Question 1

Which of the following are not considered part of government purchases?

Accepted Answer

A)  welfare benefits 
B)  teachers' salaries paid by a local government 
C)  a tank purchased by the federal government 
D)  a bridge purchased by the state government 
A)  welfare benefits 
B)  teachers' salaries paid by a local government 
C)  a tank purchased by the federal government 
D)  a bridge purchased by the state government

Question 2

High-income countries such as the United States spend a greater amount on services as compared to goods.

Accepted Answer

A) True 
 B)False

Question 3

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 rate of increase in the price level from 2017 to 2018.

Accepted Answer

A)  8.6% 
B)  7.9% 
C)  -7.9% 
D)  -8.6% 
A)  8.6% 
B)  7.9% 
C)  -7.9% 
D)  -8.6%

Question 4

Marla is an architect who is designing a home for Chuck.Chuck is paying Marla $150 per hour to design his new home.When Chuck and Marla get married,Marla continues to work on designing the home,but she no longer charges Chuck for her work.As a result,GDP ________ because ________.

Accepted Answer

A)  falls; Marla's work takes place in the underground economy once she's married 
B)  falls; Marla's work becomes less valuable once she's married 
C)  falls; Marla's architectural design services are no longer bought by Chuck once they're married 
D)  rises; Marla becomes more productive once she's married 
A)  falls; Marla's work takes place in the underground economy once she's married 
B)  falls; Marla's work becomes less valuable once she's married 
C)  falls; Marla's architectural design services are no longer bought by Chuck once they're married 
D)  rises; Marla becomes more productive once she's married

Question 5

The measure of production that values output using base-year prices is called

Accepted Answer

A)  real GDP. 
B)  nominal GDP. 
C)  value-added GDP. 
D)  underground GDP. 
A)  real GDP. 
B)  nominal GDP. 
C)  value-added GDP. 
D)  underground GDP.

Question 6

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.Nominal GDP for Vicuna for 2016 equals

Accepted Answer

A)  $4,920. 
B)  $5,100. 
C)  $5,300. 
D)  $5,850. 
A)  $4,920. 
B)  $5,100. 
C)  $5,300. 
D)  $5,850.

Question 7

The purchase of a new automobile is included in

Accepted Answer

A)  consumption expenditures on services. 
B)  consumption expenditures on nondurable goods. 
C)  consumption expenditures on durable goods. 
D)  investment expenditures. 
A)  consumption expenditures on services. 
B)  consumption expenditures on nondurable goods. 
C)  consumption expenditures on durable goods. 
D)  investment expenditures.

Question 8

Table 12-20
 $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $ $2016 $ $ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $ $ 2018$ 
$\begin{array}{|c|c|c|c|c|}
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Hats } & 200 & \$ 20 & 250 & \$ 21 \
\hline \text { French fries } & 2,000 & 1 & 2,300 & 2 \
\hline \text { Digital cameras } & 40 & 200 & 50 & 140\
\hline
\end{array}$
-Refer to Table 12-20.Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2018,using 2016 as the base year.Show your work.

Accepted Answer

Nominal GDP for 2018 equals (2

Question 9

Table 12-23
 $\begin{array}{|l|c|c|c|c|}
\hline& {2013} & & 2018 & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Pizzas } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Haircuts } & 50 & 15 & 45 & 20 \
\hline \text { Backpacks } & 200 & 40 & 210 & 45 \
\hline
\end{array}$
-Refer to Table 12-23.Suppose that a very simple economy produces three goods: pizzas,haircuts,and backpacks.Suppose that the quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above.Use the information to compute the real GDP in the year 2013 and 2018.Calculate the real GDP in 2018 assuming the base year is 2013.Do the same calculation assuming the base year is 2018.Are the calculations different? Why?

Accepted Answer

Recall that real GDP is found by valuing

Question 10

An example of a transfer payment is

Accepted Answer

A)  a teacher's paycheck. 
B)  a paycheck for a member of the National Guard. 
C)  a welfare payment. 
D)  a purchase of a new bridge in Alaska. 
A)  a teacher's paycheck. 
B)  a paycheck for a member of the National Guard. 
C)  a welfare payment. 
D)  a purchase of a new bridge in Alaska.

Question 11

Government spending ________ is included in gross domestic product.

Accepted Answer

A)  at federal, state, and local levels of government 
B)  at the federal level of government only 
C)  at state and local levels of government only 
D)  on defense goods only 
A)  at federal, state, and local levels of government 
B)  at the federal level of government only 
C)  at state and local levels of government only 
D)  on defense goods only

Question 12

Which of the following is likely to increase measured GDP?

Accepted Answer

A)  A greater number of women decide to stay at home and provide day care for their children under age 5. 
B)  Marijuana becomes legal to grow and sell. 
C)  Tax rates increase and more people attempt to underreport their income for tax purposes. 
D)  More people decide to do their own lawn maintenance and give up using a professional service. 
A)  A greater number of women decide to stay at home and provide day care for their children under age 5. 
B)  Marijuana becomes legal to grow and sell. 
C)  Tax rates increase and more people attempt to underreport their income for tax purposes. 
D)  More people decide to do their own lawn maintenance and give up using a professional service.

Question 13

Real GDP is GDP in a given year

Accepted Answer

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

Question 14

China's current rate of GDP growth is quite rapid.Its current growth rate is probably three times that of the United States.However,the levels of pollution are much higher in China.Would you consider China to be better off than the United States given this information? Why or why not?

Accepted Answer

China is not better off because of highe

Question 15

Describe briefly how the final value of an iPhone which costs $700 must be equal to the sum of incomes generated by the production of the iPhone.

Accepted Answer

Consider the value of an iPhone which co

Question 16

The "underground economy" refers to

Accepted Answer

A)  the buying and selling of goods that is concealed from the government. 
B)  the production of goods and services used by the government for covert spy operations. 
C)  the sector of the economy that earns profits that are higher than average. 
D)  the formal sector of the economy in developing countries. 
A)  the buying and selling of goods that is concealed from the government. 
B)  the production of goods and services used by the government for covert spy operations. 
C)  the sector of the economy that earns profits that are higher than average. 
D)  the formal sector of the economy in developing countries.

Question 17

If a German firm produces cars in the United States,that production should count towards

Accepted Answer

A)  U.S. GNP. 
B)  German GDP. 
C)  U.S. GDP. 
D)  both U.S. GNP and German GDP. 
A)  U.S. GNP. 
B)  German GDP. 
C)  U.S. GDP. 
D)  both U.S. GNP and German GDP.

Question 18

When Ford increases the production of cars in Romania,which of the following occurs?

Accepted Answer

A)  GDP in the United States rises. 
B)  GNP in the United States rises. 
C)  GNP in Romania rises. 
D)  Both A and C occur. 
A)  GDP in the United States rises. 
B)  GNP in the United States rises. 
C)  GNP in Romania rises. 
D)  Both A and C occur.

Question 19

Table 12-26
 $\begin{array}{|l|c|}
\hline \text { National income } & \$ 1,000 \
\hline \text { Retained earnings not paid as dividends } & 50 \
\hline \text { Transfer payments } & 40 \
\hline \text { Interest on government bonds } & 20 \
\hline \text { Personal taxes } & 30 \
\hline
\end{array}$ The components of national income for an economy are represented in Table 12-26 above. All values are in billions of dollars.
-Refer to Table 12-26.What is the level of disposable personal income for this economy?

Accepted Answer

A)  $1,080 billion 
B)  $1,010 billion 
C)  $980 billion 
D)  $860 billion 
A)  $1,080 billion 
B)  $1,010 billion 
C)  $980 billion 
D)  $860 billion

Question 20

Gross domestic product understates the total production of final goods and services because of the omission of

Accepted Answer

A)  exports. 
B)  inflation. 
C)  intermediate goods. 
D)  household production. 
A)  exports. 
B)  inflation. 
C)  intermediate goods. 
D)  household production.

Which of the following are not considered part of government purchases?

High-income countries such as the United States spend a greater amount on services as compared to goods.

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 rate of increase in the price level from 2017 to 2018.

Marla is an architect who is designing a home for Chuck.Chuck is paying Marla $150 per hour to design his new home.When Chuck and Marla get married,Marla continues to work on designing the home,but she no longer charges Chuck for her work.As a result,GDP because .

The measure of production that values output using base-year prices is called

The purchase of a new automobile is included in

An example of a transfer payment is

Government spending ________ is included in gross domestic product.

Which of the following is likely to increase measured GDP?

Real GDP is GDP in a given year

China's current rate of GDP growth is quite rapid.Its current growth rate is probably three times that of the United States.However,the levels of pollution are much higher in China.Would you consider China to be better off than the United States given this information? Why or why not?

Describe briefly how the final value of an iPhone which costs $700 must be equal to the sum of incomes generated by the production of the iPhone.

The "underground economy" refers to

If a German firm produces cars in the United States,that production should count towards

When Ford increases the production of cars in Romania,which of the following occurs?

Gross domestic product understates the total production of final goods and services because of the omission of

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

Which of the following are not considered part of government purchases?

High-income countries such as the United States spend a greater amount on services as compared to goods.

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 rate of increase in the price level from 2017 to 2018.

Marla is an architect who is designing a home for Chuck.Chuck is paying Marla $150 per hour to design his new home.When Chuck and Marla get married,Marla continues to work on designing the home,but she no longer charges Chuck for her work.As a result,GDP ________ because ________.

The measure of production that values output using base-year prices is called

The purchase of a new automobile is included in

An example of a transfer payment is

Government spending ________ is included in gross domestic product.

Which of the following is likely to increase measured GDP?

Real GDP is GDP in a given year

China's current rate of GDP growth is quite rapid.Its current growth rate is probably three times that of the United States.However,the levels of pollution are much higher in China.Would you consider China to be better off than the United States given this information? Why or why not?

Describe briefly how the final value of an iPhone which costs $700 must be equal to the sum of incomes generated by the production of the iPhone.

The "underground economy" refers to

If a German firm produces cars in the United States,that production should count towards

When Ford increases the production of cars in Romania,which of the following occurs?

Gross domestic product understates the total production of final goods and services because of the omission of

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

Marla is an architect who is designing a home for Chuck.Chuck is paying Marla $150 per hour to design his new home.When Chuck and Marla get married,Marla continues to work on designing the home,but she no longer charges Chuck for her work.As a result,GDP because .