MACROECONOMICS CHAPTER 5

if net national product is $250 billion and indirect taxes are $5 billion, then national income is

$245 billion

if gross investment in 2009 is $600 billion and depreciation in 2012 is $50 billion, net investment in 2012 is

$550 billion

_____ is commonly defined as six consecutive months of declining real GDP

a recession

which of the following is an example of a final good or service

a tractor purchased by a farmer to cultivate his farm

gross domestic product measures

all of these: the total spending on currently produced final goods and services in the country, the total market value of all currently-produced final output in the country, the total income earned from current production of final goods and services in the country

in the circular flow diagram, the different payments made by firms to households are

all of these: wages and salaries, interest on borrowed money, rent on office and factory buildings

when a country is experiencing persistent deflation, then

both real GDP is greater than nominal GDP after the base year and real GDP is less than nominal GDP before the base year are correct

which of the following is not a transfer payment

corporate dividends

gdp measures the total income of all citizens of a country

false

this year's nominal GDP is this year's output of final goods and services evaluated in base year dollars

false

in macroeconomics, underground activities include

illegal activities and non-market transactions are correct

if the value of net exports is negative, then

imports exceed exports

suppose that an economy is experiencing continuously raising prices. if 2000 is the base year, then the real GDP in 2009 is _____ the nominal GDP

less than

which of the following must be true before a recession is considered a depression

none of these need to be true before an economy is considered a recession

more abundant leisure time increases _____, but it ______ real GDP

social welfare; decreases

the most severe decline in output in U.S. history took place during

the 1929-1933 period

one major lesson that we learn from the circular flow diagram is that

total income in the economy must always equal total spending

because gdp ignores most transactions that do not take place in organized markets it probably led us to underestimate the true growth in real output in recent years

true

real GDP is a gross domestic product measured

using the prices of a specified base year