Question 1

GDP is not a complete measure of well-being.

Accepted Answer

A) True 
 B)False

Question 2

Table 19-11
 $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Guns } \
\text { Produced }
\end{array} & \text { Price af Guns } & \begin{array} { c } 
\text { Butter } \
\text { Produced }
\end{array} & \begin{array} { c } 
\text { Price of } \
\text { Butter }
\end{array} \
\hline 2007 & 80 & \$ 5 & 40 & \$ 4 \
\hline 2016 & 90 & 6 & 60 & 10 \
\hline
\end{array}$$ Consider the following data for Tyrovia,a country that produces only two products: guns and butter.
-Refer to Table 19-11.Nominal GDP for Tyrovia in 2016 equals

Accepted Answer

A) $1,140. 
B) $880. 
C) $690. 
D) $560. 
A) $1,140. 
B) $880. 
C) $690. 
D) $560.

Question 3

The factors of production include

Accepted Answer

A) wages. 
B) capital. 
C) investment. 
D) transfers. 
A) wages. 
B) capital. 
C) investment. 
D) transfers.

Question 4

Which of the following equations correctly measures GDP in an economy?

Accepted Answer

A) GDP = C + I + G + X 
B) GDP = C + net I + G + NX 
C) GDP = C + I + G + NX 
D) GDP = C + G + I - taxes 
A) GDP = C + I + G + X 
B) GDP = C + net I + G + NX 
C) GDP = C + I + G + NX 
D) GDP = C + G + I - taxes

Question 5

In the circular flow model,the value of total production for an economy ________ the value of total expenditures on final goods and services.

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 6

When consumers are less confident about their jobs or incomes,they are more likely to

Accepted Answer

A) reduce purchases of durable goods than nondurable goods. 
B) reduce purchases of nondurable goods and increase purchases of durable goods. 
C) increase investment spending and decrease consumption spending. 
D) increase consumption spending and decrease investment spending. 
A) reduce purchases of durable goods than nondurable goods. 
B) reduce purchases of nondurable goods and increase purchases of durable goods. 
C) increase investment spending and decrease consumption spending. 
D) increase consumption spending and decrease investment spending.

Question 7

Suppose that nominal GDP in 2016 was less than real GDP in 2016.Given this information,we know for certain that

Accepted Answer

A) the price level in 2016 was greater than the price level in the base year. 
B) the price level in 2016 was less than the price level in the base year. 
C) real GDP in 2016 was less than real GDP in the base year. 
D) real GDP in 2016 was greater than real GDP in the base year. 
A) the price level in 2016 was greater than the price level in the base year. 
B) the price level in 2016 was less than the price level in the base year. 
C) real GDP in 2016 was less than real GDP in the base year. 
D) real GDP in 2016 was greater than real GDP in the base year.

Question 8

Table 19-32
 $$\begin{array} { | l | c | } 
\hline & \begin{array} { c } 
\text { Billions of } \
\text { Dollars }
\end{array} \
\hline \text { National income } & \$ 11,200 \
\hline \text { Retained earnings } & 560 \
\hline \text { Depreciation } & 700 \
\hline \text { Interest on government bonds } & 300 \
\hline \text { Transfer payments } & 2,200 \
\hline \text { Personal taxes } & 1,400 \
\hline
\end{array}$$
-Refer to Table 19-32.The table above represents hypothetical data from the National Income Accounts for 2015.Use the data to calculate personal income and disposable income.

Accepted Answer

Personal income = National income - Reta

Question 9

Government spending on transfer payments is included in government purchases when calculating GDP because it results in the production of new goods and services.

Accepted Answer

A) True 
 B)False

Question 10

Nominal 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 or the quantity of 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 or the quantity of goods and services produced rises.

Question 11

The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.

Accepted Answer

A) equals 
B) is greater than 
C) is less than 
D) is sometimes greater than and other times less than 
A) equals 
B) is greater than 
C) is less than 
D) is sometimes greater than and other times less than

Question 12

What is the largest component of spending in the United States?

Accepted Answer

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

Question 13

To calculate GDP using the value-added method,one would add up

Accepted Answer

A) the market value of final goods and services produced during a particular period. 
B) only the value added by the underground economy. 
C) the value added by each firm involved in the production of final goods and services. 
D) the market value of intermediate goods and services produced during a particular period. 
A) the market value of final goods and services produced during a particular period. 
B) only the value added by the underground economy. 
C) the value added by each firm involved in the production of final goods and services. 
D) the market value of intermediate goods and services produced during a particular period.

Question 14

Nominal GDP is GDP in a given year

Accepted Answer

A) adjusted for inflation. 
B) adjusted for anticipated inflation. 
C) valued in the prices of that year. 
D) valued in the prices of the base year. 
A) adjusted for inflation. 
B) adjusted for anticipated inflation. 
C) valued in the prices of that year. 
D) valued in the prices of the base year.

Question 15

Gross domestic product understates the total production of final goods and services because of the omission of

Accepted Answer

A) exports. 
B) inflation. 
C) intermediate goods. 
D) household production. 
A) exports. 
B) inflation. 
C) intermediate goods. 
D) household production.

Question 16

During a business cycle expansion,total production ________ and total employment ________.

Accepted Answer

A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases 
A) increases;increases 
B) increases;decreases 
C) decreases;increases 
D) decreases;decreases

Question 17

Consumption spending is $4.5 billion,gross private domestic investment is $3 billion,and government expenditures are $2 billion.If GDP is $14 billion,which of the following could be true regarding exports and imports in the economy?

Accepted Answer

A) Exports are $4.5 billion,and imports are $2 billion. 
B) Exports are $6 billion,and imports are $8.5 billion. 
C) Exports are $9 billion,and imports are $6 billion. 
D) Exports are $15 billion,and imports are $10.5 billion. 
A) Exports are $4.5 billion,and imports are $2 billion. 
B) Exports are $6 billion,and imports are $8.5 billion. 
C) Exports are $9 billion,and imports are $6 billion. 
D) Exports are $15 billion,and imports are $10.5 billion.

Question 18

To make the calculation of real GDP more accurate,in 1996 the BEA switched to using

Accepted Answer

A) base-year prices. 
B) current prices. 
C) chain-weighted prices. 
D) market prices. 
A) base-year prices. 
B) current prices. 
C) chain-weighted prices. 
D) market prices.

Question 19

$$\begin{array} { | l | r | } 
\hline \text { National income } & \$ 1,000 \
\hline \text { Retained earnings not paid as dividends } & 50 \
\hline \text { Transfer payments } & 40 \
\hline \text { Interest on government bonds } & 20 \
\hline \text { Personal taxes } & 30 \
\hline
\end{array}$$ The components of national income for an economy are represented in Table 19-27 above.All values are in billions of dollars.
-Refer to Table 19-27.What is the level of personal income for this economy?

Accepted Answer

A) $1,140 billion 
B) $1,010 billion 
C) $990 billion 
D) $860 billion 
A) $1,140 billion 
B) $1,010 billion 
C) $990 billion 
D) $860 billion

Question 20

The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S.________ and the South Korean ________.

Accepted Answer

A) GDP;GDP 
B) GNP;GDP 
C) GDP;GNP 
D) GNP;GNP 
A) GDP;GDP 
B) GNP;GDP 
C) GDP;GNP 
D) GNP;GNP

Exam 19: Gdp: Measuring Total Production and Income

GDP is not a complete measure of well-being.

Table 19-11 Year Guns Produced Price af Guns Butter Produced Price of Butter 2007 80 \ 5 40 \ 4 2016 90 6 60 10 Consider the following data for Tyrovia,a country that produces only two products: guns and butter. -Refer to Table 19-11.Nominal GDP for Tyrovia in 2016 equals

The factors of production include

Which of the following equations correctly measures GDP in an economy?

In the circular flow model,the value of total production for an economy ________ the value of total expenditures on final goods and services.

When consumers are less confident about their jobs or incomes,they are more likely to

Suppose that nominal GDP in 2016 was less than real GDP in 2016.Given this information,we know for certain that

Government spending on transfer payments is included in government purchases when calculating GDP because it results in the production of new goods and services.

Nominal GDP will increase

The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.

What is the largest component of spending in the United States?

To calculate GDP using the value-added method,one would add up

Nominal GDP is GDP in a given year

Gross domestic product understates the total production of final goods and services because of the omission of

During a business cycle expansion,total production ________ and total employment ________.

Consumption spending is $4.5 billion,gross private domestic investment is $3 billion,and government expenditures are $2 billion.If GDP is $14 billion,which of the following could be true regarding exports and imports in the economy?

To make the calculation of real GDP more accurate,in 1996 the BEA switched to using

The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S.________ and the South Korean ________.

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

Filters

During a business cycle expansion,total production and total employment .

The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S. and the South Korean .