Question 1

If Gladys sells her 2003 Jeep Cherokee for $3,500 in 2018,the sale of her car contributes $3,500 to 2018 GDP.

Accepted Answer

A) True 
 B)False

Question 2

Table 12-13
 $\begin{array}{|c|c|c|c|c|}
\hline \text { Year } & \begin{array}{c}
\text { Oranges } \
\text { Produced }
\end{array} & \begin{array}{c}
\text { Price of } \
\text { Oranges }
\end{array} & \begin{array}{c}
\text { Shirts } \
\text { Produced }
\end{array} & \begin{array}{c}
\text { Price of } \
\text { Shirts }
\end{array} \
\hline 2016 & 1,800 & \$ 0.90 & 110 & \$ 30.00 \
\hline 2018 & 2,000 & 1.00 & 110 & 35.00 \
\hline
\end{array}$ Consider the data shown above for Vicuna, a country that produces only two products: oranges and shirts.
-Refer to Table 12-13.Real GDP for Vicuna for 2016 using 2018 as the base year equals

Accepted Answer

A)  $4,620. 
B)  $5,100. 
C)  $5,650. 
D)  $5,850. 
A)  $4,620. 
B)  $5,100. 
C)  $5,650. 
D)  $5,850.

Question 3

Table 12-27
 $\begin{array}{|l|c|} 
\hline & \begin{array}{c}
\text { Billions of } \
\text { Dollars }
\end{array} \
\hline \text { GDP } & \$ 3,250 \
\hline \text { Depreciation } & 300 \
\hline \text { Retained earnings } & 1,000 \
\hline \text { Personal income } & 2,500 \
\hline \text { Transfer payments } & 50 \
\hline
\end{array}$
-Refer to Table 12-27.Based on the table above,what is national income for this economy?

Accepted Answer

A)  $1,950 billion 
B)  $2,250 billion 
C)  $2,950 billion 
D)  $3,550 billion 
A)  $1,950 billion 
B)  $2,250 billion 
C)  $2,950 billion 
D)  $3,550 billion

Question 4

To calculate GDP using the value-added method,one would add up

Accepted Answer

A)  the market value of final goods and services produced during a particular period. 
B)  only the value added by the underground economy. 
C)  the value added by each firm involved in the production of final goods and services. 
D)  the market value of intermediate goods and services produced during a particular period. 
A)  the market value of final goods and services produced during a particular period. 
B)  only the value added by the underground economy. 
C)  the value added by each firm involved in the production of final goods and services. 
D)  the market value of intermediate goods and services produced during a particular period.

Question 5

Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so,how?

Accepted Answer

We would double count if we co

Question 6

If China decides to enact laws to clean up the environment,what would be the effect on GDP?

Accepted Answer

A)  GDP would increase reflecting the fact that the environment would be cleaner. 
B)  GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls. 
C)  GDP would increase as the citizens of China were made happier as the environment was cleaned up. 
D)  GDP would increase as the environmental costs of pollution were not included in the calculation of GDP. 
A)  GDP would increase reflecting the fact that the environment would be cleaner. 
B)  GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls. 
C)  GDP would increase as the citizens of China were made happier as the environment was cleaned up. 
D)  GDP would increase as the environmental costs of pollution were not included in the calculation of GDP.

Question 7

Under what circumstances would the GDP deflator be less than 100 after the base year?

Accepted Answer

A)  The GDP deflator will be less than 100 if there has been inflation relative to the base year. 
B)  The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year. 
C)  The GDP deflator will be less than 100 if there has been deflation relative to the base year. 
D)  There are no circumstances under which the GDP deflator could be less than 100. 
A)  The GDP deflator will be less than 100 if there has been inflation relative to the base year. 
B)  The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year. 
C)  The GDP deflator will be less than 100 if there has been deflation relative to the base year. 
D)  There are no circumstances under which the GDP deflator could be less than 100.

Question 8

Table 12-31
 $\begin{array}{|l|c|} 
\hline & \text { Billions of Dollars } \
\hline \text { National income } & \$ 11,200 \
\hline \text { Retained earnings } & 560 \
\hline \text { Depreciation } & 700 \
\hline \text { Interest on government bonds } & 300 \
\hline \text { Transfer payments } & 2,200 \
\hline \text { Personal taxes } & 1,400\
\hline
\end{array}$
-Refer to Table 12-31.The table above represents hypothetical data from the National Income Accounts for 2017.Use the data to calculate personal income and disposable income.

Accepted Answer

Personal income = National income - Reta

Question 9

Caroline is an artist.She purchases canvases,paints,brushes,and accessories for $75.She sells one of her original paintings to an art gallery for $1,500,which,in turn,sells it to an art lover for $4,500.How much market value does the gallery add?

Accepted Answer

A)  $1,425 
B)  $1,500 
C)  $3,000 
D)  $4,500 
A)  $1,425 
B)  $1,500 
C)  $3,000 
D)  $4,500

Question 10

Which of the following is included in both the U.S.GDP and U.S.GNP?

Accepted Answer

A)  the value of all cars produced by General Motors in the United States 
B)  the value of all cars produced by Ford in Mexico 
C)  the value of all cars produced by Toyota in the United States 
D)  the value of all cars produced by Nissan in Japan and the United States 
A)  the value of all cars produced by General Motors in the United States 
B)  the value of all cars produced by Ford in Mexico 
C)  the value of all cars produced by Toyota in the United States 
D)  the value of all cars produced by Nissan in Japan and the United States

Question 11

Give two reasons why GDP does not reflect total production in an economy.

Accepted Answer

The measure of GDP leaves out production

Question 12

If the quantity of goods and services produced in the economy decreases

Accepted Answer

A)  it may be possible for real GDP to increase. 
B)  real GDP would certainly increase. 
C)  it may be possible for nominal GDP to increase. 
D)  nominal GDP would certainly increase. 
A)  it may be possible for real GDP to increase. 
B)  real GDP would certainly increase. 
C)  it may be possible for nominal GDP to increase. 
D)  nominal GDP would certainly increase.

Question 13

If the GDP deflator is equal to 100,then for that year nominal GDP is equal to real GDP.

Accepted Answer

A) True 
 B)False

Question 14

Presently,GDP is ________ to compensate for the costs of environmental damage.

Accepted Answer

A)  fully adjusted 
B)  partially adjusted 
C)  adjusted on a chain-weight basis 
D)  not adjusted 
A)  fully adjusted 
B)  partially adjusted 
C)  adjusted on a chain-weight basis 
D)  not adjusted

Question 15

Increases in real GDP would overstate the increase in the well-being of a country over time if,over that time period,the

Accepted Answer

A)  average hours worked per week increased. 
B)  amount of pollution decreased. 
C)  price level increased. 
D)  crime rate decreased. 
A)  average hours worked per week increased. 
B)  amount of pollution decreased. 
C)  price level increased. 
D)  crime rate decreased.

Question 16

In periods when prices are falling,on average

Accepted Answer

A)  real GDP will grow slower than nominal GDP. 
B)  real GDP will grow faster than nominal GDP. 
C)  real GDP will grow as fast as nominal GDP. 
D)  one cannot calculate real GDP. 
A)  real GDP will grow slower than nominal GDP. 
B)  real GDP will grow faster than nominal GDP. 
C)  real GDP will grow as fast as nominal GDP. 
D)  one cannot calculate real GDP.

Question 17

If nominal GDP is less than real GDP,then the GDP deflator will be greater than 100.

Accepted Answer

A) True 
 B)False

Question 18

Table 12-22
2013 2018
 $\begin{array}{|l|c|c|c|c|}
\hline {\text { Product }} & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Pizzas } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Haircuts } & 50 & 15 & 45 & 20 \
\hline \text { Backpacks } & 200 & 40 & 210 & 45 \
\hline
\end{array}$
-Refer to Table 12-22.Suppose that a very simple economy produces three goods: pizzas,haircuts,and backpacks.Suppose the quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above.Use the information to compute real GDP in the year 2013 and 2018.Assume that 2013 is the base year.Is output higher in 2018 or 2013? Why?

Accepted Answer

Recall that real GDP is found by valuing

Question 19

Steve Ballmer organized government spending data on the basis of four "missions" for government that he identified in the preamble to the U.S.Constitution.Which of the four "missions" had the highest level of spending at all levels of government?

Accepted Answer

A)  Establish justice and ensure domestic tranquility. 
B)  Provide for the common defense. 
C)  Promote the general welfare. 
D)  Secure the blessings of liberty to ourselves and our posterity. 
A)  Establish justice and ensure domestic tranquility. 
B)  Provide for the common defense. 
C)  Promote the general welfare. 
D)  Secure the blessings of liberty to ourselves and our posterity.

Question 20

Scenario 12-1
CANOES-R-US makes canoes. It buys the shell of the canoe from another local firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1,200.
-Refer to Scenario 12-1.The value of each canoe in gross domestic product equals

Accepted Answer

A)  $1,200. 
B)  $800. 
C)  $500. 
D)  $400. 
A)  $1,200. 
B)  $800. 
C)  $500. 
D)  $400.

If Gladys sells her 2003 Jeep Cherokee for $3,500 in 2018,the sale of her car contributes $3,500 to 2018 GDP.

Table 12-27 Billions of Dollars GDP \ 3,250 Depreciation 300 Retained earnings 1,000 Personal income 2,500 Transfer payments 50 -Refer to Table 12-27.Based on the table above,what is national income for this economy?

To calculate GDP using the value-added method,one would add up

Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so,how?

If China decides to enact laws to clean up the environment,what would be the effect on GDP?

Under what circumstances would the GDP deflator be less than 100 after the base year?

Caroline is an artist.She purchases canvases,paints,brushes,and accessories for $75.She sells one of her original paintings to an art gallery for $1,500,which,in turn,sells it to an art lover for $4,500.How much market value does the gallery add?

Which of the following is included in both the U.S.GDP and U.S.GNP?

Give two reasons why GDP does not reflect total production in an economy.

If the quantity of goods and services produced in the economy decreases

If the GDP deflator is equal to 100,then for that year nominal GDP is equal to real GDP.

Presently,GDP is ________ to compensate for the costs of environmental damage.

Increases in real GDP would overstate the increase in the well-being of a country over time if,over that time period,the

In periods when prices are falling,on average

If nominal GDP is less than real GDP,then the GDP deflator will be greater than 100.

Steve Ballmer organized government spending data on the basis of four "missions" for government that he identified in the preamble to the U.S.Constitution.Which of the four "missions" had the highest level of spending at all levels of government?

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

If Gladys sells her 2003 Jeep Cherokee for $3,500 in 2018,the sale of her car contributes $3,500 to 2018 GDP.

Table 12-27 Billions of Dollars GDP \ 3,250 Depreciation 300 Retained earnings 1,000 Personal income 2,500 Transfer payments 50 -Refer to Table 12-27.Based on the table above,what is national income for this economy?

To calculate GDP using the value-added method,one would add up

Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so,how?

If China decides to enact laws to clean up the environment,what would be the effect on GDP?

Under what circumstances would the GDP deflator be less than 100 after the base year?

Caroline is an artist.She purchases canvases,paints,brushes,and accessories for $75.She sells one of her original paintings to an art gallery for $1,500,which,in turn,sells it to an art lover for $4,500.How much market value does the gallery add?

Which of the following is included in both the U.S.GDP and U.S.GNP?

Give two reasons why GDP does not reflect total production in an economy.

If the quantity of goods and services produced in the economy decreases

If the GDP deflator is equal to 100,then for that year nominal GDP is equal to real GDP.

Presently,GDP is ________ to compensate for the costs of environmental damage.

Increases in real GDP would overstate the increase in the well-being of a country over time if,over that time period,the

In periods when prices are falling,on average

If nominal GDP is less than real GDP,then the GDP deflator will be greater than 100.

Steve Ballmer organized government spending data on the basis of four "missions" for government that he identified in the preamble to the U.S.Constitution.Which of the four "missions" had the highest level of spending at all levels of government?

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