Question 1

When Ford increases the production of cars in Australia,which of the following occurs?

Accepted Answer

A) GDP in the United States rises. 
B) GNP in the United States rises. 
C) GNP in Australia rises. 
D) Both A and C occur.

Question 2

Between 2013 and 2014,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?

Accepted Answer

A) Net exports will increase GDP by $8 billion. 
B) The increase in exports is offset by the decrease in imports, so there is no change in net exports and no effect on GDP. 
C) Net exports will increase GDP by $16 billion. 
D) Net exports will decrease GDP by $8 billion.

Question 3

Investment spending includes spending on

Accepted Answer

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

Question 4

Which of the following is not an example of a transfer payment?

Accepted Answer

A) unemployment insurance payments 
B) health insurance payments to an army private 
C) social security payments to retirees 
D) social security payments to disabled persons

Question 5

Use the formula for the GDP deflator to explain how it is affected by an increase in prices in the economy.If the value of the deflator equals 100,what does that tell you about that year with respect to the base year?

Accepted Answer

The answer of Use the formula for the GDP deflator...

Question 6

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.

Question 7

If nominal GDP exceeds real GDP for a specific year,then the GDP deflator must be

Accepted Answer

A) equal to 100. 
B) greater than 100. 
C) less than 100. 
D) less than 0.

Question 8

Table 12-6
 $$\begin{array} { | l | c | r | } 
\hline \text { Product } & \text { Quantity } & \begin{array} { r } 
\text { Price per } \
\text { Unit }
\end{array} \
\hline \text { Coke } & 10,000 & \$ 2 \
\hline \text { Phones } & 2,000 & 150 \
\hline \text { Backpacks } & 4,000 & 25 \
\hline \text { Hershey bars } & 8,000 & 1 \
\hline
\end{array}$$
-Refer to Table 12-6.Consider the table of production and price statistics for a small economy in 2013.If the economy only produces the four goods listed below,what is GDP for 2013?

Accepted Answer

A) $428,000 
B) $267,000 
C) $24,000 
D) $1,424

Question 9

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.

Question 10

Suppose that in 2013,the national income in the United States was $200 billion,depreciation was $15 billion,personal taxes were $20 billion,and transfer payments were $10 billion.Gross domestic product in 2013 is

Accepted Answer

A) $185 billion. 
B) $215 billion. 
C) $220 billion. 
D) $245 billion.

Question 11

Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?

Accepted Answer

The answer of Why does inflation make nominal GDP a...

Question 12

Which of the following would increase gross private domestic investment in an economy?

Accepted Answer

A) an increase in the shares of Apple stock households own 
B) an increase in the number of workers Apple hires 
C) an increase in the level of Apple's inventory 
D) an increase in the number of highway construction projects the government is funding

Question 13

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 14

If the quantity of goods and services produced in the economy decreases

Accepted Answer

A) it may be possible for real GDP to increase. 
B) real GDP would certainly increase. 
C) it may be possible for nominal GDP to increase. 
D) nominal GDP would certainly increase.

Question 15

Economist Robert Higgs showed that World War II brought great increase in the number of consumer goods available to the typical person.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following would increase disposable personal income?

Accepted Answer

A) a decrease in transfer payments received 
B) a decrease in taxes paid 
C) a decrease in personal income 
D) All of the above would increase disposable income.

Question 17

The size of the underground economy would tend to increase if the government of a country

Accepted Answer

A) decreased government regulations on businesses. 
B) increased income tax rates. 
C) legalized prostitution. 
D) legalized marijuana.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

Accepted Answer

A) CPI; real GDP; nominal GDP 
B) GDP deflator; real GDP; nominal GDP 
C) GDP deflator; nominal GDP; real GDP 
D) PPI; nominal GDP; real GDP 
E) PPI; real GDP; nominal GDP

Question 20

Disposable personal income is defined as

Accepted Answer

A) personal income less personal taxes plus indirect sales taxes. 
B) personal income less transfer payments plus personal taxes. 
C) personal income less personal taxes. 
D) personal income less depreciation.

Exam 12: Gdp: Measuring Total Production and Income

When Ford increases the production of cars in Australia,which of the following occurs?

Between 2013 and 2014,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?

Investment spending includes spending on

Which of the following is not an example of a transfer payment?

Use the formula for the GDP deflator to explain how it is affected by an increase in prices in the economy.If the value of the deflator equals 100,what does that tell you about that year with respect to the base year?

The "underground economy" refers to

If nominal GDP exceeds real GDP for a specific year,then the GDP deflator must be

Nominal GDP is GDP in a given year

Suppose that in 2013,the national income in the United States was $200 billion,depreciation was $15 billion,personal taxes were $20 billion,and transfer payments were $10 billion.Gross domestic product in 2013 is

Why does inflation make nominal GDP a poor measure of the increase in total production from one year to the next?

Which of the following would increase gross private domestic investment in an economy?

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.

If the quantity of goods and services produced in the economy decreases

Economist Robert Higgs showed that World War II brought great increase in the number of consumer goods available to the typical person.

Which of the following would increase disposable personal income?

The size of the underground economy would tend to increase if the government of a country

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

The is a measure of the price level and is calculated by dividing by and multiplying by 100.

Disposable personal income is defined as