ch 6 multiple choice problems

The total income of households is a. net national product b. personal income c. national income d. production income

b.

The largest income component of GDP is a. proprietors' income b. rental income c. compensation of employees d. corporate profit

c.

A farmer buys a new tractor from John Deere to use on her cotton farm. This tractor is included in GDP as a. part of gross private domestic investment b. a durable consumption good c. a service d. a nondurable consumption good

a.

GDP is different from final sales since a. final sales ignores changes in inventory, which are included in GDP calculation b. measurements of GDP and final sales are subject to statistical errors c. final sales measures only domestic sales, but GDP considers exports as well d. final sales measures only what the consumers buy, but GDP is the sum total of consumption, investment, government purchases and net exports

a.

If the GDP deflator is greater than 100, then a. nominal GDP is greater than real GDP b. nominal GDP is lower than real GDP c. nominal GDP equals real GDP d. prices decreased by more than half between the current and the base years

a.

In the base year, nominal GDP a. is always equal to real GDP b. is always greater than real GDP c. may be higher or lower than real GDP

a.

The equation for GDP using the expenditure approach is a. GDP= C+I+G+(EX-IM) b. GDP=C+I+G+(IM-EX) c. GDP=C+I+G+EX+IM d. GDP=C+I+G-EX-IM

a.

Which of the following would NOT be counted in 2013's GDP? a. the value of a 2008 boat you purchase from your friend in 2013 b. the 2013 salary of a used motorcycle salesperson c. the commissions earned by a real estate agent in selling condominiums built prior to 2013 d. the value of a refrigerator manufactured in 2013 but not sold in 2013

a.

Assume that an economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 1 is a. 1 b. 100 c. 110 d. 111

b.

Double counting can be avoided by a. including the value of intermediate goods in the current year b. not counting the value of intermediate goods in GDP c. including the value of intermediate goods in the GNP but not in the GDP d. including the value of intermediate goods in the production year but not in the selling year of those goods

b.

Ford Motor Co. produces a Focus automobile in its factory in Germany and sells it in India. This transaction is in a. both German and U.S. GDP, with fifty percent of the value in each country's exports b. German GDP under exports c. Indian GDP under imports d. U.S. GDP under exports

b.

One reason why GDP is not a good measure of national well-being is that it fails to take into account a. profits of businesses b. income distribution c. value of intermediate goods d. depreciation

b.

Toyota, a Japan-based company manufactures a Camry automobile in Kentucky, USA and sells it in Japan. This transaction is included in a. GDP of both Japan and the U.S. with fifty percent in Japan's GDP under consumer durables and fifty percent under U.S. GDP under exports b. U.S. GDP under exports c. U.S. GDP under imports d. Japan's GDP under consumer durables

b.

If real GDP in 2012 using 2011 prices are lower than nominal GDP of 2012, the a. prices in 2012 are lower than prices in 2011 b. nominal GDP in 2012 equals nominal GDP in 2011 c. prices in 2012 are higher than prices in 2011 d. real GDP in 2012 is larger than real GDP in 2011

c.

The single largest expenditure component in GDP is a. government spending b. investment c. consumption d. net exports

c.

The value of what KFC produces in Japan is included in the U.S. _____ and in the Japanese ______. a. GDP; GDP b. GNP; GNP c. GNP; GDP d. GDP; GNP

c.

GDP is not a perfect measure of social welfare and the society's economic well-being because a. it does not say anything about the distribution of income b. GDP accounting rules do not adjust for production that causes negative externalities c. it does not include all economic activities in the economy d. all of the above

d.

If government purchases increased by $100 billion but GDP remained the same, which of the following could have occurred if everything else remains unchanged? a. both exports and imports increased by $50 billion b. imports decreased by $100 billion c. both consumption and investment increased by $50 billion d. gross private domestic investment decreased by $100 billion

d.

If the change in business inventories is zero, then final sales are a. zero b. less than GDP c. greater then GDP d. equal to GDP

d.

Which of the following is an example of a final good or service? a. wheat a bakery purchases to make bread b. coffee beans Starbucks purchases to make coffee c. lumber purchased by a construction company to be used in building houses d. a computer purchased by Federal Express to track shipments

d.

Your college bookstore receives a shipment of new economic texts for $60,000. This transaction is a. not included in GDP since books are exempt from GDP calculation b. included in GDP under investment since the bookstore earns a profit by selling these books to students c. included in GDP calculation under consumption d. not included in GDP calculation, since books bought by the bookstore are intermediate goods

d.

gross domestic product measures a. the total spending of everyone in the economy b. the value of all output in the economy c. the total income in the economy d. all of the above

d.