Chapter 5&9

One bag of coffee beans is sold for $7 to a cafe that uses it to brew coffee which it sells to customers for a total of $15. A second bag of coffee is sold directly to Joan for $7, who uses it to brew coffee for her family every morning. What is the contribution to GDP from the purchases of coffee beans and coffee?

$22

If a country experiences a real GDP growth rate of 1 percent and population growth of 2 percent, then the growth rate of real GDP per person is

-1 percent

U.S. real GDP in 2007 was $13.25 trillion and U.S. real GDP in 2008 was $13.31 trillion. What was the economic growth rate of the United States during this period?

0.45 percent

If real GDP was $13.1 trillion in 2013 and $13.3 in 2014, what is the growth rate?

1.5 percent

If an economy's growth rate of real GDP is 3 percent per year and the growth rate of the population is 2.5 percent per year, the growth rate of real GDP per person is

3 - 2.5 = 0.5 percent per year.

If it took 20 years for real GDP to double, what was the growth rate of real GDP?

3.5 percent

If Country A's real GDP grows at a rate of 14 percent per year, about how many years will it take for Country A's real GDP to double?

5

In order to be classified as a recession, a contraction of general economic activity must last at least

6 months

A nation's annual growth rate of real GDP per person is 2 percent. Its standard of living will

double in 35 years.

Gross Domestic Product is the market value of all ________ produced within a country in a given period of time.

final goods and services

Investment is the expenditure done by

firms

Which of the following goods and services are omitted from GDP?

household production

Nominal GDP increases

if either prices and/or total production increase.

Economic growth is a sustained expansion of production possibilities, as measured by the increase in ________ over time.

real GDP

Although imperfect, which of the following is used as a measure of the standard of living?

real GDP divided by population

Growth in the standard of living is measured by the increase in

real GDP per person

Suppose India wants to measure how much the standard of living has changed over the last decade. Which piece of data should India use?

real GDP per person

The business cycle has two phases,

recession and expansion

Government expenditures on goods and services include

the New York City Library's purchase of new books, Washington D.C.'s purchase of gas for its city buses, California's payment of wages to prison guards.

Which of the following is included in Germany's GDP?

China produced by the English- owned Wedgewood Company at a factory in Berlin, Germany

In the circular flow, how are the "value of production," "income," and "expenditures" related?

Expenditures on GDP equals the value of production which equals income.

The total production within an economy is measured as

Gross Domestic product

If you buy a five- year- old TV from a friend, the amount you paid for the TV is

Not included in this years GDP

Gross Domestic Product equals

Y = C + I + G + NX

The growth rate of real GDP equals

[(real GDP in current year - real GDP in previous year) ÷ real GDP in previous year] × 100.

A country with a real GDP per person similar to real GDP per person in the United States but with limited political freedom is generally considered to have

a lower standard of living than the United States.

To measure GDP by using the income approach, we must add all incomes and then ________ depreciation and ________ net taxes less subsidies.

add; add

A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is

an intermediate good.

Total expenditure equals total income

because firms pay out everything they receive as income to the factors of production.

Consumption expenditure includes spending

by households

Economists define investment to include purchases of

capital goods and inventories

The largest expenditure category in the United States is

consumption expenditure

As measured, GDP omits which of the following?

illegal sales of goods and services, changes in the amount of leisure time and household production of goods and services

If real GDP grows at a faster rate than does population, then the standard of living, as measured by real GDP per person,

improves

In 1961, real GDP totaled $575 billion and in 2011 it totaled $1,255 billion. Between 1961 and 2011, the population increased from 50 million to 100 million. Between 1961 and 2011, the standard of living based on real GDP per person

increased from $11,500 to $12,550.

Bob's Funky T- shirts began the year with 1,000 shirts in inventory, produced 10,000 shirts during the year and ended the year with 1,100 shirts in inventory. The 100 shirts added to his inventory will be classified as

investment

The business cycle is defined as

irregular ups and downs in production and jobs.

A country will likely experience an increase in poverty if

its real GDP growth rate decreases or slows over time.

GDP is best defined as the ________ in a given time period.

market value of all final goods and services produced within a country

Adding wages, interest, rent, and profits yields

net domestic product at factor cost.

Investment is defined as the purchase of

new capital goods and additions to inventories

The Rule of 70 can be used to calculate the

number of years it would take for the level of any variable to double.

Which of the following is included in U.S. GDP?

the rental value of homes owned by U.S. citizens and tickets sold by U2 for concerts held in the United States

If Country A's real GDP per person is growing at 6 percent and Country B's real GDP per person is growing at 3 percent, then

the standard of living is growing more rapidly in Country A.

Which of the following is likely to be an unreported economic activity?

tips paid to a taxi driver

A business cycle has two turning points, which are the

trough and peak

In order to measure gross domestic product, we can follow

two approaches: the expenditure approach and the income approach.

Net exports of goods and services are defined as the

value of exports minus the value of imports.

According to the income approach to measuring GDP, the largest income category is

wages