Exam 5: Measuring a Nation's Production and Income

One of the flaws of GDP is that it

Recall the Application about the size of Wal-Mart to answer the following question(s). During 2008, Wal-Mart's sales were approximately $374 billion, or roughly 2.6 percent of U.S. GDP, and its cost of sales was $286 billion. -According to this Application, by using a value-added approach to measure Wal-Mart's sales impact on the economy, we are

When GDP is measured in "current prices" it is known as the

GDP ignores transactions that take place in the underground economy.

A depression is

The GDP equation is

How many quarters (3-month periods)must the "real" GDP decline to have the economy considered to be in a recession?

The value of goods produced in a previous year but sold in the current year is added to the GDP for the current year.

How many broad categories are used by economists to define the GDP?

When real GDP falls for two consecutive quarters the economy is in a

Use the following information to answer the next several questions: Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures. In 2011, the economy produced 70 flashlights and 40 fishing lures, and the prices of flashlights and fishing lures were $5 and $12, respectively. In 2012, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $7 and $15, respectively. -Based on the information in Scenario 1, nominal GDP grew by about ________ percent from 2011 to 2012.

Recall the Application about the link between happiness and GDP to answer the following question(s). Comparing changes in happiness to changes in per capita income over the last 30 years, economists at Dartmouth College and Warwick University have measured levels of happiness in the United States and United Kingdom based on income levels, ethnicity, age, and gender. -According to the Application, large increases in per capita income in the United States over the past 30 years have

A rancher raises sheep. Once a year he shears them and sells the raw wool to a processor who cleans it and spins it into yarn. The yarn is then sold to a knitting mill, which produces and sells sweaters. In calculating GDP we would count

Suppose that a sporting goods store had $800 of golf balls on its shelves at the beginning of 2012 and $1,300 at the end of 2012. The amount of inventory investment included in GDP would be

In the GDP accounts, investment includes the purchase of newly issued shares of stock.

The date at which a recession starts is called the

If GDP included the value of leisure time, the value of U.S. GDP would most likely increase.

Depreciation is

Recall the Application about the size of Wal-Mart to answer the following question(s). During 2008, Wal-Mart's sales were approximately $374 billion, or roughly 2.6 percent of U.S. GDP, and its cost of sales was $286 billion. -In listing both the amount and cost of Wal-Mart's 2008 sales, this Application is addressing the economic concept of

If Cassie's Coffee House purchases 33 cents worth of ingredients and spends 36 cents on wages per cup of coffee to produce an 89 cent cup of coffee, then Cassie's Coffee House's contribution to GDP is ________ per cup of coffee.