Exam 19: GDP: Measuring Total Production and Income

Table 19-2 -Refer to Table 19-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals

Consumption spending is $4.5 billion, gross private domestic investment is $3 billion, and government expenditures are $2 billion. If GDP is $14 billion, which of the following could be true regarding exports and imports in the economy?

Gross domestic product understates the total production of final goods and services because of the omission of

Table 19-20 -Refer to Table 19-20. Given the following information, calculate the rate of increase in the price level from 2012 to 2013.

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.

The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.

Table 19-18 A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above. -An inflation rate of 5% between 2013 and 2014 would be implied by a change in the GDP deflator from ________ in 2013 to ________ in 2014.

Investment, as defined by economists, would include the purchase of a

Nominal GDP measures the value of all final goods and services at base-year prices.

In the first half of 2011, automobile sales in the United States were lower than they were in the first half of 2010. The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when purchased by businesses.

If a U.S. firm produces cars in Mexico, that production should count towards

Table 19-18 A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above. -Refer to Table 19-18. What is real GDP in 2013, using 2013 as the base year?

Which of the following goods is directly counted in GDP?

Article Summary For only the second time in the previous 10 quarters, China's GDP grew at a faster rate than from the same period a year earlier. From July through September 2013, China's GDP increased 7.8 percent, but a decline in exports, growing inflation, and slowing growth in factory production all suggest that growth will be slowing down. China has recently been attempting to restructure its economy by moving toward increasing consumption and relying less on exports and investments as a means to achieving more sustainable economic growth. In the first nine months of 2013, 46 percent of growth was due to consumption, 56 percent was due to investment, and exports accounted for negative 1.7 percent. Source: Aileen Wang and Kevin Yao, "China's third-quarter GDP growth fastest this year, but outlook dim," Reuters, October 18, 2013. -Refer to the Article Summary. The decline in export growth will hurt China's GDP because

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

National income equals gross domestic product

In the circular flow diagram, ________ supply the factors of production, and ________ goods and services.

Table 19-17 A very simple economy produces three goods: movies, burgers, and bikes. The quantities produced and their corresponding prices for 2006 and 2013 are shown in the table above. -Refer to Table 19-17. What is nominal GDP in 2006?

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

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