Question 1

During a business cycle expansion,total production ________ and total employment ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 2

Disposable personal income equals personal income

Accepted Answer

A)  minus personal tax payments. 
B)  plus government transfer payments. 
C)  minus personal tax payments plus government transfer payments. 
D)  minus government transfer payments plus personal tax payments. 
A)  minus personal tax payments. 
B)  plus government transfer payments. 
C)  minus personal tax payments plus government transfer payments. 
D)  minus government transfer payments plus personal tax payments.

Question 3

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

Accepted Answer

A) True 
 B)False

Question 4

Table 12-8
 $\begin{array}{|l|c|r|}
\hline \text { Product } & \text { Quantity } & \text { Price } \
\hline \text { Sweaters } & 50 & \$ 50.00 \
\hline \text { CDs } & 150 & 10.00 \
\hline \text { Sugar } & 600 & 1.00 \
\hline \text { Soft drinks } & 800 & 0.75 \
\hline
\end{array}$
-Refer to Table 12-8.Suppose that a simple economy produces only four goods and services: sweaters,CDs,sugar,and soft drinks.Assume one half of the sugar is used in making the soft drinks and the other half of the sugar is purchased by households.Calculate nominal GDP for this simple economy.

Accepted Answer

Nominal GDP equals (

Question 5

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

Accepted Answer

A)  produce goods and services no one wants. 
B)  sell their goods and services to citizens in other countries. 
C)  do not pay taxes to the government. 
D)  employ illegal immigrants from other countries. 
A)  produce goods and services no one wants. 
B)  sell their goods and services to citizens in other countries. 
C)  do not pay taxes to the government. 
D)  employ illegal immigrants from other countries.

Question 6

For developed countries like the United States,GDP will always exceed GNP.

Accepted Answer

A) True 
 B)False

Question 7

If the GDP deflator is less than 100,then for that year,nominal GDP ________ real GDP.

Accepted Answer

A)  equals 
B)  is greater than 
C)  is less than 
D)  may be greater than or less than 
A)  equals 
B)  is greater than 
C)  is less than 
D)  may be greater than or less than

Question 8

The purchase by a household in China of a CD produced in the United States is included in U.S.

Accepted Answer

A)  consumption expenditures. 
B)  investment expenditures. 
C)  government purchases. 
D)  net exports. 
A)  consumption expenditures. 
B)  investment expenditures. 
C)  government purchases. 
D)  net exports.

Question 9

Transfer payments are subtracted from national income to get to personal income.

Accepted Answer

A) True 
 B)False

Question 10

Is nominal GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period? Is real GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period?

Accepted Answer

Both nominal GDP and real GDP are measur

Question 11

The values of real GDP and real GNP are almost the same in countries where a significant fraction of domestic production takes place in foreign-owned firms.

Accepted Answer

A) True 
 B)False

Question 12

The GDP deflator in year 2 is 105,using year 1 as the base year.This means that,on average,the cost of goods and services is

Accepted Answer

A)  5% higher in year 2 than in year 1. 
B)  105% higher in year 2 than in year 1. 
C)  5% higher in year 1 than in year 2. 
D)  105% higher in year 1 than in year 2. 
A)  5% higher in year 2 than in year 1. 
B)  105% higher in year 2 than in year 1. 
C)  5% higher in year 1 than in year 2. 
D)  105% higher in year 1 than in year 2.

Question 13

What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

Accepted Answer

The underground economy is that part of

Question 14

Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?

Accepted Answer

Nominal GDP can change because

Question 15

Which of the following would be directly counted in GDP in 2018?

Accepted Answer

A)  kitchen cabinets purchased from Home Depot in 2018 to be installed in a house built in 1997 
B)  kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a brand new country-style home 
C)  kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a farm house built in 1950 
D)  none of the above 
A)  kitchen cabinets purchased from Home Depot in 2018 to be installed in a house built in 1997 
B)  kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a brand new country-style home 
C)  kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a farm house built in 1950 
D)  none of the above

Question 16

In the term "real GDP," what does "GDP" stand for and what does it measure? What does "real" indicate?

Accepted Answer

GDP stands for gross domestic product an

Question 17

Table 12-18
 $\begin{array}{|c|c|c|c|c|}
\hline & 2013 & & 2018 & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Camera } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Legal services } & 50 & 15 & 45 & 20 \
\hline \text { Books } & 200 & 40 & 210 & 45 \
\hline
\end{array}$ A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above.
-Refer to Table 12-18.What is nominal GDP in 2018 when 2013 is the base year?

Accepted Answer

A)  $28,885 
B)  $11,790 
C)  $11,200 
D)  $10,275 
A)  $28,885 
B)  $11,790 
C)  $11,200 
D)  $10,275

Question 18

Suppose that nominal GDP in 2018 was less than real GDP in 2018.Given this information,we know for certain that

Accepted Answer

A)  the price level in 2016 was greater than the price level in the base year. 
B)  the price level in 2016 was less than the price level in the base year. 
C)  real GDP in 2016 was less than real GDP in the base year. 
D)  real GDP in 2016 was greater than real GDP in the base year. 
A)  the price level in 2016 was greater than the price level in the base year. 
B)  the price level in 2016 was less than the price level in the base year. 
C)  real GDP in 2016 was less than real GDP in the base year. 
D)  real GDP in 2016 was greater than real GDP in the base year.

Question 19

Which component of consumption spending is the greatest in a typical industrialized economy?

Accepted Answer

A)  services 
B)  durable goods 
C)  nondurable goods 
D)  new housing 
A)  services 
B)  durable goods 
C)  nondurable goods 
D)  new housing

Question 20

GDP is not a complete measure of well-being.

Accepted Answer

A) True 
 B)False

During a business cycle expansion,total production and total employment .

Disposable personal income equals personal income

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

For developed countries like the United States,GDP will always exceed GNP.

If the GDP deflator is less than 100,then for that year,nominal GDP ________ real GDP.

The purchase by a household in China of a CD produced in the United States is included in U.S.

Transfer payments are subtracted from national income to get to personal income.

Is nominal GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period? Is real GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period?

The values of real GDP and real GNP are almost the same in countries where a significant fraction of domestic production takes place in foreign-owned firms.

The GDP deflator in year 2 is 105,using year 1 as the base year.This means that,on average,the cost of goods and services is

What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?

Which of the following would be directly counted in GDP in 2018?

In the term "real GDP," what does "GDP" stand for and what does it measure? What does "real" indicate?

Suppose that nominal GDP in 2018 was less than real GDP in 2018.Given this information,we know for certain that

Which component of consumption spending is the greatest in a typical industrialized economy?

GDP is not a complete measure of well-being.

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

During a business cycle expansion,total production ________ and total employment ________.

Disposable personal income equals personal income

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

For developed countries like the United States,GDP will always exceed GNP.

If the GDP deflator is less than 100,then for that year,nominal GDP ________ real GDP.

The purchase by a household in China of a CD produced in the United States is included in U.S.

Transfer payments are subtracted from national income to get to personal income.

Is nominal GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period? Is real GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period?

The values of real GDP and real GNP are almost the same in countries where a significant fraction of domestic production takes place in foreign-owned firms.

The GDP deflator in year 2 is 105,using year 1 as the base year.This means that,on average,the cost of goods and services is

What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?

Which of the following would be directly counted in GDP in 2018?

In the term "real GDP," what does "GDP" stand for and what does it measure? What does "real" indicate?

Suppose that nominal GDP in 2018 was less than real GDP in 2018.Given this information,we know for certain that

Which component of consumption spending is the greatest in a typical industrialized economy?

GDP is not a complete measure of well-being.

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

During a business cycle expansion,total production and total employment .