Question 1

A car that is produced in 2016 is not sold until 2017.According to the definition of GDP,in which year's GDP should it be counted?

Accepted Answer

A) 2016 
B) 2017 
C) Half of the sales price will count as part of 2016 GDP and half will count as part of 2017 GDP. 
D) The production cost will count as part of 2016 GDP while the sales price will count as part of 2017 GDP. 
A) 2016 
B) 2017 
C) Half of the sales price will count as part of 2016 GDP and half will count as part of 2017 GDP. 
D) The production cost will count as part of 2016 GDP while the sales price will count as part of 2017 GDP.

Question 2

If the size of the underground economy is large,

Accepted Answer

A) government agencies have difficulty measuring nominal and real GDP. 
B) it is relatively easy to gather productivity data on many businesses. 
C) measuring nominal GDP is relatively easy,but measuring real GDP is difficult. 
D) measuring real GDP is relatively easy,but measuring nominal GDP is difficult. 
A) government agencies have difficulty measuring nominal and real GDP. 
B) it is relatively easy to gather productivity data on many businesses. 
C) measuring nominal GDP is relatively easy,but measuring real GDP is difficult. 
D) measuring real GDP is relatively easy,but measuring nominal GDP is difficult.

Question 3

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 2016?

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 4

To examine how the total production of an economy has changed over time,it would be better to examine

Accepted Answer

A) real GDP. 
B) nominal GDP. 
C) GDP at current prices. 
D) the GDP deflator. 
A) real GDP. 
B) nominal GDP. 
C) GDP at current prices. 
D) the GDP deflator.

Question 5

Table 19-28
 $$\begin{array} { | l | r | } 
\hline & \begin{array} { c } 
\text { Billions of } \
\text { Dollars }
\end{array} \
\hline \text { GDP } & \$ 3,250 \
\hline \text { Depreciation } & 300 \
\hline \text { Retained earnings } & 1,000 \
\hline \text { Personal income } & 2,500 \
\hline \text { Transfer payments } & 50 \
\hline
\end{array}$$
-Refer to Table 19-28.Based on the table above,what is national income for this economy?

Accepted Answer

A) $1,950 billion 
B) $2,250 billion 
C) $2,950 billion 
D) $3,550 billion 
A) $1,950 billion 
B) $2,250 billion 
C) $2,950 billion 
D) $3,550 billion

Question 6

Table 19-8
 $$\begin{array} { | l | c | c | } 
\hline { \text { Product } } & \text { Quantity } & \text { Price } \
\hline \text { Sweaters } & 50 & \$ 50.00 \
\hline \text { CDs } & 150 & 10.00 \
\hline \text { Sugar } & 600 & 1.00 \
\hline \text { Soft drinks } & 800 & 0.75 \
\hline
\end{array}$$
-Refer to Table 19-8.Suppose that a simple economy produces only four goods and services: sweaters,CDs,sugar,and soft drinks.Assume one half of the sugar is used in making the soft drinks and the other half of the sugar is purchased by households.Calculate nominal GDP for this simple economy.

Accepted Answer

Nominal GDP equals (

Question 7

If nominal GDP rises we can say that

Accepted Answer

A) production has risen and prices remain constant. 
B) prices have risen and production remains constant. 
C) production has risen or prices have risen or both have risen. 
D) production has fallen and prices have risen. 
A) production has risen and prices remain constant. 
B) prices have risen and production remains constant. 
C) production has risen or prices have risen or both have risen. 
D) production has fallen and prices have risen.

Question 8

Under what circumstances would the GDP deflator be less than 100 after the base year?

Accepted Answer

A) The GDP deflator will be less than 100 if there has been inflation relative to the base year. 
B) The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year. 
C) The GDP deflator will be less than 100 if there has been deflation relative to the base year. 
D) There are no circumstances under which the GDP deflator could be less than 100. 
A) The GDP deflator will be less than 100 if there has been inflation relative to the base year. 
B) The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year. 
C) The GDP deflator will be less than 100 if there has been deflation relative to the base year. 
D) There are no circumstances under which the GDP deflator could be less than 100.

Question 9

The best measure of the income households actually have available to spend is

Accepted Answer

A) personal income. 
B) disposable personal income. 
C) national income. 
D) net national income. 
A) personal income. 
B) disposable personal income. 
C) national income. 
D) net national income.

Question 10

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 2011 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 11

The "underground economy" refers to

Accepted Answer

A) the buying and selling of goods that is concealed from the government. 
B) the production of goods and services used by the government for covert spy operations. 
C) the sector of the economy that earns profits that are higher than average. 
D) the formal sector of the economy in developing countries. 
A) the buying and selling of goods that is concealed from the government. 
B) the production of goods and services used by the government for covert spy operations. 
C) the sector of the economy that earns profits that are higher than average. 
D) the formal sector of the economy in developing countries.

Question 12

If nominal GDP is $5 trillion and real GDP is $4 trillion,the GDP deflator is

Accepted Answer

A) 12.5. 
B) 80. 
C) 125. 
D) 800. 
A) 12.5. 
B) 80. 
C) 125. 
D) 800.

Question 13

Transfer payments are subtracted from national income to get to personal income.

Accepted Answer

A) True 
 B)False

Question 14

If nominal GDP is less than real GDP,then the GDP deflator will be greater than 100.

Accepted Answer

A) True 
 B)False

Question 15

Since real GDP is adjusted for inflation and nominal GDP is not,nominal GDP must always be higher than real GDP.Do you agree or disagree? Why?

Accepted Answer

Disagree.It depends on whether the year

Question 16

An example of a transfer payment is

Accepted Answer

A) a teacher's paycheck. 
B) a paycheck for a member of the National Guard. 
C) a welfare payment. 
D) a purchase of a new bridge in Alaska. 
A) a teacher's paycheck. 
B) a paycheck for a member of the National Guard. 
C) a welfare payment. 
D) a purchase of a new bridge in Alaska.

Question 17

Gross national product,GNP,of the United States is the market value of all final goods and services

Accepted Answer

A) produced within the United States. 
B) consumed within the United States. 
C) produced by citizens of the United States anywhere in the world. 
D) consumed by citizens of the United States anywhere in the world. 
A) produced within the United States. 
B) consumed within the United States. 
C) produced by citizens of the United States anywhere in the world. 
D) consumed by citizens of the United States anywhere in the world.

Question 18

Table 19-12
 $$\begin{array} { | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Nominal } \
\text { GDP }
\end{array} & \text { Real GDP } \
\hline 2013 & \$ 7,400 & \$ 7,537 \
\hline 2014 & 7,813 & 7,813 \
\hline 2015 & 8,301 & 8,165 \
\hline 2016 & 8,760 & 8,516 \
\hline
\end{array}$$
-Refer to Table 19-12.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is

Accepted Answer

A) 2013. 
B) 2014. 
C) 2015. 
D) 2016. 
A) 2013. 
B) 2014. 
C) 2015. 
D) 2016.

Question 19

The purchase by a foreign government of an airplane produced in the United States is included in U.S.

Accepted Answer

A) consumption expenditures. 
B) investment expenditures. 
C) government purchases. 
D) net exports. 
A) consumption expenditures. 
B) investment expenditures. 
C) government purchases. 
D) net exports.

Question 20

To calculate GDP by the expenditure method,one must add

Accepted Answer

A) wages,rents,interest,and profits. 
B) consumption spending,investment spending,government spending,and net exports. 
C) consumption spending,investment spending,government spending,and exports. 
D) labor,natural resources,entrepreneurship,and capital. 
A) wages,rents,interest,and profits. 
B) consumption spending,investment spending,government spending,and net exports. 
C) consumption spending,investment spending,government spending,and exports. 
D) labor,natural resources,entrepreneurship,and capital.

Exam 19: Gdp: Measuring Total Production and Income

A car that is produced in 2016 is not sold until 2017.According to the definition of GDP,in which year's GDP should it be counted?

If the size of the underground economy is large,

To examine how the total production of an economy has changed over time,it would be better to examine

Table 19-28 Billions of Dollars GDP \ 3,250 Depreciation 300 Retained earnings 1,000 Personal income 2,500 Transfer payments 50 -Refer to Table 19-28.Based on the table above,what is national income for this economy?

If nominal GDP rises we can say that

Under what circumstances would the GDP deflator be less than 100 after the base year?

The best measure of the income households actually have available to spend is

The "underground economy" refers to

If nominal GDP is $5 trillion and real GDP is $4 trillion,the GDP deflator is

Transfer payments are subtracted from national income to get to personal income.

If nominal GDP is less than real GDP,then the GDP deflator will be greater than 100.

Since real GDP is adjusted for inflation and nominal GDP is not,nominal GDP must always be higher than real GDP.Do you agree or disagree? Why?

An example of a transfer payment is

Gross national product,GNP,of the United States is the market value of all final goods and services

Table 19-12 Year Nominal GDP Real GDP 2013 \ 7,400 \ 7,537 2014 7,813 7,813 2015 8,301 8,165 2016 8,760 8,516 -Refer to Table 19-12.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is

The purchase by a foreign government of an airplane produced in the United States is included in U.S.

To calculate GDP by the expenditure method,one must add

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