Macro chapter 8 real questions
Which of the following in not directly counted in GDP?
intermediate goods
The purchase of a new house is included in
investment expenditures.
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.
1) During a business cycle expansion, total production ________ and total employment ________. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
A
14) 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 A) 5% higher in year 2 than in year 1. B) 105% higher in year 2 than in year 1. C) 5% higher in year 1 than in year 2. D) 105% higher in year 1 than in year 2.
A
7) In the United States since the mid-1980s, consumption as a percentage of GDP has A) increased. B) slowly decreased. C) remained the same. D) dropped by more than half.
A
Gross domestic product is calculated by summing up A) the total market value of final goods and services produced in the economy during a period of time. B) the total market value of goods and services in the economy C) the total quality of goods and services produced in the economy during a period of time D) the total quality of goods and services in the economy
A
Which of the following are not considered part of government purchases? A) welfare benefits B) teacher's salaries paid by a local government C) a tank purchased by the federal government D) a bridge purchased by the state Government
A
10) A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will A) increase GDP and increase well being in the economy. B) increase GDP and decrease well being in the economy. C) decrease GDP and increase well being in the economy. D) decrease GDP and decrease well being in the economy.
B
13) Suppose that nominal GDP in 2011 was less than real GDP in 2011. Given this information, we know for certain that A) the price level in 2011 was greater than the price level in the base year. B) the price level in 2011 was less than the price level in the base year. C) real GDP in 2011 was less than real GDP in the base year. D) real GDP in 2011 was greater than real GDP in the base year.
B
17) The output of Mexican citizens who work in Texas would be included in the A) gross domestic product of Mexico. B) gross national product of Mexico. C) gross national product of the United States. D) net national product of the United States.
B
6) An example of business fixed investment spending is A) a purchase of a home by a household. B) a purchase of a computer by an accounting firm. C) a purchase of a bond by General Electric Corporation. D) $200 million of unsold cars at a car dealership.
B
11) Real GDP is GDP in a given year 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.
D
3) Which of the following transactions represents the purchase of a final good? A) Starbucks purchases coffee beans. B) Delta buys a new European-made jetliner. C) Apple computer buys computer processors from Intel. D) Your father buys a new John Deere riding lawn mower.
D
18) Residential investment includes spending by firms on office buildings.
F
20) Transfer payments are subtracted from national income to get to personal income.
F
The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S. ________ and the South Korean ________.
GNP; GDP
To examine how the total production of an economy has changed over time, it would be better to examine
Real GDP
19) If income is unequally distributed in an economy, increases in GDP may not raise well-being in an economy.
T
Home Depot sells new and used doors to contractors who build new homes. Home Depot also sells new and used doors to homeowners. Which of the following would be counted in GDP?
The sale of a new door to homeowner
Which of the following goods is directly counted in GDP?
a 12-inch Subway sandwich purchased by a student
Which of the following is not a durable good?
clothing
The purchase of a new automobile is included in
consumption expenditures on durable goods.
A transfer payment is a payment by the government to an individual
for which the government does not receive a good or service in return.
The output of U.S. citizens who work in Canada would be included in the
gross domestic product of Canada.
Gross domestic product understates the total production of final goods and services because of the omission of
household production.
disposable personal income equals personal income
minus personal tax payment
The purchase by a foreign government of an airplane produced in the United States is included in U.S.
net exports
Real GDP will increase
only if the quantity of final goods and services produced rises.
The GDP deflator is the
ratio of nominal GDP to real GDP multiplied by 100.
Product Quantity Price Shoes 40 $60.00 DVDs 100 18.00 Tomatoes 2,000 1.00 Ketchup 300 4.00 4) Refer to Table above. 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 A) $7,400. B) $6,400. C) $5,800. D) 2,440 units.
B
Year Nominal GDP Real GDP 2008 $7,400 $7,537 2009 7,813 7,813 2010 8,301 8,165 2011 8,760 8,516 12) Refer to Table above. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is A) 2008. B) 2009. C) 2010. D) 2011.
B
Year Nominal GDP Real GDP 2010 14,078 13,254 2011 14,441 13,312 16) Refer to Table above. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2011 equals A) 92.2. B) 102.6. C) 108.5. D) 109.1.
C
Year Oranges Produced Price of Oranges Shirts Produced Price of Shirts 2009 1,800 $0.90 110 $30.00 2011 2,000 1.00 110 35.00 15) Refer to Table above. Real GDP for Vicuna for 2009 using 2011 as the base year equals A) $4,620. B) $5,100. C) $5,650. D) $5,850.
C
5) The nominal GDP of the U.S. in 2010 was approximately $14.6 trillion. This means that A) the value of output in 2010 was around $14.6 trillion. B) total income in 2010 was around $14.6 trillion. C) total spending in 2010 was around $14.6 trillion. D) all of the above are true.
D
2) In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA A) simply counts the total number of goods produced in the market place and then adds them up. B) values goods at their market prices, multiplies them by the quantity produced, and then adds them up. C) simply counts the total number of goods and services produced in the marketplace and then adds them up. D) values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.
D
9) Gross domestic product understates the total production of final goods and services because of the omission of A) exports. B) inflation. C) intermediate goods. D) household production.
D
Assuming that the United States is the domestic economy, are goods and services produced by and purchased by . A) exports; foreign countries; the United States B) exports; the United States; the United States C) imports; foreign countries; foreign countries D) imports; foreign countries; the United States
D
Consumption expenditures $800 Investment expenditures 200 Government purchases 300 Exports 100 Imports 200 Wages 800 8) Refer to Table above. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals A) $2,200. B) $1,600. C) $1,400. D) $1,200.
D
Which equation represents the relationship between GDP and the four major expenditure components?
Y = C + I + G + NX