Question 1

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

Question 2

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Which of the following transactions represents the purchase of a final good?

Accepted Answer

A) Starbucks purchases coffee beans. 
B) Delta buys a new European-made jetliner. 
C) Apple computer buys computer processors from Intel. 
D) Your father buys a new John Deere riding lawn mower. 
A) Starbucks purchases coffee beans. 
B) Delta buys a new European-made jetliner. 
C) Apple computer buys computer processors from Intel. 
D) Your father buys a new John Deere riding lawn mower.

Question 5

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 6

Which component of consumption spending is the greatest in a typical economy?

Accepted Answer

A) services 
B) durable goods 
C) nondurable goods 
D) new housing 
A) services 
B) durable goods 
C) nondurable goods 
D) new housing

Question 7

Japan experienced periods of deflation - a declining price level - during the 1990s.During a deflationary period,which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period.

Accepted Answer

Real GDP would be higher,as long as the

Question 8

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 9

National income is derived from gross domestic product by

Accepted Answer

A) subtracting retained earnings from gross domestic product. 
B) adding personal taxes and depreciation to gross domestic product. 
C) subtracting depreciation from gross domestic product. 
D) adding personal income and transfer payments to gross domestic product. 
A) subtracting retained earnings from gross domestic product. 
B) adding personal taxes and depreciation to gross domestic product. 
C) subtracting depreciation from gross domestic product. 
D) adding personal income and transfer payments to gross domestic product.

Question 10

In comparing China to Canada,China's relatively ________ growth rate in GDP would make you more likely to take a job in China,and China's relatively ________ level of GDP would make you less likely to take a job in China.

Accepted Answer

A) high;low 
B) high;high 
C) low;low 
D) low;high 
A) high;low 
B) high;high 
C) low;low 
D) low;high

Question 11

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

Accepted Answer

A) produce goods and services no one wants. 
B) sell their goods and services to citizens in other countries. 
C) do not pay taxes to the government. 
D) employ illegal immigrants from other countries. 
A) produce goods and services no one wants. 
B) sell their goods and services to citizens in other countries. 
C) do not pay taxes to the government. 
D) employ illegal immigrants from other countries.

Question 12

Table 8-9
  
-Refer to Table 8-9.Suppose that the above table represents the goods and services produced in a very simple economy in 2016.Assume that steel is used as an input in the production of autos.Using that information,calculate GDP for the year 2016.

Accepted Answer

First,we must decide which goods to incl

Question 13

Table 8-27
   The components of national income for an economy are represented in Table 8-27 above.All values are in billions of dollars.
-Refer to Table 8-27.What is the level of disposable personal income for this economy?

Accepted Answer

A) $1,080 billion 
B) $1,010 billion 
C) $980 billion 
D) $860 billion 
A) $1,080 billion 
B) $1,010 billion 
C) $980 billion 
D) $860 billion

Question 14

Which of the following statements about the underground economy is true?

Accepted Answer

A) The underground economy in developing countries amounts to less than 10% of measured GDP. 
B) Most transactions that occur in the underground economy are included in the calculation of GDP. 
C) Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run. 
D) Income that is earned but not reported as income for tax purposes is included in the calculation of GDP. 
A) The underground economy in developing countries amounts to less than 10% of measured GDP. 
B) Most transactions that occur in the underground economy are included in the calculation of GDP. 
C) Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run. 
D) Income that is earned but not reported as income for tax purposes is included in the calculation of GDP.

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

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 17

A final good is one that

Accepted Answer

A) is used in the production of another good. 
B) is a natural resource used to produce a good. 
C) is purchased as an input in the production process. 
D) is purchased by its final user. 
A) is used in the production of another good. 
B) is a natural resource used to produce a good. 
C) is purchased as an input in the production process. 
D) is purchased by its final user.

Question 18

The output of Mexican citizens who work in Texas would be included in the

Accepted Answer

A) gross domestic product of Mexico. 
B) gross national product of Mexico. 
C) gross national product of the United States. 
D) net national product of the United States. 
A) gross domestic product of Mexico. 
B) gross national product of Mexico. 
C) gross national product of the United States. 
D) net national product of the United States.

Question 19

The nominal GDP of the U.S.in 2015 was approximately $17.3 trillion.This means that

Accepted Answer

A) the value of output in 2015 was around $17.3 trillion. 
B) total income in 2015 was around $17.3 trillion. 
C) total spending in 2015 was around $17.3 trillion. 
D) all of the above are true. 
A) the value of output in 2015 was around $17.3 trillion. 
B) total income in 2015 was around $17.3 trillion. 
C) total spending in 2015 was around $17.3 trillion. 
D) all of the above are true.

Question 20

Table 8-10
   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.
Answer:
   a)The value added is the difference between the price the firm sells a good for and the price it paid other firms for the intermediate good.The firm that does the oil drilling sells the gallon of oil to the refinery for $0.75.Since we are assuming no other input costs for simplicity,the value added by the drilling firm is $0.75.The refinery processes the oil and then sells it to the transport company for $1.25.The refinery's value added is $0.50.The transport company sells the oil to the retail company for $1.85.The transport company's value added is $1.85 - $1.25 = $0.60.Finally,the retail gas station sells the gallon of gas for $3.65.The value added by the retail station is $1.80.
b)The total value added is found by summing the value added by each firm involved the production of the gallon of gas.The retail price is the same at this total of value added.
-The Philippines and Vietnam have roughly the same size population.Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion.You should conclude

Accepted Answer

A) a typical person in Vietnam is 10 times as well off as the typical person in the Philippines. 
B) a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. 
C) a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines. 
D) it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information. 
A) a typical person in Vietnam is 10 times as well off as the typical person in the Philippines. 
B) a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. 
C) a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines. 
D) it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information.

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

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

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

Which of the following transactions represents the purchase of a final good?

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

Which component of consumption spending is the greatest in a typical economy?

Japan experienced periods of deflation - a declining price level - during the 1990s.During a deflationary period,which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period.

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

National income is derived from gross domestic product by

In comparing China to Canada,China's relatively growth rate in GDP would make you more likely to take a job in China,and China's relatively level of GDP would make you less likely to take a job in China.

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

Table 8-9 -Refer to Table 8-9.Suppose that the above table represents the goods and services produced in a very simple economy in 2016.Assume that steel is used as an input in the production of autos.Using that information,calculate GDP for the year 2016.

Table 8-27 The components of national income for an economy are represented in Table 8-27 above.All values are in billions of dollars. -Refer to Table 8-27.What is the level of disposable personal income for this economy?

Which of the following statements about the underground economy is true?

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?

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?

A final good is one that

The output of Mexican citizens who work in Texas would be included in the

The nominal GDP of the U.S.in 2015 was approximately $17.3 trillion.This means that

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

Exam 8: Gdp: Measuring Total Production and Income

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

Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.

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

Which of the following transactions represents the purchase of a final good?

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

Which component of consumption spending is the greatest in a typical economy?

Japan experienced periods of deflation - a declining price level - during the 1990s.During a deflationary period,which would be higher: nominal GDP or real GDP? Why? Assume that the base year of choice is prior to the deflationary period.

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

National income is derived from gross domestic product by

In comparing China to Canada,China's relatively ________ growth rate in GDP would make you more likely to take a job in China,and China's relatively ________ level of GDP would make you less likely to take a job in China.

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

Table 8-9 -Refer to Table 8-9.Suppose that the above table represents the goods and services produced in a very simple economy in 2016.Assume that steel is used as an input in the production of autos.Using that information,calculate GDP for the year 2016.

Table 8-27 The components of national income for an economy are represented in Table 8-27 above.All values are in billions of dollars. -Refer to Table 8-27.What is the level of disposable personal income for this economy?

Which of the following statements about the underground economy is true?

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?

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?

A final good is one that

The output of Mexican citizens who work in Texas would be included in the

The nominal GDP of the U.S.in 2015 was approximately $17.3 trillion.This means that

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

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

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

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

In comparing China to Canada,China's relatively growth rate in GDP would make you more likely to take a job in China,and China's relatively level of GDP would make you less likely to take a job in China.