GDP quiz test 1

Net exports will increase GDP by $16 billion.

Between 2013 and 2014, if an economyʹs 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? Net exports will decrease GDP by $8 billion. Net exports will increase GDP by $16 billion. Net exports will increase GDP by $8 billion. The increase in exports is offset by the decrease in imports, so there is no change in net exports and no effect on GDP.

increases; increases

During a business cycle expansion, total production __________ and total employment __________. increases; decreases decreases; decreases increases; increases decreases; increases

GDP is not adjusted for pollution.

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

$9,700

In a small economy, consumption spending in 2013 is $6,000, government spending is $1,200, gross investment is $1,500, exports are $2,000, and imports are $1,000. What is gross domestic product in 2013? $10,800 $9,800 $11,700 $9,700

valued in the prices of the base year.

Real GDP is GDP in a given year valued in the prices of the base year. adjusted only for unanticipated inflation. valued in the prices of that year. adjusted only for anticipated inflation.

False

Real GDP per capita is calculated by dividing the value of real GDP for a country by the countryʹs adult population. True False

$8,750

Refer to the table above. 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 $9,750 $8,750 3,090 units $7,250

ratio of nominal GDP to real GDP multiplied by 100.

The GDP deflator is the ratio of real GDP to nominal GDP multiplied by 100. difference between real GDP and nominal GDP multiplied by 100. difference between nominal GDP and real GDP multiplied by 100. ratio of nominal GDP to real GDP multiplied by 100.

...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 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 a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines. 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 typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. a typical person in Vietnam is 10 times as well off as the typical person in the Philippines.

relative prices change over time and these are not reflected in base-year prices, and this distorts GDP.

The drawback to calculating real GDP using base-year prices is that relative prices change over time and these are not reflected in base-year prices, and this distorts GDP. quality changes are reflected in base-year prices. real GDP in one year is not comparable to real GDP in another year. relative prices change over time and these changes are reflected in base-year prices.

the price of the intermediate goods

Value added equals the market price of the firm's product minus wages and salaries the price of the intermediate goods depreciation on plant and equipment the price of all factors of production

The price level falls and the quantity of final goods and services produced rises

Which of the following could cause nominal GDP to decrease, but real GDP to increase? The price level falls and the quantity of final goods and services produced falls. The price level rises and the quantity of final goods and services produced rises. The price level rises and the quantity of final goods and services produced falls. The price level falls and the quantity of final goods and services produced rises

goods and services people produce for themselves.

ʺHousehold productionʺ refers to the manufacturing of durable household products. goods and services people produce for themselves. the home building sector of the economy. home-based craft businesses.

$1,140

Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Nominal GDP for Tyrovia for 2013, using 2005 as the base year, equals $880 $690 $1,140 $560

$690

Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Real GDP for Tyrovia for 2013, using 2005 as the base year, equals $690 $1,140 $560 $880

the total market value of final goods and services produced in the economy during a period of time

Gross domestic product is calculated by summing up the total quantity of goods and services in the economy the total market value of goods and services in the economy the total market value of final goods and services produced in the economy during a period of time the total quantity of goods and services produced in the economy during a period of time

the underground economy.

Gross domestic product understates the total production of final goods and services because of the omission of

household production.

Gross domestic product understates the total production of final goods and services because of the omission of exports. household production. inflation. intermediate goods.

True

If income is unequally distributed in an economy, increases in GDP may not raise well-being in an economy. True False

equals

In the circular flow model, the value of total income for an economy __________ the value of total production. equals is less than may be greater than or less than is greater than

buys US government bonds

Investment, as defined by economists, would not include which of the following? Ford Motor Company buys a new robotic machine to assemble cars builds another assembly plant in the United States buys US government bonds adds 1,000 new cars to inventories

economic growth, business cycles, and inflation.

Macroeconomics seeks to understand industry sales, marketing strategies, and corporate growth. economic growth, business cycles, and inflation. product demand, product cost, and profit maximization. public choices, private choices, and consumer maximization.

average price levels of goods and services in the economy.

Macroeconomics, as opposed to microeconomics, includes the study of what determines the average price levels of goods and services in the economy. price charged for laptop computers by Dell.

employment in the economy.

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of employment in the economy. output of a specific firm. output of a specific industry. employment in a specific industry.

the value of the services of the real estate agent.

Suppose in 2014, you purchase a house built in 2003. Which of the following would be included in the gross domestic product for 2014? the value of the house in 2003 the value of the house in 2014 the value of the services of the real estate agent. the value of the house in 2014 minus depreciation

the price level in 2013 was less than the price level in the base year.

Suppose that nominal GDP in 2013 was less than real GDP in 2013. Given this information, we know for certain that real GDP in 2013 was greater than real GDP in the base year. the price level in 2013 was greater than the price level in the base year. the price level in 2013 was less than the price level in the base year. real GDP in 2013 was less than real GDP in the base year.

5% higher in year 2 than in year 1

The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is 5% higher in year 2 than in year 1 5% higher in year 1 than in year 2 105% higher in year 2 than in year 1 105% higher in year 1 than in year 2

clothing

Which of the following is not a durable good? furniture refrigerator clothing automobile

The war time years were a period of prosperity for U.S. consumers.

Which of the following is not a true statement about the impact of World War II on the U.S. economy? More than 40% of the labor force was in the military or producing war goods. The war time years were a period of prosperity for U.S. consumers. U.S. GDP increased dramatically from 1941 to 1945. Increased production of tanks, ships, planes, and munitions accounted for most of the increase in GDP.

intermediate goods

Which of the following is not directly counted in GDP? government purchases consumer goods investment expenditures intermediate goods

intermediate goods

Which of the following is not directly counted in GDP? investment expenditures government purchases consumer goods intermediate goods

GDP accounting rules do not adjust for production that pollutes the economy.

Which of the following statements is true? GDP growth distributes income equally to people in the economy. Household production is counted in GDP as it amounts to real production. GDP accounting rules do not adjust for production that pollutes the economy. A decrease in the crime rate increases GDP as people will spend more on security.

You buy a new John Deere riding lawn mower.

Which of the following transactions represents the purchase of a final good? Apple buys new computer processors from Intel. Starbucks purchases coffee beans. Delta buys an new Airbus jetliner. You buy a new John Deere riding lawn mower.