Question 1

Marla is an architect who is designing a home for Chuck.Chuck is paying Marla $150 per hour to design his new home.When Chuck and Marla get married,Marla continues to work on designing the home,but she no longer charges Chuck for her work.As a result,GDP ________ because ________.

Accepted Answer

A) falls;Marla's work takes place in the underground economy once she's married 
B) falls;Marla's work becomes less valuable once she's married 
C) falls;Marla's architectural design services are no longer bought by Chuck once they're married 
D) rises;Marla becomes more productive once she's married

Question 2

Table 8-8
 
-Refer to Table 8-8.Suppose that a simple economy produces only four goods and services: sweaters,CDs,sugar,and soft drinks.Assume one half of the sugar is used in making the soft drinks and the other half of the sugar is purchased by households.Calculate nominal GDP for this simple economy.

Accepted Answer

The answer of Table 8-8
 
-Refer to Table 8-8.Suppose that...

Question 3

In 2015,Ford Motor Company's sales were rising.These events were caused by

Accepted Answer

A) an economic recession. 
B) an economic expansion. 
C) an increase in advertising. 
D) improving quality of service.

Question 4

If nominal GDP is $5 trillion and real GDP is $4 trillion,the GDP deflator is

Accepted Answer

A) 12.5. 
B) 80. 
C) 125. 
D) 800.

Question 5

People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power.If inflation and income grow at the same rate,is this complaint valid? Explain carefully.

Accepted Answer

The answer of People complain that inflation increases the cost...

Question 6

An inflation rate of 5% between 2015 and 2016 would be implied by a change in the GDP deflator from ________ in 2015 to ________ in 2016.

Accepted Answer

A) 105;115 
B) 200;205 
C) 400;420 
D) 375;390

Question 7

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 8

If the GDP deflator is equal to 100,then for that year nominal GDP is equal to real GDP.

Accepted Answer

A) True 
 B)False

Question 9

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.

Question 10

Table 8-1
 
-Refer to Table 8-1.Suppose that a simple economy produces only four goods and services: sweatshirts,dental examinations,coffee drinks,and coffee beans.Assume all of the coffee beans are used in the production of the coffee drinks.Using the information in the above table,nominal GDP for this simple economy equals

Accepted Answer

A) 3,090 units. 
B) $7,250. 
C) $8,750. 
D) $9,750.

Question 11

Real GDP is GDP in a given year

Accepted Answer

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

Question 12

Table 8-2
 
-Refer to Table 8-2.Suppose that a simple economy produces only four goods and services: shoes,DVDs,tomatoes,and ketchup.Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households.Using the information in the above table,nominal GDP for this simple economy equals

Accepted Answer

A) $7,400. 
B) $6,400. 
C) $5,800. 
D) 2,440 units.

Question 13

Which of the following is counted in GDP?

Accepted Answer

A) the value of goods and services produced in the underground economy 
B) the cost of a speed boat purchased by drug smugglers 
C) the value of do-it-yourself work 
D) the value of leisure

Question 14

National income is equal to

Accepted Answer

A) personal income minus personal taxes. 
B) GDP minus depreciation. 
C) disposable personal income plus depreciation plus personal taxes. 
D) GNP plus depreciation.

Question 15

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 16

Table 8-19
 
-Refer to Table 8-19.Given the information above,calculate the GDP deflator in 2016.

Accepted Answer

A) 114 
B) 105 
C) 95 
D) 87

Question 17

If the GDP deflator is 142,by how much have prices changed since the base year?

Accepted Answer

A) Prices have increased by 42%. 
B) Prices have increased by 142%. 
C) Prices have decreased by 4.2%. 
D) Prices have increased by 58%.

Question 18

Which of the following is included in both the U.S.GDP and U.S.GNP?

Accepted Answer

A) the value of all cars produced by General Motors in the United States 
B) the value of all cars produced by Ford in Mexico 
C) the value of all cars produced by Toyota in the United States 
D) the value of all cars produced by Nissan in Japan and the United States

Question 19

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

Accepted Answer