Economics

21) If nominal GDP rises we can say that A) production has risen and prices remain constant. B) prices have risen and production remains constant. C) production has risen or prices have risen or both have risen. D) production has fallen and prices have risen

C Production has risen or prices have risen or both have risen.

Real GDP is

The measure of production that values output using base-year prices is called

Nominal GDP is

The measure of production that values production using current prices.

Between 2008 and 2009, if an economy's exports fell by $12 billion and its imports increase by $7 billion, by how much will GDP change between the two years, all else equal?

-12 - 7 = - 19 Start with 100 exports 20 imports 10 total = 110 Year 2 exports = 20-12=8 year 2 imports = 10+7=17 100+8-17=91 Decrease from 110 to 91 = 110-91=-19 bill

2004. 2009 Qu Price. Qu. Price Movies. 20. 6. 30. 7 Burgers. 100. 2. 90. 250 Bikes. 3. 1000. 6. 1100 2009 Nominal GDP? 2004 nominal GDP?

2009 nominal=(30x7) +. (90x2.50) +( 6x1100)=7035. 2004 nominal =120+200+3000=3320

10) GDP is not a perfect measure of well-being because A) the value of leisure is included in GDP. B) GDP is not adjusted for pollution. C) GDP is adjusted for changes in crime rates. D) GDP is adjusted for increases in drug addiction

B. Not adjusted for pollution (or education level or happiness level or crime rate etc )

12) 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 _______. 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

C

11) The underground economy can be described as A) production of intermediate goods and services. B) economic production that includes mining. C) economic activity that is hidden from the government to avoid taxes or because the activity is illegal. D) production of infrastructure that spurs growth in the rest of the economy.

C. Hidden from the government to avoid taxes and/or because it involves an illegal activity.

9) Between 2008 and 2009, 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? 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

C. net exports will increase GDP by 16 billion. 8 - -8 = 16. Exports rose by 8. Imports fell, so you take away a negative 8 from the increase in exports. Might be easier to start from beginning and say that everything but net exports = 100. If your exports were $20 and your imports were $10 the first year, then what is the total? 100+(20-10)=110 Year 1 total 110 Year 2, you increase your exports by 8 (20+8=28) and decrease your imports by 8 (10-8=2) 100+ (28-2)= 126 Year 2 total 126 110 to 126 is an increase of 16 (126-110= 16)

Nominal GDP is another term for A) inflation-adjusted GDP. B) real GDP. C) current dollar GDP

Current dollar GDP

Between 2008 and 2009, if an economy's exports rise by $12 billion and its imports increase by $7 billion, by how much will GDP change between the two years, all else equal?

Increase 5 billion 12-7=5 billion. 12 more in exports minus the 7 increase in imports. Start with $100 from everything else 100 +20 in exports and 10 in imports = 100+20-10=110 Year 1 total = 110 Year 2 exports increase by 12 (20+12) imports increase by 7 (10+7) 100+(32-17)=115 Increase from 110 bill to 115 bill = 5 billion.

When measuring GDP, new automobile sales are counted as consumption when the automobiles are purchased by ________ and as investment when they are purchased by ________. A) households; businesses B) households; the government C) businesses; the government D) foreign customers outside the United States; households

New auto sales: A) Consumption for households, but investments for businesses

Between 2008 and 2009, if an economy's exports fell by $12 billion and its imports fell by $12 billion, by how much will GDP change between the two years, all else equal

No change -12 - (- 12)= 0

The measure of production that values production using current prices is called A) value-added GDP. B) nominal GDP. C) real GDP. D) underground GDP

Nominal GDP

17) If real GDP increases we know for sure that A) output has risen. B) prices have risen. C) prices have risen but output has remained constant. D) prices have remained constant.

Output has risen

The measure of production that values output using base-year prices is called

Real GDP