Question 1

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

Accepted Answer

A)  CPI; real GDP; nominal GDP 
B)  GDP deflator; real GDP; nominal GDP 
C)  GDP deflator; nominal GDP; real GDP 
D)  PPI; nominal GDP; real GDP 
E)  PPI; real GDP; nominal GDP 
A)  CPI; real GDP; nominal GDP 
B)  GDP deflator; real GDP; nominal GDP 
C)  GDP deflator; nominal GDP; real GDP 
D)  PPI; nominal GDP; real GDP 
E)  PPI; real GDP; nominal GDP

Question 2

Nominal GDP is GDP in a given year

Accepted Answer

A)  adjusted for inflation. 
B)  adjusted for anticipated inflation. 
C)  valued in the prices of that year. 
D)  valued in the prices of the base year. 
A)  adjusted for inflation. 
B)  adjusted for anticipated inflation. 
C)  valued in the prices of that year. 
D)  valued in the prices of the base year.

Question 3

Which of the following transactions would take place in the "underground economy"?

Accepted Answer

A)  Elizabeth tells her mother she's going to work but really goes to see a movie. 
B)  Paul buys 15 gallons of gasoline for $3.29 a gallon, not realizing that $1.50 per gallon of that price goes to the government as tax revenue. 
C)  John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes. 
D)  Matt bought an iPad for $499 but decided to sell it on eBay instead of keeping it. 
A)  Elizabeth tells her mother she's going to work but really goes to see a movie. 
B)  Paul buys 15 gallons of gasoline for $3.29 a gallon, not realizing that $1.50 per gallon of that price goes to the government as tax revenue. 
C)  John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes. 
D)  Matt bought an iPad for $499 but decided to sell it on eBay instead of keeping it.

Question 4

Gross domestic product in the economy is measured by the

Accepted Answer

A)  total number of goods and services produced in the economy. 
B)  dollar value of all final goods and services produced in the economy. 
C)  total number of goods produced in the economy. 
D)  total number of services produced in the economy. 
A)  total number of goods and services produced in the economy. 
B)  dollar value of all final goods and services produced in the economy. 
C)  total number of goods produced in the economy. 
D)  total number of services produced in the economy.

Question 5

Table 12-21
 $ \quad $ $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $ $2013$$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $ $ 2017 $ $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ 2018 $ 
$\begin{array}{|l|r|l|r|r|r|r|}
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { MP3s } & 40 & \$ 250.00 & 45 & \$ 200.00 & 50 & \$ 150.00 \
\hline \text { Tacos } & 2,000 & 2.00 & 2,200 & 2.25 & 2,300 & 2.40 \
\hline \text { Coats } & 300 & 50.00 & 310 & 52.00 & 350 & 55.00 \
\hline
\end{array}$
-Refer to Table 12-21.Consider the data above for a simple economy: Using 2013 as the base year,calculate nominal GDP,real GDP,and the GDP deflator for 2018.Show your work.

Accepted Answer

Nominal GDP for 2018 equals (5

Question 6

Which of the following is not an example of a transfer payment?

Accepted Answer

A)  unemployment insurance payments 
B)  health insurance payments to an army private 
C)  social security payments to retirees 
D)  social security payments to disabled persons 
A)  unemployment insurance payments 
B)  health insurance payments to an army private 
C)  social security payments to retirees 
D)  social security payments to disabled persons

Question 7

The GDP deflator is a measure of the

Accepted Answer

A)  total production of the economy adjusted for inflation. 
B)  total production of the economy unadjusted for inflation. 
C)  average level of prices of final goods and services in the economy. 
D)  average level of prices of intermediate goods and services in the economy. 
A)  total production of the economy adjusted for inflation. 
B)  total production of the economy unadjusted for inflation. 
C)  average level of prices of final goods and services in the economy. 
D)  average level of prices of intermediate goods and services in the economy.

Question 8

Table 12-16
 $\begin{array}{|l|c|c|}
\hline & \mathbf{2 0 1 7} & \mathbf{2 0 1 8} \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 12,000 \
\hline \text { Real GDP } & 9,500 & 10,500 \
\hline
\end{array}$
-Refer to Table 12-16.Given the information above,what can we say has happened in the economy from 2017 to 2018?

Accepted Answer

A)  The price level has fallen. 
B)  The price level has risen. 
C)  The price level has remained constant. 
D)  Not enough information is available to determine what has happened to prices. 
A)  The price level has fallen. 
B)  The price level has risen. 
C)  The price level has remained constant. 
D)  Not enough information is available to determine what has happened to prices.

Question 9

Personal income is defined as

Accepted Answer

A)  national income less retained earnings plus transfer payments and plus interest on government bonds. 
B)  national income plus retained earnings less transfer payments and less interest on government bonds. 
C)  national income less depreciation. 
D)  national income less personal taxes. 
A)  national income less retained earnings plus transfer payments and plus interest on government bonds. 
B)  national income plus retained earnings less transfer payments and less interest on government bonds. 
C)  national income less depreciation. 
D)  national income less personal taxes.

Question 10

Table 12-14
 $\begin{array}{|c|c|c|}
\hline \text { Year } & \begin{array}{c}
\text { Nominal } \
\text { GDP }
\end{array} & \text { Real GDP } \
\hline 2017 & 14,078 & 13,254 \
\hline 2018 & 14,441 & 13,312 \
\hline
\end{array}$
-Refer to Table 12-14.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2018 equals

Accepted Answer

A)  92.2. 
B)  102.6. 
C)  108.5. 
D)  109.1. 
A)  92.2. 
B)  102.6. 
C)  108.5. 
D)  109.1.

Question 11

Table 12-19
 $\begin{array}{|l|c|r|}
\hline & \mathbf{2 0 1 7} & {\mathbf{2 0 1 8}} \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 12,000 \
\hline \text { Real GDP } & 9,500 & 10,500 \
\hline
\end{array}$
-Refer to Table 12-19.Given the information above,calculate the GDP deflator in 2017.

Accepted Answer

A)  87 
B)  95 
C)  105 
D)  114 
A)  87 
B)  95 
C)  105 
D)  114

Question 12

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

Accepted Answer

A)  GNP is much larger than GDP. 
B)  GDP is much larger than GNP. 
C)  GDP is equal to GNP. 
D)  GDP is not comparable to GDP. 
A)  GNP is much larger than GDP. 
B)  GDP is much larger than GNP. 
C)  GDP is equal to GNP. 
D)  GDP is not comparable to GDP.

Question 13

Macroeconomics seeks to understand

Accepted Answer

A)  economic growth, business cycles, and inflation. 
B)  industry sales, marketing strategies, and corporate growth. 
C)  product demand, product cost, and profit maximization. 
D)  public choices, private choices, and consumer maximization. 
A)  economic growth, business cycles, and inflation. 
B)  industry sales, marketing strategies, and corporate growth. 
C)  product demand, product cost, and profit maximization. 
D)  public choices, private choices, and consumer maximization.

Question 14

How are intermediate goods treated in the calculation of GDP?

Accepted Answer

A)  Their value is not counted separately, but included as part of the value of the final good for which they are an input. 
B)  Their value is counted separately, and their value is also included as part of the value of the final good for which they are an input. 
C)  Their value is counted separately, but is not included as part of the value of the final good for which they are an input. 
D)  They are included only if they are imported. 
A)  Their value is not counted separately, but included as part of the value of the final good for which they are an input. 
B)  Their value is counted separately, and their value is also included as part of the value of the final good for which they are an input. 
C)  Their value is counted separately, but is not included as part of the value of the final good for which they are an input. 
D)  They are included only if they are imported.

Question 15

National income is derived from gross domestic product by

Accepted Answer

A)  subtracting retained earnings from gross domestic product. 
B)  adding personal taxes and depreciation to gross domestic product. 
C)  subtracting depreciation from gross domestic product. 
D)  adding personal income and transfer payments to gross domestic product. 
A)  subtracting retained earnings from gross domestic product. 
B)  adding personal taxes and depreciation to gross domestic product. 
C)  subtracting depreciation from gross domestic product. 
D)  adding personal income and transfer payments to gross domestic product.

Question 16

Which of the following statements is true?

Accepted Answer

A)  A decrease in the crime rate increases GDP as people will spend more on security. 
B)  Household production is counted in GDP as it amounts to real production. 
C)  GDP accounting rules do not adjust for production that pollutes the economy. 
D)  GDP growth distributes income equally to people in the economy. 
A)  A decrease in the crime rate increases GDP as people will spend more on security. 
B)  Household production is counted in GDP as it amounts to real production. 
C)  GDP accounting rules do not adjust for production that pollutes the economy. 
D)  GDP growth distributes income equally to people in the economy.

Question 17

To make the calculation of real GDP more accurate,in 1996 the BEA switched to using

Accepted Answer

A)  base-year prices. 
B)  current prices. 
C)  chain-weighted prices. 
D)  market prices. 
A)  base-year prices. 
B)  current prices. 
C)  chain-weighted prices. 
D)  market prices.

Question 18

Table 12-30
 $\begin{array}{|l|c|}
\hline & \begin{array}{c}
\text { Billions of } \
\text { Dollars }
\end{array} \
\hline \text { National income } & \$ 7,400 \
\hline \text { Retained earnings } & 480 \
\hline \text { Depreciation } & 660 \
\hline \text { Interest on government bonds } & 450 \
\hline \text { Transfer payments } & 1,000 \
\hline \text { Personal taxes } & 1,100\
\hline
\end{array}$
-Refer to Table 12-30.The table above represents hypothetical data from the National Income Accounts for 2017.Use the data to calculate personal income and disposable personal income.

Accepted Answer

Personal income = National income - Reta

Question 19

The GDP deflator is equal to

Accepted Answer

A)  real GDP divided by nominal GDP. 
B)  nominal GDP divided by real GDP, multiplied by 100. 
C)  nominal GDP divided by real GDP. 
D)  real GDP divided by nominal GDP, multiplied by 100. 
A)  real GDP divided by nominal GDP. 
B)  nominal GDP divided by real GDP, multiplied by 100. 
C)  nominal GDP divided by real GDP. 
D)  real GDP divided by nominal GDP, multiplied by 100.

Question 20

What is the largest component of spending in the United States?

Accepted Answer

A)  consumption spending 
B)  investment spending 
C)  government purchases 
D)  net investment spending 
A)  consumption spending 
B)  investment spending 
C)  government purchases 
D)  net investment spending

The is a measure of the price level and is calculated by dividing by and multiplying by 100.

Nominal GDP is GDP in a given year

Which of the following transactions would take place in the "underground economy"?

Gross domestic product in the economy is measured by the

Which of the following is not an example of a transfer payment?

The GDP deflator is a measure of the

Table 12-16 Nominal GDP \ 10,000 \ 12,000 Real GDP 9,500 10,500 -Refer to Table 12-16.Given the information above,what can we say has happened in the economy from 2017 to 2018?

Personal income is defined as

Table 12-14 Year Nominal GDP Real GDP 2017 14,078 13,254 2018 14,441 13,312 -Refer to Table 12-14.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2018 equals

Table 12-19 Nominal GDP \ 10,000 \ 12,000 Real GDP 9,500 10,500 -Refer to Table 12-19.Given the information above,calculate the GDP deflator in 2017.

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

Macroeconomics seeks to understand

How are intermediate goods treated in the calculation of GDP?

National income is derived from gross domestic product by

Which of the following statements is true?

To make the calculation of real GDP more accurate,in 1996 the BEA switched to using

The GDP deflator is equal to

What is the largest component of spending in the United States?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

Exam 12: GDP: Measuring Total Production and Income

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

Nominal GDP is GDP in a given year

Which of the following transactions would take place in the "underground economy"?

Gross domestic product in the economy is measured by the

Which of the following is not an example of a transfer payment?

The GDP deflator is a measure of the

Table 12-16 Nominal GDP \ 10,000 \ 12,000 Real GDP 9,500 10,500 -Refer to Table 12-16.Given the information above,what can we say has happened in the economy from 2017 to 2018?

Personal income is defined as

Table 12-14 Year Nominal GDP Real GDP 2017 14,078 13,254 2018 14,441 13,312 -Refer to Table 12-14.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2018 equals

Table 12-19 Nominal GDP \ 10,000 \ 12,000 Real GDP 9,500 10,500 -Refer to Table 12-19.Given the information above,calculate the GDP deflator in 2017.

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

Macroeconomics seeks to understand

How are intermediate goods treated in the calculation of GDP?

National income is derived from gross domestic product by

Which of the following statements is true?

To make the calculation of real GDP more accurate,in 1996 the BEA switched to using

The GDP deflator is equal to

What is the largest component of spending in the United States?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, The Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,Production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, International Trade, and Exchange Rates

Filters

The is a measure of the price level and is calculated by dividing by and multiplying by 100.