Question 1

If the quantity of goods and services produced in the economy decreases,

Accepted Answer

A) it may be possible for real GDP to increase. 
B) real GDP would certainly increase. 
C) it may be possible for nominal GDP to increase. 
D) nominal GDP would certainly increase. 
A) it may be possible for real GDP to increase. 
B) real GDP would certainly increase. 
C) it may be possible for nominal GDP to increase. 
D) nominal GDP would certainly increase.

Question 2

Table 19-18
 $$\begin{array} { | l | c | c | c | c | } 
\hline & \mathbf { 2 0 1 1 } & & \mathbf { 2 0 1 6 } & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Camera } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Legal services } & 50 & 15 & 45 & 20 \
\hline \text { Books } & 200 & 40 & 210 & 45 \
\hline
\end{array}$$ A very simple economy produces three goods: cameras,legal services,and books.The quantities produced and their corresponding prices for 2011 and 2016 are shown in the table above.
-Refer to Table 19-18.What is real GDP in 2016,using 2016 as the base year?

Accepted Answer

A) $28,885 
B) $11,790 
C) $11,200 
D) $10,275 
A) $28,885 
B) $11,790 
C) $11,200 
D) $10,275

Question 3

Describe briefly how the final value of an iPhone must be equal to the sum of incomes generated by the production of the iPhone.

Accepted Answer

Consider the value of an iPhone which co

Question 4

Table 19-9
 $$\begin{array} { | l | c | c | } 
\hline \text { Product } & \text { Quantity } & \begin{array} { c } 
\text { Price per } \
\text { Unit }
\end{array} \
\hline \text { Steel } & 1,000 & \$ 100 \
\hline \text { iPods } & 5,000 & 200 \
\hline \text { Autos } & 500 & 25,000 \
\hline \text { Legal services } & 100 & 2,000 \
\hline
\end{array}$$
-Refer to Table 19-9.Suppose that the above table represents the goods and services produced in a very simple economy in 2016.Assume that steel is used as an input in the production of autos.Using that information,calculate GDP for the year 2016.

Accepted Answer

First,we must decide which goods to incl

Question 5

Which of the following goods is directly counted in GDP?

Accepted Answer

A) the lettuce that Subway purchases for its sandwiches 
B) the bread that Subway purchases for its sandwiches 
C) a 12-inch Subway sandwich purchased by a student 
D) the plastic bags that Subway purchases to wrap its sandwiches 
A) the lettuce that Subway purchases for its sandwiches 
B) the bread that Subway purchases for its sandwiches 
C) a 12-inch Subway sandwich purchased by a student 
D) the plastic bags that Subway purchases to wrap its sandwiches

Question 6

Table 19-19
 $$\begin{array} { | l | r | r | } 
\hline & { \mathbf { 2 0 1 5 } } & { \mathbf { 2 0 1 6 } } \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 12,000 \
\hline \text { Real GDP } & 9,500 & 10,500 \
\hline
\end{array}$$
-Refer to Table 19-19.Given the information above,calculate the GDP deflator in 2015.

Accepted Answer

A) 87 
B) 95 
C) 105 
D) 114 
A) 87 
B) 95 
C) 105 
D) 114

Question 7

If prices rise on average in the U.S.economy,the purchasing power of a dollar declines.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that in 2016,the national income in the United States was $200 billion,depreciation was $15 billion,personal taxes were $20 billion,and transfer payments were $10 billion.Gross domestic product in 2016 is

Accepted Answer

A) $185 billion. 
B) $215 billion. 
C) $220 billion. 
D) $245 billion. 
A) $185 billion. 
B) $215 billion. 
C) $220 billion. 
D) $245 billion.

Question 9

Macroeconomics,as opposed to microeconomics,includes the study of what determines the level of

Accepted Answer

A) employment in a specific industry. 
B) employment in the economy. 
C) output of a specific firm. 
D) output of a specific industry. 
A) employment in a specific industry. 
B) employment in the economy. 
C) output of a specific firm. 
D) output of a specific industry.

Question 10

Which of the following statements is true?

Accepted Answer

A) A decrease in the crime rate increases GDP as people will spend more on security. 
B) Household production is counted in GDP as it amounts to real production. 
C) GDP accounting rules do not adjust for production that pollutes the economy. 
D) GDP growth distributes income equally to people in the economy. 
A) A decrease in the crime rate increases GDP as people will spend more on security. 
B) Household production is counted in GDP as it amounts to real production. 
C) GDP accounting rules do not adjust for production that pollutes the economy. 
D) GDP growth distributes income equally to people in the economy.

Question 11

If the GDP deflator is less than 100,which will be higher: nominal GDP or real GDP? Why?

Accepted Answer

Real GDP will be higher.The GD

Question 12

Which of the following would increase GNP in the United States?

Accepted Answer

A) an increase in the production of U.S.-owned General Motors cars made in Mexico 
B) an increase in the production of Japanese-owned Toyota cars in Mexico 
C) an increase in the production of Japanese-owned Toyota cars in the U.S. 
D) an increase in the production of Mexican-owned Grupo Minsa corn in the U.S. 
A) an increase in the production of U.S.-owned General Motors cars made in Mexico 
B) an increase in the production of Japanese-owned Toyota cars in Mexico 
C) an increase in the production of Japanese-owned Toyota cars in the U.S. 
D) an increase in the production of Mexican-owned Grupo Minsa corn in the U.S.

Question 13

Consumption expenditures do not include household purchases of

Accepted Answer

A) medical care. 
B) education. 
C) new houses. 
D) durable goods. 
A) medical care. 
B) education. 
C) new houses. 
D) durable goods.

Question 14

Table 19-16
 $$\begin{array} { | l | r | r | } 
\hline & \mathbf { 2 0 1 5 } & \mathbf { 2 0 1 6 } \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 12,000 \
\hline \text { Real GDP } & 9,500 & 10,500 \
\hline
\end{array}$$
-Refer to Table 19-16.Given the information above,what can we say has happened in the economy from 2015 to 2016?

Accepted Answer

A) The price level has fallen. 
B) The price level has risen. 
C) The price level has remained constant. 
D) Not enough information is available to determine what has happened to prices. 
A) The price level has fallen. 
B) The price level has risen. 
C) The price level has remained constant. 
D) Not enough information is available to determine what has happened to prices.

Question 15

Personal income is defined as

Accepted Answer

A) national income less retained earnings plus transfer payments and plus interest on government bonds. 
B) national income plus retained earnings less transfer payments and less interest on government bonds. 
C) national income less depreciation. 
D) national income less personal taxes. 
A) national income less retained earnings plus transfer payments and plus interest on government bonds. 
B) national income plus retained earnings less transfer payments and less interest on government bonds. 
C) national income less depreciation. 
D) national income less personal taxes.

Question 16

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

Accepted Answer

A) True 
 B)False

Question 17

When Ford increases the production of cars in Romania,which of the following occurs?

Accepted Answer

A) GDP in the United States rises. 
B) GNP in the United States rises. 
C) GNP in Romania rises. 
D) Both A and C occur. 
A) GDP in the United States rises. 
B) GNP in the United States rises. 
C) GNP in Romania rises. 
D) Both A and C occur.

Question 18

Total income in an economy is equal to

Accepted Answer

A) GDP minus net exports. 
B) income minus taxes. 
C) the sum of wages,interest,rent,and profit. 
D) firm revenues. 
A) GDP minus net exports. 
B) income minus taxes. 
C) the sum of wages,interest,rent,and profit. 
D) firm revenues.

Question 19

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.

Accepted Answer

Real GDP would be higher,as long as the

Question 20

Which of the following would increase disposable personal income?

Accepted Answer

A) a decrease in transfer payments received 
B) a decrease in taxes paid 
C) a decrease in personal income 
D) All of the above would increase disposable income. 
A) a decrease in transfer payments received 
B) a decrease in taxes paid 
C) a decrease in personal income 
D) All of the above would increase disposable income.

Exam 19: Gdp: Measuring Total Production and Income

If the quantity of goods and services produced in the economy decreases,

Describe briefly how the final value of an iPhone must be equal to the sum of incomes generated by the production of the iPhone.

Which of the following goods is directly counted in GDP?

Table 19-19 Nominal GDP \ 10,000 \ 12,000 Real GDP 9,500 10,500 -Refer to Table 19-19.Given the information above,calculate the GDP deflator in 2015.

If prices rise on average in the U.S.economy,the purchasing power of a dollar declines.

Suppose that in 2016,the national income in the United States was $200 billion,depreciation was $15 billion,personal taxes were $20 billion,and transfer payments were $10 billion.Gross domestic product in 2016 is

Macroeconomics,as opposed to microeconomics,includes the study of what determines the level of

Which of the following statements is true?

If the GDP deflator is less than 100,which will be higher: nominal GDP or real GDP? Why?

Which of the following would increase GNP in the United States?

Consumption expenditures do not include household purchases of

Table 19-16 Nominal GDP \ 10,000 \ 12,000 Real GDP 9,500 10,500 -Refer to Table 19-16.Given the information above,what can we say has happened in the economy from 2015 to 2016?

Personal income is defined as

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

When Ford increases the production of cars in Romania,which of the following occurs?

Total income in an economy is equal to

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.

Which of the following would increase disposable personal income?

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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