ECON 110 HW 5 al-hamdi

5) Refer to Table above. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals A) $2,200. B) $2,100 C) $1,600. D) $1,400.

C) $1,600.

If income is unequally distributed in an economy, increases in GDP may not raise well-being in an economy. True False

True

Refer to Table above. The value added by the automobile dealer equals A) $7,000. B) $15,000. C) $18,000. D) $25,000.

A) $7,000.

Refer to Tableabove. Given the information above, calculate the rate of increase in the price level from 2017 to 2018. A) 8.6% B) 7.9% C) -7.9% D) -8.6%

A) 8.6%

Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP? A) GDP will decrease. B) GDP will increase. C) GDP will not change. D) GDP may increase or may decrease depending on inflation.

A) GDP will decrease.

If the GDP deflator is 142, by how much have prices changed since the base year? A) Prices have increased by 42%. B) Prices have increased by 142% C) Prices have decreased by 4.2%. D) Prices have increased by 58%.

A) Prices have increased by 42%.

2) In the circular flow model, the value of total income for an economy ________ the value of total production. A) equals B) is greater than C) is less than D) may be greater than or less than

A) equals

Refer to Table above. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is A) 2015. B) 2016. C) 2017. D) 2018.

B) 2016.

The output of Mexican citizens who work in Texas would be included in the A) gross domestic product of Mexico B) gross national product of Mexico. C) gross national product of the United States. D) net national product of the United States.

B) gross national product of Mexico.

A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements. This will A) increase GDP and increase well-being in the economy. B) increase GDP and decrease well-being in the economy. C) decrease GDP and increase well-being in the economy. D) decrease GDP and decrease well-being in the economy

B) increase GDP and decrease well-being in the economy.

The underground economy can be described as A) production of intermediate goods and services. B) economic production that includes mining. C) economic activity that is hidden from the government to avoid taxes or because the activity is illegal. D) production of infrastructure that spurs growth in the rest of the economy.

C) economic activity that is hidden from the government to avoid taxes or because the activity is illegal.

If the GDP deflator is less than 100, then for that year, nominal GDP ________ real GDP A) equals B) is greater than C) is less than D) may be greater than or less than

C) is less than

An example of an intermediate good would be A) a new car. B) a used car. C) the rims on a new car. D) new rims to replace old rims on a used car.

C) the rims on a new car.

Investment, as defined by economists, would include the purchase of a A) corporate bond. B) government bond. C) share of stock in ExxonMobil. D) computer by an accounting firm.

D) computer by an accounting firm.

Nominal GDP will increase A) only if the price level rises. B) only if the price level falls. C) only if the quantity of final goods and services produced rises D) if either the price level or the quantity of goods and services produced rises

D) if either the price level or the quantity of goods and services produced rises

The purchase by a household in China of a CD produced in the United States is included in U.S. A) consumption expenditures. B) investment expenditures. C) government purchases. D) net exports.

D) net exports.

In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA A) simply counts the total number of goods produced in the market place and then adds them up. B) values goods at their market prices, multiplies them by the quantity produced, and then adds them up. C) simply counts the total number of goods and services produced in the marketplace and then adds them up. D) values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.

D) values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.

If Gladys sells her 2003 Jeep Cherokee for $3,500 in 2018, the sale of her car contributes $3,500 to 2018 GDP. True False

False

Nominal GDP measures the value of all final goods and services at base-year prices. True False

False

Transfer payments are subtracted from national income to get to personal income. True False

False