Question 1

If a German firm produces cars in the United States,that production should count towards

Accepted Answer

A) U.S.GNP. 
B) German GDP. 
C) U.S.GDP. 
D) both U.S.GNP and German GDP. 
A) U.S.GNP. 
B) German GDP. 
C) U.S.GDP. 
D) both U.S.GNP and German GDP.

Question 2

Table 19-5
 $$\begin{array} { | c | c | c | c | } 
\hline \text { Stage of Production } & \text { Seller } & \text { Buyer } & \text { Price } \
\hline 1 & \text { Steelmill } & \text { Auto manufacturer } & \$ 10,000 \
\hline 2 & \text { Auto manufacturer } & \text { Auto dealer } & 18,000 \
\hline 3 & \text { Auto dealer } & \text { Consumer } & 25,000 \
\hline
\end{array}$$ Consider the table above showing three stages of production of an automobile.
-Refer to Table 19-5.The value added by the automobile dealer equals

Accepted Answer

A) $7,000. 
B) $15,000. 
C) $18,000. 
D) $25,000. 
A) $7,000. 
B) $15,000. 
C) $18,000. 
D) $25,000.

Question 3

The size of the underground economy as a percent of GDP is larger in the United States as compared to poorer countries such as Zimbabwe.

Accepted Answer

A) True 
 B)False

Question 4

The table below describes the value added in the production of a gallon of gasoline by each stage of production. (The values are hypothetical.)

Table 19-10

$$\begin{array} { | l | l | l | } 
\hline \text { Stage of Production } & \text { Value of Sales } & \text { Value Added } \
\hline \text { Oil drilling } & 0.75 & \
\hline \text { Refining } & 1.25 & \
\hline \text { Shipping } & 1.85 & \
\hline \text { Retail sales } & 3.65 & \
\hline
\end{array}$$ 
 
-a)What is the value added by each stage of production?
b)What is the total value added?
For simplicity,you can ignore the cost of the inputs for oil drilling.

Accepted Answer

a)The value added is the difference betw

Question 5

Which of the following would not be included in the expenditure category called investment expenditures?

Accepted Answer

A) spending on new houses 
B) a purchase of shares of preferred stock 
C) a purchase of a copy machine by FedEx Office 
D) the cars held in inventory on a local Ford dealer's lot 
A) spending on new houses 
B) a purchase of shares of preferred stock 
C) a purchase of a copy machine by FedEx Office 
D) the cars held in inventory on a local Ford dealer's lot

Question 6

The largest component of spending in GDP is

Accepted Answer

A) consumption spending. 
B) investment spending. 
C) government spending. 
D) net export spending. 
A) consumption spending. 
B) investment spending. 
C) government spending. 
D) net export spending.

Question 7

A transfer payment is a payment by the government to an individual

Accepted Answer

A) for a service. 
B) for an investment good. 
C) for a consumption good. 
D) for which the government does not receive a good or service in return. 
E) for a debt owed. 
A) for a service. 
B) for an investment good. 
C) for a consumption good. 
D) for which the government does not receive a good or service in return. 
E) for a debt owed.

Question 8

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 nominal GDP in 2016 when 2011 is 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 9

If income is unequally distributed in an economy,increases in GDP may not raise well-being in an economy.

Accepted Answer

A) True 
 B)False

Question 10

The purchase by a household in China of a CD 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 11

Table 19-21
  
-Refer to Table 19-21.Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2016,using 2014 as the base year.Show your work.

Accepted Answer

Nominal GDP for 2016 equals (2

Question 12

An example of an intermediate good would be

Accepted Answer

A) a new car. 
B) a used car. 
C) the rims on a new car. 
D) new rims to replace old rims on a used car. 
A) a new car. 
B) a used car. 
C) the rims on a new car. 
D) new rims to replace old rims on a used car.

Question 13

For developed countries like the United States,GDP will always exceed GNP.

Accepted Answer

A) True 
 B)False

Question 14

Developing countries with large informal sectors tend to have firms that invest less in capital equipment.

Accepted Answer

A) True 
 B)False

Question 15

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 the GDP deflator in 2011 if 2016 is the base year?

Accepted Answer

A) 187 
B) 87 
C) 8.7 
D) 0.87 
A) 187 
B) 87 
C) 8.7 
D) 0.87

Question 16

Investment spending includes spending on

Accepted Answer

A) stocks. 
B) food. 
C) changes in business inventories. 
D) transfer payments. 
A) stocks. 
B) food. 
C) changes in business inventories. 
D) transfer payments.

Question 17

Recent estimates put the size of the underground economy in the United States at ________ of measured GDP.

Accepted Answer

A) 2 percent 
B) 8 percent 
C) 13 percent 
D) over 50 percent 
A) 2 percent 
B) 8 percent 
C) 13 percent 
D) over 50 percent

Question 18

In 2014,which component of GDP had a negative value?

Accepted Answer

A) consumption 
B) investment 
C) government spending 
D) net exports 
A) consumption 
B) investment 
C) government spending 
D) net exports

Question 19

Which of the following could cause nominal GDP to increase,but real GDP to decrease?

Accepted Answer

A) The price level rises and the quantity of final goods and services produced rises. 
B) The price level rises and the quantity of final goods and services produced falls. 
C) The price level falls and the quantity of final goods and services produced rises. 
D) The price level falls and the quantity of final goods and services produced falls. 
A) The price level rises and the quantity of final goods and services produced rises. 
B) The price level rises and the quantity of final goods and services produced falls. 
C) The price level falls and the quantity of final goods and services produced rises. 
D) The price level falls and the quantity of final goods and services produced falls.

Question 20

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

Accepted Answer

A) GNP is much larger than GDP. 
B) GDP is much larger than GNP. 
C) GDP is equal to GNP. 
D) GDP is not comparable to GDP. 
A) GNP is much larger than GDP. 
B) GDP is much larger than GNP. 
C) GDP is equal to GNP. 
D) GDP is not comparable to GDP.

Exam 19: Gdp: Measuring Total Production and Income

If a German firm produces cars in the United States,that production should count towards

The size of the underground economy as a percent of GDP is larger in the United States as compared to poorer countries such as Zimbabwe.

Which of the following would not be included in the expenditure category called investment expenditures?

The largest component of spending in GDP is

A transfer payment is a payment by the government to an individual

If income is unequally distributed in an economy,increases in GDP may not raise well-being in an economy.

The purchase by a household in China of a CD produced in the United States is included in U.S.

Table 19-21 -Refer to Table 19-21.Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2016,using 2014 as the base year.Show your work.

An example of an intermediate good would be

For developed countries like the United States,GDP will always exceed GNP.

Developing countries with large informal sectors tend to have firms that invest less in capital equipment.

Investment spending includes spending on

Recent estimates put the size of the underground economy in the United States at ________ of measured GDP.

In 2014,which component of GDP had a negative value?

Which of the following could cause nominal GDP to increase,but real GDP to decrease?

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

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