Exam 5: Measuring a Nations Income

Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture. With each $1,000 worth of leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for $2,600. Neither firm had any inventory at the beginning of 2015. During that year, Cowhide produced enough leather for 25 couches. Couches, Inc. bought 80% of that leather for $20,000 and promised to buy the remaining 20% for $5,000 in 2016. Couches, Inc. produced 20 couches during 2015 and sold each one during that year for $2,600. What was the economy's GDP for 2015?

For monitoring fluctuations in the national economy, which measure of income is best?

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

If nominal GDP is $10 trillion and real GDP is $12 trillion, then the GDP deflator is

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

Government purchases include spending on goods and services by

In 2010 a country had nominal GDP of 6 trillion euro and real GDP of 5 trillion euro. In 2011 it had nominal GDP of 6.5 trillion euro and real GDP of 5.2 trillion euro. What was its inflation rate in 2011? Show your work.

If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP?

If in some year nominal GDP was $28 trillion and real GDP was $32 trillion, what was the GDP deflator?

If in some year real GDP was $25 billion and the GDP deflator was 68, what was nominal GDP?

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

Table 23-10 A hypothetical country of Lahland produces only movies and popcorn. Quantities and prices of these goods for the last several years are shown below. The base year is 2015 . -Refer to Table 23-10. What was this country's GDP deflator in 2017?

Consumption is $5.5 trillion, investment is $1 trillion, government expenditures are $1.5 trillion, transfer payments are $.5 trillion, exports are $.75 trillion and imports are $1.25 trillion. What is GDP?

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

Which of the following is a way to compute GDP?

Table 23-9 A country produces only ice cream and pie. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Prices and Quantities -Refer to Table 23-9. This country's inflation rate from 2009 to 2010 to the nearest tenth was

GDP

Which of the following examples of production of goods and services would be included in U.S. GDP?

Which of the following is correct?