Question 1

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 2

The purchase of a new automobile is included in

Accepted Answer

A) consumption expenditures on services. 
B) consumption expenditures on nondurable goods. 
C) consumption expenditures on durable goods. 
D) investment expenditures. 
A) consumption expenditures on services. 
B) consumption expenditures on nondurable goods. 
C) consumption expenditures on durable goods. 
D) investment expenditures.

Question 3

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 mus

Question 4

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 5

The GDP deflator is a measure of the

Accepted Answer

A) total production of the economy adjusted for inflation. 
B) total production of the economy unadjusted for inflation. 
C) average level of prices of final goods and services in the economy. 
D) average level of prices of intermediate goods and services in the economy. 
A) total production of the economy adjusted for inflation. 
B) total production of the economy unadjusted for inflation. 
C) average level of prices of final goods and services in the economy. 
D) average level of prices of intermediate goods and services in the economy.

Question 6

If an increase in crime causes households to spend money on police and security systems,GDP will rise.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following transactions represents the purchase of a final good?

Accepted Answer

A) Starbucks purchases coffee beans. 
B) Delta buys a new European-made jetliner. 
C) Apple computer buys computer processors from Intel. 
D) Your father buys a new John Deere riding lawn mower. 
A) Starbucks purchases coffee beans. 
B) Delta buys a new European-made jetliner. 
C) Apple computer buys computer processors from Intel. 
D) Your father buys a new John Deere riding lawn mower.

Question 8

If real GDP increases we know for sure that

Accepted Answer

A) output has risen. 
B) prices have risen. 
C) prices have risen but output has remained constant. 
D) prices have remained constant. 
A) output has risen. 
B) prices have risen. 
C) prices have risen but output has remained constant. 
D) prices have remained constant.

Question 9

Table 19-22
  
-Refer to Table 19-22.Consider the data above for a simple economy: Using 2011 as the base year,calculate nominal GDP,real GDP,and the GDP deflator for 2016.Show your work.

Accepted Answer

Nominal GDP for 2016 equals (5

Question 10

Table 19-2
 $$\begin{array} { | l | c | c | } 
\hline { \text { Product } } & \text { Quantity } & \text { Price } \
\hline \text { Shoes } & 40 & \$ 60.00 \
\hline \text { DVDs } & 100 & 18.00 \
\hline \text { Tomatoes } & 2,000 & 1.00 \
\hline \text { Ketchup } & 300 & 4.00 \
\hline
\end{array}$$
-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

Accepted Answer

A) $7,400. 
B) $6,400. 
C) $5,800. 
D) 2,440 units. 
A) $7,400. 
B) $6,400. 
C) $5,800. 
D) 2,440 units.

Question 11

In the term "real GDP," what does "GDP" stand for and what does it measure? What does "real" indicate?

Accepted Answer

GDP stands for gross domestic product an

Question 12

Table 19-20
 $$\begin{array} { | l | r | r | } 
\hline & { \mathbf { 2 0 1 5 } } &{ \mathbf { 2 0 1 6 } } \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 12,000 \
\hline \text { Real GDP } & 9,500 & 10,500 \
\hline
\end{array}$$
-Refer to Table 19-20.Given the following information,calculate the rate of increase in the price level from 2015 to 2016.

Accepted Answer

A) 8.6% 
B) 7.9% 
C) -7.9% 
D) -8.6% 
A) 8.6% 
B) 7.9% 
C) -7.9% 
D) -8.6%

Question 13

Table 19-17
 $$\begin{array} { | l | c | c | c | c | } 
\hline & \mathbf { 2 0 1 1 } & & \mathbf { 2 0 1 6 } & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Movies } & 20 & \$ 6.00 & 30 & \$ 7.00 \
\hline \text { Burgers } & 100 & 2.00 & 90 & 2.50 \
\hline \text { Bikes } & 3 & 1,000.00 & 6 & 1,100.00 \
\hline
\end{array}$$ A very simple economy produces three goods: movies,burgers,and bikes.The quantities produced and their corresponding prices for 2011 and 2016 are shown in the table above.
-Refer to Table 19-17.What is nominal GDP in 2011?

Accepted Answer

A) $3,320 
B) $3,690 
C) $6,360 
D) $7,035 
A) $3,320 
B) $3,690 
C) $6,360 
D) $7,035

Question 14

If the value added of a firm is positive,will the firm necessarily have positive profits?

Accepted Answer

No.Value added equals the price of the f

Question 15

If nominal GDP exceeds real GDP for a specific year,then the GDP deflator must be

Accepted Answer

A) equal to 100. 
B) greater than 100. 
C) less than 100. 
D) less than 0. 
A) equal to 100. 
B) greater than 100. 
C) less than 100. 
D) less than 0.

Question 16

Residential investment includes spending by firms on office buildings.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would result in GDP for an economy equal to $10 trillion?

Accepted Answer

A) C = $6 trillion I = $2 trillion
G = $1.5 trillion
NX = -$2 trillion 
B) C = $7 trillion I = $2 trillion
G = $4 trillion
NX = $3 trillion 
C) C = $5 trillion I = $5 trillion
G = $2 trillion
NX = -$2 trillion 
D) C = $4 trillion I = $3 trillion
G = $2 trillion
NX = -$1 trillion 
A) C = $6 trillion I = $2 trillion
G = $1.5 trillion
NX = -$2 trillion 
B) C = $7 trillion I = $2 trillion
G = $4 trillion
NX = $3 trillion 
C) C = $5 trillion I = $5 trillion
G = $2 trillion
NX = -$2 trillion 
D) C = $4 trillion I = $3 trillion
G = $2 trillion
NX = -$1 trillion

Question 18

Give two reasons why GDP does not reflect total production in an economy.

Accepted Answer

The measure of GDP leaves out production

Question 19

If the GDP deflator is less than 100,then for that year nominal GDP ________ real GDP.

Accepted Answer

A) equals 
B) is greater than 
C) is less than 
D) may be greater than or less than 
A) equals 
B) is greater than 
C) is less than 
D) may be greater than or less than

Question 20

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

Accepted Answer

A) True 
 B)False

Exam 19: Gdp: Measuring Total Production and Income

An example of business fixed investment spending is

The purchase of a new automobile is included in

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

The GDP deflator is a measure of the

If an increase in crime causes households to spend money on police and security systems,GDP will rise.

Which of the following transactions represents the purchase of a final good?

If real GDP increases we know for sure that

Table 19-22 -Refer to Table 19-22.Consider the data above for a simple economy: Using 2011 as the base year,calculate nominal GDP,real GDP,and the GDP deflator for 2016.Show your work.

In the term "real GDP," what does "GDP" stand for and what does it measure? What does "real" indicate?

Table 19-20 Nominal GDP \ 10,000 \ 12,000 Real GDP 9,500 10,500 -Refer to Table 19-20.Given the following information,calculate the rate of increase in the price level from 2015 to 2016.

If the value added of a firm is positive,will the firm necessarily have positive profits?

If nominal GDP exceeds real GDP for a specific year,then the GDP deflator must be

Residential investment includes spending by firms on office buildings.

Which of the following would result in GDP for an economy equal to $10 trillion?

Give two reasons why GDP does not reflect total production in an economy.

If the GDP deflator is less than 100,then for that year nominal GDP ________ real GDP.

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

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

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