Exam 8: Gdp: Measuring Total Production and 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?

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Question 1

Correct Answer:

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China is not better off because of higher rates of growth of GDP.GDP is not a perfect measure of well-being.GDP is not adjusted for pollution or other negative effects of production.Certainly the rapid growth of GDP raises the standards of living of many in China.However,this comes at a cost of dirty air and water.According to the World Health Organization,seven of the ten most polluted cities in the world are in China.This pollution can result in negative health effects.The improvement in standards of living affect well-being in a positive manner,but the increased pollution has a negative effect on well-being.In addition,GDP per capita may be a better measure of standard of living rather than growth in GDP.

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

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(True/False)

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Question 2

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False

Between 2015 and 2016,if an economy's exports rise by $8 billion and its imports fall by $8 billion,by how much will GDP change between the two years,all else equal?

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Question 3

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In 2016,Kendall Ford,an automobile dealership,spent $20,000 on a new car lift for its repair shop,$2,000 on a new copy machine for its sales division,and $600,000 on Ford Motor company stock.Unsold cars and trucks were valued at $400,000 on January 1,2016 and unsold cars and trucks were valued at $900,000 on December 31,2016.What is Kendall Ford's total investment spending in 2016?

(Multiple Choice)

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Question 4

An example of business fixed investment spending is

(Multiple Choice)

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Question 5

Suppose Bob works for Mary as a proofreader.Mary and Bob fall deeply in love,marry,and have eight children.Bob stops working for Mary in order to care for the children.What will be the effect on GDP?

(Multiple Choice)

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Question 6

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.

(True/False)

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Question 7

Gross national product is defined as

(Multiple Choice)

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Question 8

Table 8-3 -Refer to Table 8-3.Consider the data above (in billions of dollars)for an economy: Gross domestic product (in billions of dollars)for this economy equals

(Multiple Choice)

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Question 9

Which of the following is included in gross domestic product for an economy in a given year?

(Multiple Choice)

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Question 10

The underground economy - the informal sector - can be a significant drag on the economies of developing countries.Why are firms in the informal sector often less efficient than firms in the formal sector?

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Question 11

If Gladys sells her 1998 Jeep Cherokee for $3,500 in 2016,the sale of her car contributes $3,500 to 2016 GDP.

(True/False)

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Question 12

Investment,as defined by economists,would not include which of the following? Ford

(Multiple Choice)

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Question 13

The factors of production include

(Multiple Choice)

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Question 14

Table 8-26 -Refer to Table 8-26.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?

(Essay)

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Question 15

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

(Multiple Choice)

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Question 16

Nominal GDP measures the value of all final goods and services at base-year prices.

(True/False)

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Question 17

The values of real GDP and real GNP are almost the same for the United States.

(True/False)

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Question 18

Table 8-16 -Refer to Table 8-16.Given the information above,what can we say has happened in the economy from 2015 to 2016?

(Multiple Choice)

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Question 19

Table 8-15 -Refer to Table 8-15.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2015 equals

(Multiple Choice)

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Question 20

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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?

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

Between 2015 and 2016,if an economy's exports rise by $8 billion and its imports fall by $8 billion,by how much will GDP change between the two years,all else equal?

An example of business fixed investment spending is

Suppose Bob works for Mary as a proofreader.Mary and Bob fall deeply in love,marry,and have eight children.Bob stops working for Mary in order to care for the children.What will be the effect on GDP?

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.

Gross national product is defined as

Table 8-3 -Refer to Table 8-3.Consider the data above (in billions of dollars)for an economy: Gross domestic product (in billions of dollars)for this economy equals

Which of the following is included in gross domestic product for an economy in a given year?

The underground economy - the informal sector - can be a significant drag on the economies of developing countries.Why are firms in the informal sector often less efficient than firms in the formal sector?

If Gladys sells her 1998 Jeep Cherokee for $3,500 in 2016,the sale of her car contributes $3,500 to 2016 GDP.

Investment,as defined by economists,would not include which of the following? Ford

The factors of production include

Table 8-26 -Refer to Table 8-26.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?

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

Nominal GDP measures the value of all final goods and services at base-year prices.

The values of real GDP and real GNP are almost the same for the United States.

Table 8-16 -Refer to Table 8-16.Given the information above,what can we say has happened in the economy from 2015 to 2016?

Table 8-15 -Refer to Table 8-15.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2015 equals

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