Exam 6: GDP and the Measurement of Progress

Use the following to answer questions: Table: Data from Europia Account Amount Consumption expenditures \ 9,000 Business profits 2,500 Exports 800 Imports 1,000 Wages and Salaries 8,000 Government purchases 3,000 Rent receipts 500 Investment expenditures 2,000 -(Table: Data from Europia) Based on the data in the table, what is interest income in the economy of Europia?

In the national spending approach, investment spending involves the acquisition of which of the following?

GDP measures the total spending on final goods and services in a country.

The factor income approach splits GDP into consumption, investment, interest, and rent.

Private spending on final goods and services is part of:

The GDP deflator is the ratio of real to nominal GDP (multiplied by 100).

The market value of all final goods and services produced within a given country in a year divided by the country's population is:

The purchase of a new home is considered a personal consumption expenditure.

Which statement is TRUE about a recession?

The market value of all final goods and services produced by a country's permanent residents in a year, regardless of where the production takes place, divided by the country's population is:

A tractor built in 2001 and still in operation today is:

Explain the difference between real GDP and nominal GDP.

Use the following to answer questions: Table: Three-Good Economy I Product Quantity (2008) Price (2008) Quantity (2009) Price (2009) Computers 25 \ 800.00 30 \ 1,000.00 Pizzas 90 9.00 100 10.00 Burgers 180 1.80 200 2.00 -(Table: Three-Good Economy I) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. If prices in 2008 are used to calculate real GDP, what is the real GDP in 2008?

Intermediate goods are goods:

Purchases of lumber, such as a sheet of plywood, are always considered intermediate goods and those transactions are not counted in GDP.

Suppose a doctor spends half of the year in the United States and the other half in Canada and works in both places. How does his production get allocated between U.S. and Canadian GNP?

Imagine a nation that has automobile factories that emit pollution, grows (illegal) marijuana, and does not allow its women to work outside the home. Which activities will be counted in GDP?

GNP measures:

Personal consumption expenditure is the largest spending component in GDP.

Use the following to answer questions: Table: Three-Good Economy I Product Quantity (2008) Price (2008) Quantity (2009) Price (2009) Computers 25 \ 800.00 30 \ 1,000.00 Pizzas 90 9.00 100 10.00 Burgers 180 1.80 200 2.00 -(Table: Three-Good Economy I) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. What is the nominal GDP in 2008?