate the initial incentive to
engage. political stability property rights competitive and open markets honest government a
dependable legal system
Answer: property rights
Question 9: A firm that pays for workers to attend a technical college is increasing its
______________________. human capital gains from trade technical knowledge physical capital
Answer: human capital
Question 10: In general, increases in a country's wealth will cause infant survival rates to: increase.
become unpredictable. remain unchanged. decrease.
Answer: Not provided in source document.
Question 11: Which statement best describes the cross-country evidence on the relationship between a
nation's GDP per capita and standard measures of societal well-being? There is no relationship
between GDP per capita and measures of societal well-being. GDP per capita is negatively related to
measures of societal well-being. GDP per capita is positively related to measures of societal well-being.
The relationship between GDP per capita and societal well-being is positive at times and negative at
times.
Answer: The relationship between GDP per capita and societal well-being is positive at times and negative
at times.
Question 12: When an economic system changes from using a collective property rights system to
something closer to private property rights, the immediate effect is: to increase regulation, resulting in
less market activities. to decrease investment, work effort, and productivity. to increase investment,
work effort, and productivity. less efficient organization of resources.
Answer: to increase investment, work effort, and productivity.
Page 2
