Question 1

GDP is not a perfect measure of well-being because

Accepted Answer

A)  the value of leisure is included in GDP. 
B)  GDP is not adjusted for pollution. 
C)  GDP is adjusted for changes in crime rates. 
D)  GDP is adjusted for increases in drug addiction. 
A)  the value of leisure is included in GDP. 
B)  GDP is not adjusted for pollution. 
C)  GDP is adjusted for changes in crime rates. 
D)  GDP is adjusted for increases in drug addiction.

Question 2

Table 12-9
 $\begin{array}{|l|r|r|}
\hline \text { Product } & \text { Quantity } & \text { Priceper Unit } \
\hline \text { Steel } & 1,000 & \$ 100 \
\hline \text { iPods } & 5,000 & 200 \
\hline \text { Autos } & 500 & 25,000 \
\hline \text { Legal services } & 100 & 2,000 \
\hline
\end{array}$
-Refer to Table 12-9.Suppose that the above table represents the goods and services produced in a very simple economy in 2018.Assume that steel is used as an input in the production of autos.Using that information,calculate GDP for the year 2018.

Accepted Answer

First,we must decide which goods to incl

Question 3

Because workers in the United States work fewer hours per week,on average,than they did over 100 years ago

Accepted Answer

A)  workers in the United States are worse off than they were over 100 years ago. 
B)  workers in the United States earn less income than they did over 100 years ago. 
C)  GDP is lower than it would be if U.S. workers worked the same workweek they had 100 years ago. 
D)  GDP is higher than it would be if U.S. workers worked the same workweek they had 100 years ago. 
A)  workers in the United States are worse off than they were over 100 years ago. 
B)  workers in the United States earn less income than they did over 100 years ago. 
C)  GDP is lower than it would be if U.S. workers worked the same workweek they had 100 years ago. 
D)  GDP is higher than it would be if U.S. workers worked the same workweek they had 100 years ago.

Question 4

The table below describes the value added in the production of a gallon of gasoline by each stage of production.(The values are hypothetical.)
Table 12-10
 $\begin{array}{|l|l|l|}
\hline \text { Stage of Production } & \text { Value of Sales } & \text { Value Added } \
\hline \text { Oil drilling } & 0.75 & \
\hline \text { Refining } & 1.25 & \
\hline \text { Shipping } & 1.85 & \
\hline \text { Retail sales } & 3.65 & \
\hline
\end{array}$ 
a)What is the value added by each stage of production?
b)What is the total value added?
For simplicity,you can ignore the cost of the inputs for oil drilling.

Accepted Answer

a)The value added is the difference betw

Question 5

A final good is one that

Accepted Answer

A)  is used in the production of another good. 
B)  is a natural resource used to produce a good. 
C)  is purchased as an input in the production process. 
D)  is purchased by its final user. 
A)  is used in the production of another good. 
B)  is a natural resource used to produce a good. 
C)  is purchased as an input in the production process. 
D)  is purchased by its final user.

Question 6

In the first half of 2017,automobile sales in the United States were lower than they were in the first half of 2016.The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when purchased by businesses.

Accepted Answer

A)  nondurable goods; durable goods 
B)  consumption; investment 
C)  investment; consumption 
D)  durable goods; nondurable goods 
A)  nondurable goods; durable goods 
B)  consumption; investment 
C)  investment; consumption 
D)  durable goods; nondurable goods

Question 7

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 real GDP in 2018,using 2013 as 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 8

In 2016,Ford Motor Company's sales were rising.These events were caused by

Accepted Answer

A)  an economic recession. 
B)  an economic expansion. 
C)  an increase in advertising. 
D)  improving quality of service. 
A)  an economic recession. 
B)  an economic expansion. 
C)  an increase in advertising. 
D)  improving quality of service.

Question 9

If the value added of a firm is positive,will the firm necessarily have positive profits?

Accepted Answer

No.Value added equals the price of the f

Question 10

If nominal GDP rises we can say that

Accepted Answer

A)  production has risen and prices remain constant. 
B)  prices have risen and production remains constant. 
C)  production has risen or prices have risen or both have risen. 
D)  production has fallen and prices have risen. 
A)  production has risen and prices remain constant. 
B)  prices have risen and production remains constant. 
C)  production has risen or prices have risen or both have risen. 
D)  production has fallen and prices have risen.

Question 11

Scott is a woodworker and charges $125 an hour for his time manufacturing custom-made wood products.For his wife's birthday,he designs and creates an intricate birdseye maple jewelry box that takes him 15 hours to complete.By how much and in what direction does GDP change as a result of his efforts?

Accepted Answer

A)  GDP rises by $1,875. 
B)  GDP is not affected by Scott's production of the jewelry box. 
C)  GDP rises by $125. 
D)  GDP falls by $1,875. 
A)  GDP rises by $1,875. 
B)  GDP is not affected by Scott's production of the jewelry box. 
C)  GDP rises by $125. 
D)  GDP falls by $1,875.

Question 12

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

Accepted Answer

A) True 
 B)False

Question 13

An inflation rate of 5% between 2017 and 2018 would be implied by a change in the GDP deflator from ________ in 2017 to ________ in 2018.

Accepted Answer

A)  105; 115 
B)  200; 205 
C)  400; 420 
D)  375; 390 
A)  105; 115 
B)  200; 205 
C)  400; 420 
D)  375; 390

Question 14

Which of the following could cause nominal GDP to decrease next year,but real GDP to increase?

Accepted Answer

A)  The price level rises and the quantity of final goods and services produced rises. 
B)  The price level falls and the quantity of final goods and services produced rises. 
C)  The price level rises and the quantity of final goods and services produced falls. 
D)  The price level falls and the quantity of final goods and services produced falls. 
A)  The price level rises and the quantity of final goods and services produced rises. 
B)  The price level falls and the quantity of final goods and services produced rises. 
C)  The price level rises and the quantity of final goods and services produced falls. 
D)  The price level falls and the quantity of final goods and services produced falls.

Question 15

An example of a final good would be

Accepted Answer

A)  the soy milk sold to Starbucks. 
B)  the whipped cream sold to Starbucks. 
C)  a soy latte sold by Starbucks to a student. 
D)  the coffee beans sold to Starbucks. 
A)  the soy milk sold to Starbucks. 
B)  the whipped cream sold to Starbucks. 
C)  a soy latte sold by Starbucks to a student. 
D)  the coffee beans sold to Starbucks.

Question 16

Explain the difference between gross domestic product and gross national product.Give an example of each.

Accepted Answer

Gross domestic product is the value of f

Question 17

The size of the underground economy as a percent of GDP is larger in the United States as compared to poorer countries such as Zimbabwe.

Accepted Answer

A) True 
 B)False

Question 18

Table 12-17
 $\begin{array}{|c|c|c|c|c|}
\hline & 2013 & & 2018 & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Movies } & 20 & \$ 6.00 & 30 & \$ 7.00 \
\hline \text { Burgers } & 100 & 2.00 & 90 & 2.50 \
\hline \text { Bikes } & 3 & 1,000.00 & 6 & 1,100.00 \
\hline
\end{array}$ A very simple economy produces three goods: movies, burgers, and bikes. The quantities produced and their corresponding prices for 2013 and 2018 are shown in the table above.
-Refer to Table 12-17.What is nominal GDP in 2013?

Accepted Answer

A)  $3,320 
B)  $3,690 
C)  $6,360 
D)  $7,035 
A)  $3,320 
B)  $3,690 
C)  $6,360 
D)  $7,035

Question 19

Which of the following is not true about the composition of GDP in 2016?

Accepted Answer

A)  The majority of consumer spending is on durable goods. 
B)  Purchases made by state and local governments are greater than purchases made by the federal government. 
C)  Imports are greater than exports. 
D)  Business fixed investment is the largest component of investment. 
A)  The majority of consumer spending is on durable goods. 
B)  Purchases made by state and local governments are greater than purchases made by the federal government. 
C)  Imports are greater than exports. 
D)  Business fixed investment is the largest component of investment.

Question 20

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 the GDP deflator in 2013 if 2018 is the base year?

Accepted Answer

A)  187 
B)  87 
C)  8.7 
D)  0.87 
A)  187 
B)  87 
C)  8.7 
D)  0.87

GDP is not a perfect measure of well-being because

Because workers in the United States work fewer hours per week,on average,than they did over 100 years ago

A final good is one that

In the first half of 2017,automobile sales in the United States were lower than they were in the first half of 2016.The decrease in auto sales impacts GDP because new automobiles are counted as when purchased by households and when purchased by businesses.

In 2016,Ford Motor Company's sales were rising.These events were caused by

If the value added of a firm is positive,will the firm necessarily have positive profits?

If nominal GDP rises we can say that

Scott is a woodworker and charges $125 an hour for his time manufacturing custom-made wood products.For his wife's birthday,he designs and creates an intricate birdseye maple jewelry box that takes him 15 hours to complete.By how much and in what direction does GDP change as a result of his efforts?

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

An inflation rate of 5% between 2017 and 2018 would be implied by a change in the GDP deflator from in 2017 to in 2018.

Which of the following could cause nominal GDP to decrease next year,but real GDP to increase?

An example of a final good would be

Explain the difference between gross domestic product and gross national product.Give an example of each.

The size of the underground economy as a percent of GDP is larger in the United States as compared to poorer countries such as Zimbabwe.

Which of the following is not true about the composition of GDP in 2016?

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

GDP is not a perfect measure of well-being because

Because workers in the United States work fewer hours per week,on average,than they did over 100 years ago

A final good is one that

In the first half of 2017,automobile sales in the United States were lower than they were in the first half of 2016.The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when purchased by businesses.

In 2016,Ford Motor Company's sales were rising.These events were caused by

If the value added of a firm is positive,will the firm necessarily have positive profits?

If nominal GDP rises we can say that

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

An inflation rate of 5% between 2017 and 2018 would be implied by a change in the GDP deflator from ________ in 2017 to ________ in 2018.

Which of the following could cause nominal GDP to decrease next year,but real GDP to increase?

An example of a final good would be

Explain the difference between gross domestic product and gross national product.Give an example of each.

The size of the underground economy as a percent of GDP is larger in the United States as compared to poorer countries such as Zimbabwe.

Which of the following is not true about the composition of GDP in 2016?

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

In the first half of 2017,automobile sales in the United States were lower than they were in the first half of 2016.The decrease in auto sales impacts GDP because new automobiles are counted as when purchased by households and when purchased by businesses.

An inflation rate of 5% between 2017 and 2018 would be implied by a change in the GDP deflator from in 2017 to in 2018.