Macroeconomics Chapter 8 GDP
Consider the following simple economy that produces only three goods: (Table 8.5) Real GDP in 2017 equals ...
$6680
A simple economy produces two goods, Apple Pies and Computer games. Price and quantity data are as follows (Table 8.23) In Year 2, nominal GDP is equal to ______ and real GDP is _______
126234.38 ; 63156.25
Table 8.4 with Nominal and Real GDP In 2011, the value of GDP deflator is ... In 2012, the value of GDP deflator is...
2011... 113 2012... 119
The GDP of country Sumeria has grown at an average rate of 6 percent over the last two years, while the rate of inflation has remained more or less stable. Macroeconomists in the country are arguing that this increase in GDP is a clear indication of an overall improvement in the well being of its people. Which of the following, if true, about the last two years in Sumeria would strengthen this argument?
An increasing percentage of the population is choosing leisure time over time spent in the work force
Indicate whether each of the following is a final good, an intermediate good, or neither: Coffee beans purchased by a coffee shop One share of Google stock A new pick-up truck purchased by a consumer A new home purchased by a family
Coffee beans: Intermediate good Google stock: Neither Pick up truck: Final good New Home: Final good
The figure shows the values of the components of GDP for the year 2016. Based on the data shown, which of the following statements regarding the components of GDP is false
Consumer spending on services is less than the sum of spending on durable and nondurable goods
What are the four major categories of expenditure?
Consumption, investment, government purchases, and net exports
The following table gives nominal and real GDP for an economy for two years (Table 8.22) Based on the table, in Year 2, the value of the GDP deflator is... The inflation rate between Year 1 and Year 2 is..
GDP deflator... 116.7 Inflation rate... 6.1%
Real GDP per capita is often used as a measure of general well being. While increases in real GDP often do lead to increases in the well being of the population, why is real GDP not a perfect measure of well being
GDP does not include crime rates or income distribution, the costs of pollution are not included, the value of leisure is not included
what happens if we measure GDP by adding up the value of every good and service produced in the economy?
GDP is overestimated because of double counting
Which of the following is not a shortcoming of GDP as a measure of well being
GDP only counts final goods and services not intermediate goods
If Americans still worked 60 hours weeks, as they did in 1890
GDP would be much higher than it is, but the well being of the typical person would not necessarily be higher
According to most economists, is it a serious shortcoming of GDP that it does not count household production or production in the underground economy?
Most economists would answer "no" because these types of production do not affect the most important use of GDP measure which is to measure changes in total production over short periods of time
The textile industry in Indonesia has traditionally been one of the largest employers in the manufacturing sector. Increased production levels in this industry during the first three quarters this year led industry experts to believe that the industry's contribution to Indonesia's GDP would also increase. However, at the end of the year it was seen that the percentage of Indonesia's GDP that came from the textile industry actually declined. Which of the following, if true, would best explain this outcome?
Other major industries reported greater increases in production value than those reported by the Indonesian textile industry
suppose the base year is 2001. looking at GDP data from the United States from 2001 to the present, what would be true of the relationship between nominal GDP and real GDP?
RGDP < NGDP because prices are rising
The Council of Economic Advisors to the president of a country reported gross investment expenditure at 400 000 during a particular year. The group excluded from this valuation an amount of 50 000 spent by an existing domestic firm during the year. Mark, an economist, argued that this amount should have been included under the business as fixed investment component of GDP. Which of the following, if true, would support Mark's argument?
The firm purchased new machinery worth 50 000 for its production facility during that year
The production of LCD television sets in Australia increased by 20% this year as compared to last year. Those TV sets were no less advanced technologically than the sets sold in previous years. However, the value of the contribution LCD television sets made to Australia's nominal GDP during this year was the same as the previous year. Which of the following, if true, would best explain this outcome?
The price of LCD television sets declined in the past year
Which of the following equations sums up the components of Gross Domestic Product
Y = C + I + G + NX
A recession occurs when an economy experiences a period in which there is
a decrease in total production
Inventories are part of investment and therefore included in GDP because
firms produce goods, however sometimes goods may be unsold at the time GDP is computed
If prices rise over time, then real GDP will be
larger than nominal GDP in years before the base year
One major component of GDP that can be negative is
net exports
If the GDP deflator in 2012 has a value of 98.0 then
prices have decreased 2 percent between the base year and 2012
Over time, prices may change relative to each other. To allow for this, the Bureau of Economic Analysis calculates:
real GDP using chain weights
In calculating GDP, which levels of government spending are included in government purchases?
spending by federal, state, and local governments
Which of the following statements about the consumption component of GDP is not correct?
spending on services is smaller than the amount of consumption spending on durable and nondurable goods
The total value of commodity A produced in Country X increased from $500,000 in 2011 to $700,000 in 2012. According to Laura, a student of economics, the share of commodity A in real GDP of 2012 should be higher than that of 2011. Which of the following, if true, would strengthen Laura's argument?
the average price level in the economy remained stable over the two years
Gross domestic product is best defined as
the market value of all final goods and services produced in a country during a period of time, typically one year
Which of the following is included in the economists' definition of investment?
the purchase of new machines, factories, or houses
Real GDP is
the value of goods and services evaluated at base year prices
the business cycle exists because
total production experiences periods of increases and periods of decreases
Transfer payments are not included in GDP calculations because
transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service
During the current year, the government in the country of Brungaria has adopted a fiscal stimulus package to boost economic growth. The stimulus package is a major factor behind the increase in government purchases this year. As a result of these policies, Brungaria will experience a substantial increase in overall employment, gross investment, and the consumption expenditure. In response,, the Economic Advisory Committee of the government announces at a press conference that these results will ensure that Brungaria's GDP will be higher this year than it was in the previous year. Which of the following, if true, would undermine the claim of the Economic Advisory Committee?
Brungaria's exports have fallen significantly in the current year
The country of Alaine produces 1000 tons of corn during a year. it is valued at 500 dollars per ton. a lobbyist for the corn industry in Alaine argues that the total value of corn production should be included in the country's GDP for the same year. The lobbyist's claim is based on the assumption that...
corn is not used in the production of other goods
Household production and the underground economy
are not accounted for in the Bureau of Economic Analysis' estimates of GDP.
Ambrosia, a small country in the Mediterranean region,, has an agriculture based economy. In recent year, a decline in global trade barriers has led to a massive increase in agricultural production in Ambrosia. The government of Ambrosia has claimed that this expansion has increased the country's GDP and also improved the overall welfare of its people by increasing employment opportunities. However, critics of the government have claimed that this expansion has actually made the people of Ambrosia worse off. Which of the following if true would support the critic's argument
the expansion was made possible by an expansion of pesticide use that has damaged the natural environment.
