Econ inquisitive 1: Chapter 6 answers

Calculate the real GDP of the United States for the year 2017. Use 2012 as the base period and round to the nearest whole number.

$18042 billion Real GDP for 2017 = Nominal GDP for 2017 * (Defaltor in 2012/Deflator in 2017) Real GDP for 2017 = 19485.4 * (100/108) Real GDP for 2017 = 18042.04 Real GDP for 2017 = $18042 billion

In the graph, click on the start and end points of a period of recession or contraction

*The 2nd and 4th area*

GDP is the best measure of a nation's economic activity. However, GDP does not take into account many factors that affect quality of life, like the amount of people's _________ or the cleanliness of the ___________. GDP only measures a country's economic ________.

-Leisure Time -Environment -Output

Calculate the annual percentage change in price level for the year 2017. Round up to the nearest two decimal places.

1.89% % change in price level 2017 = {(2017 price level - 2016 price level)/2016 price level} × 100 = {(108 - 106)/106} × 100 = (2 × 100)/106 = 200/106 = 1.89%

Fill in the blanks to complete the following sentence about the occurrences of recessions in the United States, based on the graph below. Although there were 34 recessions during the time period of ______, there has been a ______ trend in the number of ______ over time. The most recent recession, the ______ lasted almost ______ years and was particularly deep and lengthy.

1988-2017 downward recession Great Recession two

What data do economists use to calculate the real GDP of a nation?

Data Economists Use: -market values -price level Not Data Economists Use: -unemployment rate -income tax rate

Identify each good as either intermediate or final. Not every good will be used: -plasticware purchased by a food truck -tires bought by a driver for personal use -tires purchased by a car manufacturer -lenses bought by a camera manufacturer -memory card bought by a gamer

Intermediate: -plasticware purchased by a food truck -tires purchased by a car manufacturer -lenses bought by a camera manufacturer Final: -memory card bought by a gamer -tires bought by a driver for personal use

Which of the following are examples of investment?

Investments: -a photojournalist buys a new camera -a professional painter buys new brushes -a mechanic buys a new wrench Not investments: -your neighbor buys a new tv -your friend buys a new set of golf clubs

Which questions explore microeconomic topics, and which explore macroeconomic topics? Apply the correct label to each question.

Microeconomics: -Why did Billi buy a new house? -Why did Company C increase its advertising budget? Macroeconomics: -What effect did the interest rate have on inflation? -What effect did falling home values have on unemployment?

Low GDP is not necessarily an indicator of an economy in poor health. For one thing, a _______ country may have a low GDP but a high ______. For another thing, an economy with a low GDP but a strong ______ is healthier than an economy with a comparable GDP that is stagnant or declining.

small per capita GDP real GDP growth rate

Identify each good as either intermediate or final. Not every good will be used.

Final: -tires bought by a driver for her personal vehicle -a memory card bought by a gamer Intermediate: -tires used by a manufacturer -lens bought by a camera manufacturer -memory card bought by a photographer

Classify each concept as microeconomic or macroeconomic: A. the unemployment rate of a nation B. the hiring decisions of a company C. the median income of a small stat D. the financial decisions of a family

Micro: B. the hiring decisions of a company D. the financial decisions of a family Macro: A. the unemployment rate of a nation C. the median income of a small stat

Match the use of GDP data to the appropriate situation.

Measuring long-term economic growth: -Leia examines real per capita GDP over a ten-year period to determine whether the economy of a particular country is in decline or on the rise. Measuring living standards: -Lupe examines the real per capita GDP of seven nations to determine which country might have the wealthiest citizens. Measuring business cycles: -Brad looks at real per capita GDP to determine what impact the recent recession has had on economic activity.

Canada's GDP ______ that Canadians have the tenth-best standard of living. A nation's ______ is a better standard-of-living indicator, because it measures ______. Using this measure, it looks like Canada has a better standard of living than all but one other nation.

does not indicate per capita GDP average income

The most natural interpretation of "better off" is that citizens of country B have a ______. It is possible that the citizens of country B spend more time in ______. It is also possible that they live in a ______. GDP ______ measure the quality-of-life indicators that would explain this.

higher quality of life. leisure activities cleaner environment does not

Which of the following by definition directly adds to a country's GDP (gross domestic product)?

increased commercial travel

Which of the following are examples of nonmarket services?

Correct Answers: -cutting your own hair -changing the oil in your car yourself Incorrect Answers: -taking your car to the mechanic for routine maintenance -going to the barber

The real GDP of Country A grew by only 1% from 2016 to 2018 while the real GDP of Country B grew by 5% during that same time span. Based on the data, what can we say definitely about the two countries?

Correct Answer(s): -Country B will eventually have a higher real GDP than Country A if the economy of each country continues to grow this way. Incorrect Answer(s): -Country B has a very high quality of life. -Country A's economy has been in a period of contraction. -Country A has a high real GDP. -Country A has a modestly high quality of life.

Which of the following statements are good assessments of the value of GDP as an economic statistic?

Correct Answer(s): -GDP is correlated with many measures of human welfare. -Nominal GDP cannot indicate whether the economy is getting stronger or weaker. Incorrect Answer(s): -GDP does not account for goods being imported rather than locally produced. -GDP accurately captures all economic activity.

What might a decrease in sales of new cars indicate about the state of the economy?

Correct Answer(s): -The economy is weak. -GDP is going to decrease in the near future. Incorrect Answer(s): -The economy is strong. -GDP rose in the recent past.

Goods created within the borders the United States contribute to the ______ if of the United States, ______ if the company that makes them is foreign owned. The output of an American company operating in another country contributes to the ______ if of the United States.

GDP even if GNP

Underground economies are smallest in countries with strong economies.

True

Click on the year that produced a 4% rate of real GDP growth. Year, Nominal GDP Growth Rate, Price-level Growth Rate 2014, 8%, 4% 2015, 10, 4 2016, -16, 3 2017, 12, 3.5

Year 2014