Question 1

Real GDP will increase

Accepted Answer

A) only if the price level rises. 
B) only if the price level falls. 
C) only if the quantity of final goods and services produced rises. 
D) if either the price level rises or the quantity of final goods and services produced rises. 
A) only if the price level rises. 
B) only if the price level falls. 
C) only if the quantity of final goods and services produced rises. 
D) if either the price level rises or the quantity of final goods and services produced rises.

Question 2

Macroeconomics seeks to understand

Accepted Answer

A) economic growth,business cycles,and inflation. 
B) industry sales,marketing strategies,and corporate growth. 
C) product demand,product cost,and profit maximization. 
D) public choices,private choices,and consumer maximization. 
A) economic growth,business cycles,and inflation. 
B) industry sales,marketing strategies,and corporate growth. 
C) product demand,product cost,and profit maximization. 
D) public choices,private choices,and consumer maximization.

Question 3

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

Accepted Answer

A) Avocado prices rise due to a late frost in California. 
B) The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. 
C) Real GDP grows by 2.3% in the second quarter. 
D) Airlines raise ticket prices in response to rising fuel costs. 
A) Avocado prices rise due to a late frost in California. 
B) The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. 
C) Real GDP grows by 2.3% in the second quarter. 
D) Airlines raise ticket prices in response to rising fuel costs.

Question 4

The GDP deflator in year 2 is 105,using year 1 as the base year.This means that,on average,the cost of goods and services is

Accepted Answer

A) 5% higher in year 2 than in year 1. 
B) 105% higher in year 2 than in year 1. 
C) 5% higher in year 1 than in year 2. 
D) 105% higher in year 1 than in year 2. 
A) 5% higher in year 2 than in year 1. 
B) 105% higher in year 2 than in year 1. 
C) 5% higher in year 1 than in year 2. 
D) 105% higher in year 1 than in year 2.

Question 5

Table 19-1
 $$\begin{array} { | l | c | c | } 
\hline  { \text { Product } } & \text { Quantity } & \text { Price } \
\hline \text { Sweatshirts } & 50 & \$ 35.00 \
\hline \text { Dental examinations } & 40 & 75.00 \
\hline \text { Coffee drinks } & 1,000 & 4.00 \
\hline \text { Coffee beans } & 2,000 & 0.50 \
\hline
\end{array}$$
-Refer to Table 19-1.Suppose that a simple economy produces only four goods and services: sweatshirts,dental examinations,coffee drinks,and coffee beans.Assume all of the coffee beans are used in the production of the coffee drinks.Using the information in the above table,nominal GDP for this simple economy equals

Accepted Answer

A) 3,090 units. 
B) $7,250. 
C) $8,750. 
D) $9,750. 
A) 3,090 units. 
B) $7,250. 
C) $8,750. 
D) $9,750.

Question 6

Disposable personal income is equal to personal income minus personal tax payments.

Accepted Answer

A) True 
 B)False

Question 7

Table 19-4
 $$\begin{array} { | l | r | } 
\hline \text { Consumption expenditures } & \$ 800 \
\hline \text { Investment expenditures } & 300 \
\hline \text { Government purchases } & 300 \
\hline \text { Government transfer payments } & 400 \
\hline \text { Exports } & 300 \
\hline \text { Imports } & 100 \
\hline
\end{array}$$
-Refer to Table 19-4.Consider the data above (in billions of dollars)for an economy: Gross domestic product (in billions of dollars)for this economy equals

Accepted Answer

A) $2,200. 
B) $2,100. 
C) $1,600. 
D) $1,400. 
A) $2,200. 
B) $2,100. 
C) $1,600. 
D) $1,400.

Question 8

If an American firm opens a production facility in India,the total value of the production will be included in the

Accepted Answer

A) gross domestic product of the United States. 
B) national income of the United States. 
C) gross domestic product of India. 
D) national income of India. 
A) gross domestic product of the United States. 
B) national income of the United States. 
C) gross domestic product of India. 
D) national income of India.

Question 9

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate,is this complaint valid? Explain carefully.

Accepted Answer

If inflation and income grow at the same

Question 10

Which of the following are not considered part of government purchases?

Accepted Answer

A) welfare benefits 
B) teachers' salaries paid by a local government 
C) a tank purchased by the federal government 
D) a bridge purchased by the state government 
A) welfare benefits 
B) teachers' salaries paid by a local government 
C) a tank purchased by the federal government 
D) a bridge purchased by the state government

Question 11

The values of real GDP and real GNP are almost the same in countries where a significant fraction of domestic production takes place in foreign-owned firms.

Accepted Answer

A) True 
 B)False

Question 12

Home Depot sells new and used doors to contractors who build new homes.Home Depot also sells new and used doors to homeowners.Which of the following would be counted in GDP?

Accepted Answer

A) the sale of a used door to a homeowner 
B) the sale of a new door to homeowner 
C) the sale of a used door to TapKon construction for installation into a new home 
D) the sale of a new door to TapKon construction for installation into a new home 
A) the sale of a used door to a homeowner 
B) the sale of a new door to homeowner 
C) the sale of a used door to TapKon construction for installation into a new home 
D) the sale of a new door to TapKon construction for installation into a new home

Question 13

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements.This will

Accepted Answer

A) increase GDP and increase well-being in the economy. 
B) increase GDP and decrease well-being in the economy. 
C) decrease GDP and increase well-being in the economy. 
D) decrease GDP and decrease well-being in the economy. 
A) increase GDP and increase well-being in the economy. 
B) increase GDP and decrease well-being in the economy. 
C) decrease GDP and increase well-being in the economy. 
D) decrease GDP and decrease well-being in the economy.

Question 14

The U.S.work week has declined from 60 hours in 1890 to 40 hours today.The impact of the decline in working hours

Accepted Answer

A) increases U.S.GDP and increases the well-being of a typical working person in the U.S. 
B) increases U.S.GDP and decreases the well-being of a typical working person in the U.S. 
C) decreases U.S.GDP and increases the well-being of a typical working person in the U.S. 
D) decreases U.S.GDP and decreases the well-being of a typical working person in the U.S. 
A) increases U.S.GDP and increases the well-being of a typical working person in the U.S. 
B) increases U.S.GDP and decreases the well-being of a typical working person in the U.S. 
C) decreases U.S.GDP and increases the well-being of a typical working person in the U.S. 
D) decreases U.S.GDP and decreases the well-being of a typical working person in the U.S.

Question 15

Table 19-26
 $$\begin{array} { | l | r | r | } 
\hline &  { \mathbf { 2 0 1 5 } } &  { \mathbf { 2 0 1 6 } } \
\hline \text { Nominal GDP } & \$ 10,000 & \$ 15,000 \
\hline \text { Real GDP } & 10,000 & 14,000 \
\hline
\end{array}$$
-Refer to Table 19-26.Given the information above,calculate the GDP deflator for both 2015 and 2016.What does the value of the deflator in the year 2015 tell you about that year with respect to the base year? What happened to prices in 2016 as compared to 2015?

Accepted Answer

To calculate the GDP deflator for 2012 a

Question 16

Presently,GDP is ________ to compensate for the costs of environmental damage.

Accepted Answer

A) fully adjusted 
B) partially adjusted 
C) adjusted on a chain-weight basis 
D) not adjusted 
A) fully adjusted 
B) partially adjusted 
C) adjusted on a chain-weight basis 
D) not adjusted

Question 17

Table 19-23

$$\begin{array} { | l | c | c | c | r | } 
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Pizzas } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Haircuts } & 50 & 15 & 45 & 20 \
\hline \text { Backpacks } & 200 & 40 & 210 & 45 \
\hline
\end{array}$$
-Refer to Table 19-23.Suppose that a very simple economy produces three goods: pizzas,haircuts,and backpacks.Suppose the quantities produced and their corresponding prices for 2011 and 2016 are shown in the table above.Use the information to compute real GDP in the year 2011 and 2016.Assume that 2011 is the base year.Is output higher in 2016 or 2011? Why?

Accepted Answer

Recall that real GDP is found by valuing

Question 18

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 2016.

Accepted Answer

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

Question 19

Gross domestic product is generally ________ national income.

Accepted Answer

A) greater than 
B) less than 
C) equal to 
D) unrelated to 
A) greater than 
B) less than 
C) equal to 
D) unrelated to

Question 20

China's current rate of GDP growth is quite rapid.Its current growth rate is probably three times that of the United States.However,the levels of pollution are much higher in China.Would you consider China to be better off than the United States given this information? Why or why not?

Accepted Answer

China is not better off because of highe

Exam 19: Gdp: Measuring Total Production and Income

Real GDP will increase

Macroeconomics seeks to understand

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

The GDP deflator in year 2 is 105,using year 1 as the base year.This means that,on average,the cost of goods and services is

Disposable personal income is equal to personal income minus personal tax payments.

If an American firm opens a production facility in India,the total value of the production will be included in the

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate,is this complaint valid? Explain carefully.

Which of the following are not considered part of government purchases?

The values of real GDP and real GNP are almost the same in countries where a significant fraction of domestic production takes place in foreign-owned firms.

Home Depot sells new and used doors to contractors who build new homes.Home Depot also sells new and used doors to homeowners.Which of the following would be counted in GDP?

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements.This will

The U.S.work week has declined from 60 hours in 1890 to 40 hours today.The impact of the decline in working hours

Presently,GDP is ________ to compensate for the costs of environmental damage.

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 2016.

Gross domestic product is generally ________ national income.

China's current rate of GDP growth is quite rapid.Its current growth rate is probably three times that of the United States.However,the levels of pollution are much higher in China.Would you consider China to be better off than the United States given this information? Why or why not?

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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