chapter 19 econ

18. Which of the following statements is true? A. GDP includes spending on recreation and travel, but it does not cover leisure time. B. GDP does not include production that is exchanged in the market, but it does cover production that is not exchanged in the market. C. GDP does not include newly produced goods and services, but counts the buying and selling of previously existing assets D. GDP includes production that is not exchanged in the market

A. GDP includes spending on recreation and travel, but it does not cover leisure time.

5. ___________ is a small category that refers to the goods produced by one business that have yet to be sold to consumers, and are either still sitting in warehouses and on store shelves. A. Inventories B. Services C. Structures D. Durable goods

A. Inventories

4. Consumption is the purchase of goods and services by: A. households. B. government. C. business firms. D. foreign buyers.

A. households.

10. Investment (I) includes: A. the amount spent on new factories and machinery. B. the amount spent on stocks and bonds. C. the amount spent on consumer goods that last more than one year. D. the amount spent on purchases of art.

A. the amount spent on new factories and machinery.

7. Which of the following is not counted as a part of GDP? A. the purchase of 100 shares of AT&T stock by your grandfather. B. the purchase of a snow plough by the city of Minneapolis. C. the unsold additions to inventory at an appliances store D. the purchase of a loaf of bread by a consumer

A. the purchase of 100 shares of AT&T stock by your grandfather.

8. _________ are now the largest single component of the supply side of GDP, representing over half of GDP. A. Durable goods B. Services C. Nondurable goods D. Structures

B. Services

13. If imports exceed exports, as in recent years, then __________ exists. A. a trade surplus B. a trade deficit C. a trade imbalance D. trade disequilibrium

B. a trade deficit

15. The gap between exports and imports in a nation's economy is called the ___________. A. trade surplus B. trade balance C. trade deficit D. trade inventory

B. trade balance

9. GDP in the United States in 2012 was about __________. A. $162 billion B. $1.62 trillion C. $16.2 trillion D. $162 trillion

C. $16.2 trillion

11. Middle-income countries, which include much of Latin America, Eastern Europe, and some countries in East Asia, have per capita GDP in the range of ___________. A. $60 to $120 B. $600 to $1200 C. $6,000 to $12,000 D. $60,000 to $120,000

C. $6,000 to $12,000

2. Consumption in the United States is about ____________ of GDP, and it moves relatively little over time. A. 10% B. 33% C. 68% D. 90%

C. 68%

6. Which of the following is included in the calculated Gross Domestic Product? A. Farmer Freddie sells his second tractor to his son. B. Suzanne buys a love seat and chair for $85 at the yard sale on the corner. C. A local ice cream store sells $17,000 worth of cones and sundaes on July 1. D. Mr. Farkle buys a used lawn mower from his neighbor, Mr. Sparkle.

C. A local ice cream store sells $17,000 worth of cones and sundaes on July 1.

19. The difference between nominal GDP and real GDP is: A. nominal GDP measures actual productivity B. nominal GDP adjusts for inflation C. real GDP adjusts for inflation D. real GDP excludes imports and exports

C. real GDP adjusts for inflation

20. The nominal value of any economic statistic refers to the number that is actually announced at that time, while the ________________ refers to the statistic after it has been adjusted for inflation. A. empirical value B. adjusted value C. real value D. net value

C. real value

17. The change in inventories, a component of aggregate supply, comprises roughly __________ of GDP. A. 20% B. 10% C. 1% D. 0.5%

D. 0.5%

14. In 1980 Denmark had a GDP of $70 billion (measured in U.S. dollars) and a population of 5.1 million. In 2000, Denmark had a GDP of $160 billion (measured in U.S. dollars) s and a population of 5.3 million. By what percentage did Denmark's GDP per capita rise between 1980 and 2000? A. 45.4% B. 219% C. 128% D. 120%

D. 120%

16. _______________, which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country. A. Trade balance B. Inflation C. Education D. Economic growth

D. Economic growth

3. The demand measure of GDP accounting adds together: A. wages and salaries, rent, interest, and profit. B. consumption, investment, government purchases, and trade balance. C. consumption, government purchases, wages and salaries, and trade balance. D. consumption, interest, government purchases, and trade balance.

D. consumption, interest, government purchases, and trade balance.

12. A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are (in order): A. trough, expansion, recession, peak B. contraction, recession, expansion, boom C. expansion, trough, recession, peak D. expansion, peak, recession, trough

D. expansion, peak, recession, trough

1. GDP is: A. the sum of all currency and coins in circulation. B. the value of all final goods and services produced by a government. C. the value of all final good and services produced anywhere in the world by a nation's firms. D. the value of all final goods and services produced domestically.

D. the value of all final goods and services produced domestically.