Question 1

Nominal GDP will increase

Accepted Answer

A) only if the price level rises. 
B) only if the price level falls. 
C) only if the quantity of final goods and services produced rises. 
D) if either the price level or the quantity of goods and services produced rises. 
A) only if the price level rises. 
B) only if the price level falls. 
C) only if the quantity of final goods and services produced rises. 
D) if either the price level or the quantity of goods and services produced rises.

Question 2

The GDP deflator is equal to

Accepted Answer

A) real GDP divided by nominal GDP. 
B) nominal GDP divided by real GDP,multiplied by 100. 
C) nominal GDP divided by real GDP. 
D) real GDP divided by nominal GDP,multiplied by 100. 
A) real GDP divided by nominal GDP. 
B) nominal GDP divided by real GDP,multiplied by 100. 
C) nominal GDP divided by real GDP. 
D) real GDP divided by nominal GDP,multiplied by 100.

Question 3

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 4

Which of the following statements about the underground economy is true?

Accepted Answer

A) The underground economy in developing countries amounts to less than 10% of measured GDP. 
B) Most transactions that occur in the underground economy are included in the calculation of GDP. 
C) Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run. 
D) Income that is earned but not reported as income for tax purposes is included in the calculation of GDP. 
A) The underground economy in developing countries amounts to less than 10% of measured GDP. 
B) Most transactions that occur in the underground economy are included in the calculation of GDP. 
C) Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run. 
D) Income that is earned but not reported as income for tax purposes is included in the calculation of GDP.

Question 5

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 6

The largest component of spending in GDP is

Accepted Answer

A) consumption spending. 
B) investment spending. 
C) government spending. 
D) net export spending. 
A) consumption spending. 
B) investment spending. 
C) government spending. 
D) net export spending.

Question 7

An example of an intermediate good would be

Accepted Answer

A) the bread that goes into a sub sandwich that is sold by Quiznos. 
B) the soda pop sold by Quiznos. 
C) a sub sandwich sold by Quiznos. 
D) the potato chips sold by Quiznos. 
A) the bread that goes into a sub sandwich that is sold by Quiznos. 
B) the soda pop sold by Quiznos. 
C) a sub sandwich sold by Quiznos. 
D) the potato chips sold by Quiznos.

Question 8

Table 8-1
  
-Refer to Table 8-1.Suppose that a simple economy produces only four goods and services: sweatshirts,dental examinations,coffee drinks,and coffee beans.Assume all of the coffee beans are used in the production of the coffee drinks.Using the information in the above table,nominal GDP for this simple economy equals

Accepted Answer

A) 3,090 units. 
B) $7,250. 
C) $8,750. 
D) $9,750. 
A) 3,090 units. 
B) $7,250. 
C) $8,750. 
D) $9,750.

Question 9

Which of the following statements is true?

Accepted Answer

A) A decrease in the crime rate increases GDP as people will spend more on security. 
B) Household production is counted in GDP as it amounts to real production. 
C) GDP accounting rules do not adjust for production that pollutes the economy. 
D) GDP growth distributes income equally to people in the economy. 
A) A decrease in the crime rate increases GDP as people will spend more on security. 
B) Household production is counted in GDP as it amounts to real production. 
C) GDP accounting rules do not adjust for production that pollutes the economy. 
D) GDP growth distributes income equally to people in the economy.

Question 10

The GDP deflator is a measure of the price level which is calculated as nominal GDP divided by real GDP and multiplied by 100.

Accepted Answer

A) True 
 B)False

Question 11

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.

Accepted Answer

Real GDP would be higher,as long as the

Question 12

Which of the following would increase disposable personal income?

Accepted Answer

A) a decrease in transfer payments received 
B) a decrease in taxes paid 
C) a decrease in personal income 
D) All of the above would increase disposable income. 
A) a decrease in transfer payments received 
B) a decrease in taxes paid 
C) a decrease in personal income 
D) All of the above would increase disposable income.

Question 13

Table 8-6
  
-Refer to Table 8-6.Consider the table of production and price statistics for a small economy in 2018.If the economy only produces the four goods listed below,what is GDP for 2018?

Accepted Answer

A) $428,000 
B) $267,000 
C) $24,000 
D) $1,424 
A) $428,000 
B) $267,000 
C) $24,000 
D) $1,424

Question 14

A car that is produced in 2018 is not sold until 2019.According to the definition of GDP,in which year's GDP should it be counted?

Accepted Answer

A) 2018 
B) 2019 
C) Half of the sales price will count as part of 2018 GDP and half will count as part of 2019 GDP. 
D) The production cost will count as part of 2018 GDP while the sales price will count as part of 2019 GDP. 
A) 2018 
B) 2019 
C) Half of the sales price will count as part of 2018 GDP and half will count as part of 2019 GDP. 
D) The production cost will count as part of 2018 GDP while the sales price will count as part of 2019 GDP.

Question 15

Table 8-26
   The components of national income for an economy are represented in Table 8-26 above.All values are in billions of dollars.
-Refer to Table 8-26.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 16

The circular flow diagram shows that

Accepted Answer

A) the value of total income is equal to the total value of expenditures on final goods and services. 
B) firms pay households wages,and households receive transfer payments from firms. 
C) households spend all their income on goods and services. 
D) GDP will be less than the total value of expenditures on final goods and services in the economy. 
A) the value of total income is equal to the total value of expenditures on final goods and services. 
B) firms pay households wages,and households receive transfer payments from firms. 
C) households spend all their income on goods and services. 
D) GDP will be less than the total value of expenditures on final goods and services in the economy.

Question 17

A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements.This will

Accepted Answer

A) increase GDP and increase well-being in the economy. 
B) increase GDP and decrease well-being in the economy. 
C) decrease GDP and increase well-being in the economy. 
D) decrease GDP and decrease well-being in the economy. 
A) increase GDP and increase well-being in the economy. 
B) increase GDP and decrease well-being in the economy. 
C) decrease GDP and increase well-being in the economy. 
D) decrease GDP and decrease well-being in the economy.

Question 18

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

Accepted Answer

A) CPI; real GDP; nominal GDP 
B) GDP deflator; real GDP; nominal GDP 
C) GDP deflator; nominal GDP; real GDP 
D) PPI; nominal GDP; real GDP 
E) PPI; real GDP; nominal GDP 
A) CPI; real GDP; nominal GDP 
B) GDP deflator; real GDP; nominal GDP 
C) GDP deflator; nominal GDP; real GDP 
D) PPI; nominal GDP; real GDP 
E) PPI; real GDP; nominal GDP

Question 19

Table 8-11
   Consider the following data for Tyrovia,a country that produces only two products: guns and butter.
-Refer to Table 8-11.Real GDP for Tyrovia for 2018 using 2009 as the base year equals

Accepted Answer

A) $1,140. 
B) $880. 
C) $690. 
D) $560. 
A) $1,140. 
B) $880. 
C) $690. 
D) $560.

Question 20

Which of the following is not directly counted in GDP?

Accepted Answer

A) investment expenditures 
B) government purchases 
C) intermediate goods 
D) consumer goods 
A) investment expenditures 
B) government purchases 
C) intermediate goods 
D) consumer goods

Nominal GDP will increase

The GDP deflator is equal to

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

Which of the following statements about the underground economy is true?

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.

The largest component of spending in GDP is

An example of an intermediate good would be

Which of the following statements is true?

The GDP deflator is a measure of the price level which is calculated as nominal GDP divided by real GDP and multiplied by 100.

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.

Which of the following would increase disposable personal income?

Table 8-6 -Refer to Table 8-6.Consider the table of production and price statistics for a small economy in 2018.If the economy only produces the four goods listed below,what is GDP for 2018?

A car that is produced in 2018 is not sold until 2019.According to the definition of GDP,in which year's GDP should it be counted?

Table 8-26 The components of national income for an economy are represented in Table 8-26 above.All values are in billions of dollars. -Refer to Table 8-26.What is the level of disposable personal income for this economy?

The circular flow diagram shows that

A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements.This will

The is a measure of the price level and is calculated by dividing by and multiplying by 100.

Table 8-11 Consider the following data for Tyrovia,a country that produces only two products: guns and butter. -Refer to Table 8-11.Real GDP for Tyrovia for 2018 using 2009 as the base year equals

Which of the following is not directly counted in GDP?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 8: GDP: Measuring Total Production and Income

Nominal GDP will increase

The GDP deflator is equal to

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

Which of the following statements about the underground economy is true?

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.

The largest component of spending in GDP is

An example of an intermediate good would be

Which of the following statements is true?

The GDP deflator is a measure of the price level which is calculated as nominal GDP divided by real GDP and multiplied by 100.

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.

Which of the following would increase disposable personal income?

Table 8-6 -Refer to Table 8-6.Consider the table of production and price statistics for a small economy in 2018.If the economy only produces the four goods listed below,what is GDP for 2018?

A car that is produced in 2018 is not sold until 2019.According to the definition of GDP,in which year's GDP should it be counted?

Table 8-26 The components of national income for an economy are represented in Table 8-26 above.All values are in billions of dollars. -Refer to Table 8-26.What is the level of disposable personal income for this economy?

The circular flow diagram shows that

A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements.This will

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

Table 8-11 Consider the following data for Tyrovia,a country that produces only two products: guns and butter. -Refer to Table 8-11.Real GDP for Tyrovia for 2018 using 2009 as the base year equals

Which of the following is not directly counted in GDP?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,Banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

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.

The is a measure of the price level and is calculated by dividing by and multiplying by 100.