CH 8 IN MACRO QUIZ

INDICATE WHICH COMPONENT OF GDP WILL BE AFFECTED BY EACH OF THE FOLLOWING TRANSACTIONS INVOLVING THE FORD MOTOR COMPANY You purchase a new Ford Escape Hybrid from a Ford dealer

Consumption Expenditure

INDICATE WHETHER THE FOLLOWING IS A FINAL GOOD, AN INTERMEDIATE GOOD, OR NEITHER A new home purchased by a family

FINAL GOOD

INDICATE WHETHER THE FOLLOWING IS A FINAL GOOD, AN INTERMEDIATE GOOD, OR NEITHER A new pick-up truck purchased by a consumer

FINAL GOOD

INDICATE WHICH COMPONENT OF GDP WILL BE AFFECTED BY EACH OF THE FOLLOWING TRANSACTIONS INVOLVING THE FORD MOTOR COMPANY The state of Missouri builds a new highway to help improve access to the Ford Escape plant

Government Expenditure

INDICATE WHETHER THE FOLLOWING IS A FINAL GOOD, AN INTERMEDIATE GOOD, OR NEITHER Coffee beans purchased by a coffee shop

INTERMEDIATE GOOD

INDICATE WHICH COMPONENT OF GDP WILL BE AFFECTED BY EACH OF THE FOLLOWING TRANSACTIONS INVOLVING THE FORD MOTOR COMPANY Ford purchases new machine tools to use in its Missouri Escape factory

Investment Expenditure

INDICATE WHETHER THE FOLLOWING IS A FINAL GOOD, AN INTERMEDIATE GOOD, OR NEITHER One share of Google stock

NEITHER

INDICATE WHICH COMPONENT OF GDP WILL BE AFFECTED BY EACH OF THE FOLLOWING TRANSACTIONS INVOLVING THE FORD MOTOR COMPANY Ford produces 1,000 Escapes in a factory in Missouri and ships them to a car dealer in Shanghai, China

Net Export Expenditure

INDICATE WHICH COMPONENT OF GDP WILL BE AFFECTED BY EACH OF THE FOLLOWING TRANSACTIONS INVOLVING THE FORD MOTOR COMPANY Ford purchases door handles for the Escape from an auto parts manufacturer in Indiana

Not included in GDP calculation

INDICATE WHICH COMPONENT OF GDP WILL BE AFFECTED BY EACH OF THE FOLLOWING TRANSACTIONS INVOLVING THE FORD MOTOR COMPANY You purchase a 2013 (preowned) Ford Escape Hybrid from a friend

Not included in GDP calculation

Suppose a house is built and sold in the year 2008. If the house is resold in the year 2019, is the value of the house included in Gross Domestic Product (GDP) for 2019? a. No. GDP for 2019 includes only production that occurs during 2019 b. Yes. The value of the house is included in Gross Private Domestic Investment for 2019 c. No. GDP for 2019 includes only the market value of final goods. A house resold in 2019 is an intermediate good. d. Yes. The value of the house is included in Personal Consumption Expenditures for 2019

a. No. GDP for 2019 includes only production that occurs during 2019

One major component of GDP that can be negative is... a. net exports b. investment c. consumption d. government expenditures

a. net exports

"If nominal GDP is less than real GDP, then the price level must have fallen during the year." a. Disagree. Real GDP will be equal to nominal GDP if the price level increases and is equal to the base year's prices. b. Disagree. Nominal GDP is less than real GDP if the current price level is less than the base year price level. A fall in the price level during the year is neither necessary nor sufficient to cause nominal GDP to be less than real GDP. c. Agree. Nominal GDP will be less than real GDP if the price level falls and is higher than the base year's prices. d. Agree. Real GDP will be less than nominal GDP if the price level falls and is lower than the base year's prices.

b. Disagree. Nominal GDP is less than real GDP if the current price level is less than the base year price level. A fall in the price level during the year is neither necessary nor sufficient to cause nominal GDP to be less than real GDP.

"Whenever real GDP declines, nominal GDP must also decline." a. Agree. Both real GDP and nominal GDP decline if price falls and output remains constant. b. Disagree. Real GDP falls if output falls. Nominal GDP can increase if output falls and prices rise. c. Agree. Both real GDP and nominal GDP decline if output falls and prices remain constant. d. Disagree. Real GDP falls is output falls. Nominal GDP can increase if output falls and prices fall.

b. Disagree. Real GDP falls if output falls. Nominal GDP can increase if output falls and prices rise.

Which of the following would be included in the gross national product (GNP) of the United States? a. Production from a Canadian firm that operates in Montana. b. Production from a U.S. firm that operates in Mexico. c. Production from a Hungarian citizen who works in Denver, CO. d. All of the above are included in the GNP of the U.S.

b. Production from a U.S. firm that operates in Mexico.

What are the four major categories of income? a. Wages, Salaries, Interest, and Dividends b. Wages, Interest, Rent, and Profit c. Labor, Capital, Natural Resources, and Entrepreneurship d. Consumption, Investment, Government Purchases, and Net Exports

b. Wages, Interest, Rent, and Profit

Suppose a house is built and sold in the year 2008. If the house is resold in the year 2019, would the services of a real estate agent who helped sell (or helped buy) the house be included in GDP for 2019? a. No. GDP for 2019 includes only the market value of final goods. Real Estate services are not final goods. b. Yes. GDP for 2019 includes the market value of final goods and services. This includes real estate services c. Yes. Real estate services are considered Gross Private Domestic Investment d. No. The value of the house is not included in GDP for 2019. Therefore, real estate services are not included either

b. Yes. GDP for 2019 includes the market value of final goods and services. This includes real estate services

Transfer payments are not included in GDP calculations because... a. transfer payments do not include movements of income between countries so they should only be included in foreign country GDPs b. transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service c. transfer payments come from taxes and government expenditures so they are already included in government purchases d. None of the above because transfer payments are included in GDP

b. transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service

Which of the following transactions is NOT counted in GDP? a. A consumer goes out to dinner and to see a movie b. A retailer hires a contractor to paint the outside of the store c. A consumer purchases illegal goods from a street vendor d. The U.S. government pays for national defense

c. A consumer purchases illegal goods from a street vendor

"If a recession is so severe that the price level declines, then we know that both real GDP and nominal GDP must decline." a. Disagree. Real GDP falls if output falls. Nominal GDP can increase if output falls and prices fall. b. Agree. If prices fall, real GDP and nominal GDP will both fall if output increases. c. Disagree. Real GDP falls if output falls. Nominal GDP can increase if output falls and prices rise. d. Agree. If both output and prices are falling, then both real GDP and nominal GDP will fall.

d. Agree. If both output and prices are falling, then both real GDP and nominal GDP will fall.

"If real GDP stayed the same while nominal GDP declined between 2008 and 2009, then the GDP deflator must also have declined." a. Disagree. If nominal GDP declined between 2008 and 2009, then the GDP deflator could have gone up. b. Disagree. If real GDP declined between 2008 and 2009, then the GDP deflator must also have declined. c. Disagree. If nominal GDP increased between 2008 and 2009, then the GDP deflator must have remained the same d. Agree. If nominal GDP declined between 2008 and 2009, then the GDP deflator must also have declined

d. Agree. If nominal GDP declined between 2008 and 2009, then the GDP deflator must also have declined

What are the four major categories of expenditure? a. Final goods, intermediate goods, production, and income b. Wages, interest, rent, and profit c. Labor, capital, natural resources, and entrepreneurship d. Consumption, investment, government purchases, and net exports

d. Consumption, investment, government purchases, and net exports

Why is GDP an imperfect measure of total production in the economy? a. GDP measures total income paid to the factors of production, not production b. The official measure of GDP does not include intermediate goods and services c. The BEA does not include the value of new houses in GDP d. GDP does not include household production or production from the underground economy

d. GDP does not include household production or production from the underground economy

Why in microeconomics can we measure production in terms of quantity, but in macroeconomics we measure production in terms of market value? a. If, in macroeconomics, we measured production using quantities, we would add tons of wheat grown by U.S. farmers to the number of iPods produced by Apple, to gallons of milk, and so on b. When we measure total production, we can't just add together quantities of every good and service because the result would be meaningless c. Measuring production using market value in dollar terms allows us to add together many different goods and services d. Both A. and C. e. All of the above

e. All of the above