Exam 7: Tracking the Us Economy

Suppose that the economy is in equilibrium with a trade deficit and that saving is greater than investment. According to the circular flow model, the government's budget

A wholesale nursery purchases six dozen gladiolus bulbs for $5. The nursery sells the six dozen resulting flowers to a wholesale florist for $10. The wholesale florist delivers the flowers to a retail florist for $15. The flowers are sold by the retail florist for $75 to the bereaved Jones family to use at great-grandfather Jones's wake. What is the value added by the retail florist?

Consumption spending is the biggest aggregate expenditure, about

GDP understates total economic activity because it ignores household production of goods and services.

If nominal GDP increases by 3 percent from 2004 to 2005 and real GDP increases by 5 percent from 2004 to 2005, this indicates that

If the GDP price index rises from 100 to 110 to 115 over three consecutive year, the inflation rate is decreasing.

Double counting in the value added approach to GDP refers to

The two basic markets in the simple circular flow model are the

Whenever there is inflation, the increase in nominal GDP will overstate growth in the economy.

GDP is a good measure of social welfare since it includes the value of leisure time.

If nominal GDP for a particular year is $4 trillion and real GDP for that year is $5 trillion, then the GDP price index for that year is

If real GDP for a particular year is $5 trillion and the GDP price index for that year is 136, the nominal GDP for that year is

Which of the following would not be included in GDP?

Exhibit 6-3 -Refer to Exhibit 6-3. Between 2004 and 2005, real GDP for this nation

Assume the economy produces five goods. If the prices of three of the goods increase, then the price level must increase.

Which of the following is not considered a component of government purchases in calculating GDP?

If the real GDP equals $100 billion this year and nominal GDP is $200 billion, the price level since the base year has increased

Limitations of the national income accounting system include

A major difference between the CPI and the GDP price index is that the CPI includes

Which of the following increases GDP?