Question 1

Which of the following is a true statement about real and nominal GDP?

Accepted Answer

A)  If nominal GDP increases from one year to the next, we know that production of goods and services has risen. 
B)  Nominal GDP is a better measure than real GDP in comparing changes in the production of goods and service year after year. 
C)  Increases in average prices do not affect the calculation of nominal GDP. 
D)  If real GDP increases from one year to the next, we know that production of goods and services has risen. 
A)  If nominal GDP increases from one year to the next, we know that production of goods and services has risen. 
B)  Nominal GDP is a better measure than real GDP in comparing changes in the production of goods and service year after year. 
C)  Increases in average prices do not affect the calculation of nominal GDP. 
D)  If real GDP increases from one year to the next, we know that production of goods and services has risen.

Question 2

Which component of consumption spending is the greatest in a typical 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 3

Table 19-14
  
-Refer to Table 19-14. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2013 equals

Accepted Answer

A)  92.2. 
B)  102.6. 
C)  108.5. 
D)  109.1. 
A)  92.2. 
B)  102.6. 
C)  108.5. 
D)  109.1.

Question 4

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 5

If the GDP deflator is equal to 100, then for that year nominal GDP is equal to real GDP.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

What are the differences between national income, personal income, and disposable personal income?

Accepted Answer

National income is the total income rece

Question 8

Table 19-26
  
-If an American firm opens a production facility in India, the total value of the production will be included in the

Accepted Answer

A)  gross domestic product of the United States. 
B)  national income of the United States. 
C)  gross domestic product of India. 
D)  national income of India. 
A)  gross domestic product of the United States. 
B)  national income of the United States. 
C)  gross domestic product of India. 
D)  national income of India.

Question 9

Table 19-4
  
-Refer to Table 19-4. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

Accepted Answer

A)  $2,200. 
B)  $2,100. 
C)  $1,600. 
D)  $1,400. 
A)  $2,200. 
B)  $2,100. 
C)  $1,600. 
D)  $1,400.

Question 10

An example of business fixed investment spending is

Accepted Answer

A)  a purchase of a home by a household. 
B)  a purchase of a computer by an accounting firm. 
C)  a purchase of a bond by General Electric Corporation. 
D)  $200 million of unsold cars at a car dealership. 
A)  a purchase of a home by a household. 
B)  a purchase of a computer by an accounting firm. 
C)  a purchase of a bond by General Electric Corporation. 
D)  $200 million of unsold cars at a car dealership.

Question 11

Table 19-29
  
-Refer to Table 19-29. Based on the table above, what is national income for this economy?

Accepted Answer

A)  $4,700 billion 
B)  $4,000 billion 
C)  $3,150 billion 
D)  $2,450 billion 
A)  $4,700 billion 
B)  $4,000 billion 
C)  $3,150 billion 
D)  $2,450 billion

Question 12

Table 19-26
  
-The output of U.S. citizens who work in Canada would be included in the

Accepted Answer

A)  gross domestic product of Canada. 
B)  gross national product of Canada. 
C)  gross domestic product of the United States. 
D)  gross national product of Canada and the gross national product of the United States. 
A)  gross domestic product of Canada. 
B)  gross national product of Canada. 
C)  gross domestic product of the United States. 
D)  gross national product of Canada and the gross national product of the United States.

Question 13

In comparing China to Canada, China's relatively ________ growth rate in GDP would make you more likely to take a job in China, and China's relatively ________ level of GDP would make you less likely to take a job in China.

Accepted Answer

A)  high; low 
B)  high; high 
C)  low; low 
D)  low; high 
A)  high; low 
B)  high; high 
C)  low; low 
D)  low; high

Question 14

Government spending on transfer payments is included in government purchases when calculating GDP because it results in the production of new goods and services.

Accepted Answer

A) True 
 B)False

Question 15

Table 19-11
   Consider the following data for Tyrovia, a country that produces only two products: guns and butter.
-Refer to Table 19-11. Nominal GDP for Tyrovia in 2013 equals

Accepted Answer

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

Question 16

Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?

Accepted Answer

A)  GDP will decrease. 
B)  GDP will increase. 
C)  GDP will not change. 
D)  GDP may increase or may decrease depending on inflation. 
A)  GDP will decrease. 
B)  GDP will increase. 
C)  GDP will not change. 
D)  GDP may increase or may decrease depending on inflation.

Question 17

Disposable personal income is equal to personal income minus personal tax payments.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Developing countries with large informal sectors tend to have firms that invest less in capital equipment.

Accepted Answer

A) True 
 B)False

Question 20

Debbie makes porcelain plates in her home and sells them to the Opus gallery. She spent $400 last month on supplies and made 50 plates. She sold the plates to the gallery at $25 per plate. The gallery sells all the plates for $40 each. For all of the 50 plates, what is Debbie's total value added? For all the 50 plates, what is the gallery's total value added?

Accepted Answer

To determine Debbie's value added, we mu

Exam 19: GDP: Measuring Total Production and Income

Which of the following is a true statement about real and nominal GDP?

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

Table 19-14 -Refer to Table 19-14. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2013 equals

Which of the following is likely to increase measured GDP?

If the GDP deflator is equal to 100, then for that year nominal GDP is equal to real GDP.

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

What are the differences between national income, personal income, and disposable personal income?

Table 19-26 -If an American firm opens a production facility in India, the total value of the production will be included in the

Table 19-4 -Refer to Table 19-4. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

An example of business fixed investment spending is

Table 19-29 -Refer to Table 19-29. Based on the table above, what is national income for this economy?

Table 19-26 -The output of U.S. citizens who work in Canada would be included in the

In comparing China to Canada, China's relatively ________ growth rate in GDP would make you more likely to take a job in China, and China's relatively ________ level of GDP would make you less likely to take a job in China.

Government spending on transfer payments is included in government purchases when calculating GDP because it results in the production of new goods and services.

Table 19-11 Consider the following data for Tyrovia, a country that produces only two products: guns and butter. -Refer to Table 19-11. Nominal GDP for Tyrovia in 2013 equals

Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?

Disposable personal income is equal to personal income minus personal tax payments.

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

Developing countries with large informal sectors tend to have firms that invest less in capital equipment.

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

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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

In comparing China to Canada, China's relatively growth rate in GDP would make you more likely to take a job in China, and China's relatively level of GDP would make you less likely to take a job in China.