Chapter 13. GDP and the CPI: Tracking the Macroeconomy

Nominal GDP equation

= # units produces * avg mkt price

Boeing buys $3 million worth of steel, $2.5 million worth of computer hardware and software, and $1 million worth of mechanical tools to manufacture a certain model of aircraft. Boeing sells this particular model at $10 million. The value added by Boeing is equal to: A. $3.5 million. B. $16.5 million. C. $13 million. D. $15.5 million.

A

GDP calculated via factor payments includes: A. wages, interest payments, rent, and profits. B. taxes, wages, interest payments, and rents. C. rents, profits, value-added adjustments, and taxes. D. consumption, investment, and government.

A

If the consumer price index changes from 120 to 125 between December 2009 and December 2010, the: A. inflation rate for 2010 is 4.2%. B. inflation rate for 2010 is 5%. C. deflation rate for 2010 is 5%. D. deflation rate for 2010 is 4.2%.

A

Suppose that in year 1 an economy produces 100 golf balls that sell for $3 each and 75 pizzas that sell for $8 each. The next year the economy produces 110 golf balls that sell for $3.25 each and 80 pizzas that sell for $9 each.Look at the scenario Real GDP. The value of nominal GDP in years 1 and 2 respectively is: A. $900 and $1,077.50. B. $900 and $990. C. $180,000 and $257,400. D. $1,000 and $1,005.

A

The GDP deflator is equal to: A. nominal GDP divided by real GDP times 100. B. real GDP divided by nominal GDP times 100. C. real GDP times nominal GDP times 100. D. [(real GDP times nominal GDP) divided by real GDP] times 100.

A

Which of the following is NOT included in the calculation of GDP? A. your granny's monthly Social Security payment B. the new textbook you purchase C. a cup of coffee from a vendor D. the wages you pay to the employee who cleans your house

A

If real GDP rises while nominal GDP falls, then prices on average have: A. risen. B. fallen. C. stayed the same. D. decreased and then been offset by an equal increase.

B

If the consumer price index for 2010 was 160.6 and for 2011 was 163.1, what was the inflation rate between the two years? A. 0.25% B. 1.56% C. 2.59% D. 5%

B

If the cost of a market basket is $200 in year 1 and $230 in year 2, the price index for year 2 using year 1 as the base is: A. 100. B. 115. C. 130. D. 200.

B

If the cost of the market basket in the base year is $2,000 and in 2014 it is $2,100, the price index for 2014 is: A. 2,100. B. 105. C. 100. D. 95.

B

The dollar value of final goods and services only is counted in GDP because: A. we can measure only the value of final goods and services, not the value of inputs. B. if we counted the value of all goods, we would count inputs, like the value of steel in a new automobile, more than once. C. intermediate goods reduce GDP. D. only final goods and services matter for the economy.

B

Assume that the real GDP of the United States is approximately $12 trillion and the population of the United States is approximately 300 million. What is per capita real GDP? $4,000$36,000$40,000Real per capita GDP can't be determined without more information.

C

If during 2011 the Republic of Sildavia recorded a value added of $78 billion, wages of $40 billion, profits of $8 billion, and total sales of $90 billion, the value of intermediate goods purchased during 2011 in Sildavia was: A. $42 billion. B. $30 billion. C. $12 billion. D. $4 billion.

C

If the price level and nominal GDP both doubled, then real GDP would: A. also double. B. increase by half. C. remain unchanged. D. decrease by half.

C

The total of the values added at every stage of production for a good yields: A. the total cost of the labor used to produce the good. B. the prices of the factors of production used to produce the good. C. the final value of the good. D. the intermediate value of the good.

C

Which of the following transactions is included in the nation's gross domestic product? A. A college student buys a used textbook from his roommate. B. A construction company purchases lumber to build a new house. C. A college student buys a pizza and has it delivered to her dorm room. D. A group of college students volunteer to rake leaves at an assisted living facility for senior citizens.

C