Question 1

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 C

Question 2

Is nominal GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period? Is real GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period?

Accepted Answer

Both nominal GDP and real GDP are measured in terms of dollars.Nominal GDP is measured using the value of the dollar for that specific year,and real GDP is measured using the value of the dollar for the base year.

Question 3

Which of the following would be directly counted in GDP in 2016?

Accepted Answer

A) kitchen cabinets purchased from Home Depot in 2016 to be installed in a house built in 1997 
B) kitchen cabinets built in 1887,extracted from the 1887 home,and installed in a brand new country-style home 
C) kitchen cabinets built in 1887,extracted from the 1887 home,and installed in a farm house built in 1950 
D) none of the above 
A) kitchen cabinets purchased from Home Depot in 2016 to be installed in a house built in 1997 
B) kitchen cabinets built in 1887,extracted from the 1887 home,and installed in a brand new country-style home 
C) kitchen cabinets built in 1887,extracted from the 1887 home,and installed in a farm house built in 1950 
D) none of the above A

Question 4

An example of a final good would be

Accepted Answer

A) the soy milk sold to Starbucks. 
B) the whipped cream sold to Starbucks. 
C) a soy latte sold by Starbucks to a student. 
D) the coffee beans sold to Starbucks. 
A) the soy milk sold to Starbucks. 
B) the whipped cream sold to Starbucks. 
C) a soy latte sold by Starbucks to a student. 
D) the coffee beans sold to Starbucks.

Question 5

National income is equal to

Accepted Answer

A) personal income minus personal taxes. 
B) GDP minus depreciation. 
C) disposable personal income plus depreciation plus personal taxes. 
D) GNP plus depreciation. 
A) personal income minus personal taxes. 
B) GDP minus depreciation. 
C) disposable personal income plus depreciation plus personal taxes. 
D) GNP plus depreciation.

Question 6

If prices are rising on average,then

Accepted Answer

A) real GDP will always be equal to nominal GDP. 
B) real GDP will be greater than nominal GDP in the years after the base year. 
C) real GDP will be less than nominal GDP in the years before the base year. 
D) real GDP will be greater than nominal GDP in the years before the base year. 
A) real GDP will always be equal to nominal GDP. 
B) real GDP will be greater than nominal GDP in the years after the base year. 
C) real GDP will be less than nominal GDP in the years before the base year. 
D) real GDP will be greater than nominal GDP in the years before the base year.

Question 7

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 8

Table 19-7
 $$\begin{array} { | l | c | c | } 
\hline \text { Product } & \text { Quantity } & \text { Price } \
\hline \text { iPods } & 20 & \$ 125.00 \
\hline \text { T-shirts } & 100 & 20.00 \
\hline \text { Bottled water } & 2,000 & 1.00 \
\hline \text { Oranges } & 600 & 0.50 \
\hline
\end{array}$$
-Refer to Table 19-7.Suppose that a simple economy produces only four goods and services: iPods,t-shirts,bottled water,and oranges.Calculate nominal GDP for this simple economy.

Accepted Answer

Nominal GDP equals (

Question 9

Which of the following transactions would be included in the official calculation of GDP?

Accepted Answer

A) A student buys a used textbook at the bookstore. 
B) Firestone sells $2 million worth of tires to General Motors. 
C) You wash and wax your father's car as a favor to him. 
D) You buy a new iPod. 
E) You illegally download music off the Internet to put on your new iPod. 
A) A student buys a used textbook at the bookstore. 
B) Firestone sells $2 million worth of tires to General Motors. 
C) You wash and wax your father's car as a favor to him. 
D) You buy a new iPod. 
E) You illegally download music off the Internet to put on your new iPod.

Question 10

Value added equals the market price of the firm's product minus

Accepted Answer

A) wages and salaries. 
B) the price of intermediate goods. 
C) the price of all factors of production. 
D) depreciation on plant and equipment. 
A) wages and salaries. 
B) the price of intermediate goods. 
C) the price of all factors of production. 
D) depreciation on plant and equipment.

Question 11

Increases in real GDP would understate the well-being of a country over time if,over that time period,the

Accepted Answer

A) crime rate increased. 
B) percentage of people addicted to illegal drugs increased. 
C) amount of pollution decreased. 
D) average hours worked per week increased. 
A) crime rate increased. 
B) percentage of people addicted to illegal drugs increased. 
C) amount of pollution decreased. 
D) average hours worked per week increased.

Question 12

Investment,as defined by economists,would not include which of the following? Ford

Accepted Answer

A) buys a new robotic machine (from a plant in Ohio)to assemble cars. 
B) adds 1,000 new cars to inventories. 
C) builds another assembly plant in the United States. 
D) buys U.S.government bonds. 
A) buys a new robotic machine (from a plant in Ohio)to assemble cars. 
B) adds 1,000 new cars to inventories. 
C) builds another assembly plant in the United States. 
D) buys U.S.government bonds.

Question 13

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 14

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

Accepted Answer

A) corporate bond. 
B) government bond. 
C) share of stock in ExxonMobil. 
D) computer by an accounting firm. 
A) corporate bond. 
B) government bond. 
C) share of stock in ExxonMobil. 
D) computer by an accounting firm.

Question 15

GDP is not a perfect measure of well-being because

Accepted Answer

A) the value of leisure is included in GDP. 
B) GDP is not adjusted for pollution. 
C) GDP is adjusted for changes in crime rates. 
D) GDP is adjusted for increases in drug addiction. 
A) the value of leisure is included in GDP. 
B) GDP is not adjusted for pollution. 
C) GDP is adjusted for changes in crime rates. 
D) GDP is adjusted for increases in drug addiction.

Question 16

Table 19-13
 $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Oranges } \
\text { Produced }
\end{array} & \begin{array} { c } 
\text { Price of } \
\text { Oranges }
\end{array} & \begin{array} { c } 
\text { Shirts } \
\text { Produced }
\end{array} & \begin{array} { c } 
\text { Price of } \
\text { Shirts }
\end{array} \
\hline 2013 & 1,800 & \$ 0.90 & 110 & \$ 30.00 \
\hline 2015 & 2,000 & 1.00 & 110 & 35.00 \
\hline
\end{array}$$ Consider the data shown above for Vicuna,a country that produces only two products: oranges and shirts.
-Refer to Table 19-13.Real GDP for Vicuna for 2013 using 2015 as the base year equals

Accepted Answer

A) $4,620. 
B) $5,100. 
C) $5,650. 
D) $5,850. 
A) $4,620. 
B) $5,100. 
C) $5,650. 
D) $5,850.

Question 17

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 18

If China decides to enact laws to clean up the environment,what would be the effect on GDP?

Accepted Answer

A) GDP would increase reflecting the fact that the environment would be cleaner. 
B) GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls. 
C) GDP would increase as the citizens of China were made happier as the environment was cleaned up. 
D) GDP would increase as the environmental costs of pollution were not included in the calculation of GDP. 
A) GDP would increase reflecting the fact that the environment would be cleaner. 
B) GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls. 
C) GDP would increase as the citizens of China were made happier as the environment was cleaned up. 
D) GDP would increase as the environmental costs of pollution were not included in the calculation of GDP.

Question 19

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

Accepted Answer

A) True 
 B)False

Question 20

Table 19-13
 $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Oranges } \
\text { Produced }
\end{array} & \begin{array} { c } 
\text { Price of } \
\text { Oranges }
\end{array} & \begin{array} { c } 
\text { Shirts } \
\text { Produced }
\end{array} & \begin{array} { c } 
\text { Price of } \
\text { Shirts }
\end{array} \
\hline 2013 & 1,800 & \$ 0.90 & 110 & \$ 30.00 \
\hline 2015 & 2,000 & 1.00 & 110 & 35.00 \
\hline
\end{array}$$ Consider the data shown above for Vicuna,a country that produces only two products: oranges and shirts.
-Refer to Table 19-13.Nominal GDP for Vicuna for 2013 equals

Accepted Answer

A) $4,920. 
B) $5,100. 
C) $5,300. 
D) $5,850. 
A) $4,920. 
B) $5,100. 
C) $5,300. 
D) $5,850.

Exam 19: Gdp: Measuring Total Production and Income

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

Is nominal GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period? Is real GDP measured in terms of quantity or in terms of dollars? If dollars,the value of the dollar from what period?

Which of the following would be directly counted in GDP in 2016?

An example of a final good would be

National income is equal to

If prices are rising on average,then

The circular flow diagram shows that

Table 19-7 Product Quantity Price iPods 20 \ 125.00 T-shirts 100 20.00 Bottled water 2,000 1.00 Oranges 600 0.50 -Refer to Table 19-7.Suppose that a simple economy produces only four goods and services: iPods,t-shirts,bottled water,and oranges.Calculate nominal GDP for this simple economy.

Which of the following transactions would be included in the official calculation of GDP?

Value added equals the market price of the firm's product minus

Increases in real GDP would understate the well-being of a country over time if,over that time period,the

Investment,as defined by economists,would not include which of the following? Ford

Which of the following is likely to increase measured GDP?

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

GDP is not a perfect measure of well-being because

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

If China decides to enact laws to clean up the environment,what would be the effect on GDP?

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

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

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