Exam 4: GDP: Measuring Total Production and Income

Japan experienced periods of deflation-a declining price level-during the 1990s.During a deflationary period, which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period.

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate, is this complaint valid? Explain carefully.

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 jewellery box that takes him 15 hours to complete.How is GDP affected by Scott's efforts?

In 2017, Kendall Ford, an automobile dealership, spent $20,000 on a new car lift for its repair shop, $2,000 on a new copy machine for its sales division, and $600,000 on Ford Motor company stock.Unsold cars and trucks were valued at $400,000 on January 1, 2017, and unsold cars and trucks were valued at $900,000 on December 31, 2017.What is Kendall Ford's total investment spending in 2017?

"Household production" refers to

If an economy's exports rise by $8 billion and its imports fall by $8 billion between 2016 and 2017, by how much will GDP change between the two years, all else equal?

Nominal GDP is GDP in a given year

Which of the following would increase gross fixed capital formation in an economy?

If the GDP deflator is 142, by how much have prices changed since the base year?

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

If real GDP is larger than nominal GDP

To examine how the total production of an economy has changed over time, it would be better to examine

Table 4.22 -Refer to Table 4.22.Given the information above, calculate the rate of increase in the price level from 2016 to 2017.

What would explain a rise in nominal GDP but a drop in real GDP during the same period?

Real GDP is GDP in a given year

In the first half of 2015, the Canadian economy slowed down.This slowdown was caused mostly by

Gross domestic product is generally ________ net national income.

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

Real GDP will increase

Table 4.13 Consider the data shown above for Vicuna, a country that produces only two products: oranges and shirts. -Refer to Table 4.13.Nominal GDP for Vicuna for 2017 equals