Macro - Chapter 12 Homework and Exam
When nominal GDP increases, real GDP falls
(Click on the graph in the window on the right and select Multiple Time Series to graph nominal GDP and real GDP for the years 1990-2006. For Y axis1 select nominal GDP, and for Y axis2 select real GDP. Roll your cursor over the plotted data to identify each series.) For this data, the base year for calculating GDP is 2000. Use the graph to help determine which one of the following statements regarding nominal and real GDP is FALSE.
A decrease in total production
A recession occurs when an economy experiences a period in which there is ________________.
A welfare payment
An example of a transfer payment is
Each measure of production and income gives a different value for total production and income.
Based on the table and graph, which of the following statements regarding total production and total income is true?
116.7
Based on the table, in Year 2, the value of the GDP deflator is _____________.
$1,200
CANOES-R-US makes canoes. It buys the shell of the canoe from another firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1,200. Refer to the scenario above. The value of each canoe in gross domestic product equals
Minus personal tax payments
Disposable personal income equals personal income
Personal income minus personal taxes
Disposable personal income is _______________.
Increases; Increases
During a business cycle expansion, total production ________ and total employment ___________.
The market value of all final goods and services produced in a country during a period of time
Gross Domestic Product (GDP) is __________________.
Household product
Gross domestic product understates the total production of final goods and services because of the omission of
Produced by residents of the US anywhere in the world
Gross national product, GNP, of the United States is the market value of all final goods and services
Microeconomics
Identify whether the following topic belongs in microeconomics or macroeconomics: How does the price of corn change if the price of wheat increase?
Macroeconomics
Identify whether the following topic belongs in microeconomics or macroeconomics: How will an increase in government spending impact the inflation rate?
Macroeconomics
Identify whether the following topic belongs in microeconomics or macroeconomics: Identify the best measurement of total output in the US economy.
Microeconomics
Identify whether the following topic belongs in microeconomics or macroeconomics: The most efficient market structure is perfect competition.
Less than their values without these measurements
If GDP calculations included measurements of pollution and environmental damage, GDP values would most likely be
It may be possible for nominal GDP to increase
If the quantity of goods and services produced in the economy decreases
113 --> because 13495/11919 * 100 = 113
In 2011, the value of the GDP deflator is ______________.
119 --> because 14241/12007 * 100 = 119
In 2012, the value of the GDP deflator is ________________. GDP deflator = ((NGDP)/(RGDP)) x 100
Values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up
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
Equals
In the circular flow model, the value of total income for an economy ________ the value of total production.
Intermediate good; neither; final good; final good
Indicate whether each of the following is a final good, intermediate good, or neither: - Coffee beans purchased by a coffee shop ____________________ - One share of Google stock ____________________ - A new pick-up truck purchased by a consumer ____________________ - A new home purchased by a family ____________________
Firms produce goods, however sometimes the goods may be unsold at the time GDP is computed
Inventories are part of investment and therefore included in GDP because _____________.
Computer by an accounting firm
Investment, as defined by economists, would include the purchase of a
Buys US government bonds
Investment, as defined by economists, would not include which of the following? Ford
GDP minus depreciation.
National income is _____________.
Net exports
One major component of GDP that can be negative is
National income minus retained corporate earnings plus government transfer payments and interest on government bonds
Personal income is _________________.
$690
Real GDP for Tyrovia for 2016 using 2007 as the base year equals
$6680
Real GDP in 2017 equals _____________.
Valued in the prices of the base year
Real GDP is GDP in a given year
All of the above
Real GDP per capita is often used as a measure of general well-being. While increases in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being? - The value of leisure is not included. - The costs of pollution are not included. - GDP does not include crime rates or income distribution. - All of the above.
$1,200
Refer to the table. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals
$8,750
Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nominal GDP for this simple economy equals
RGDP < NGDP because prices are rising
Suppose the base year is 2001. Looking at GDP data from the United States from 2001 to the present, what would be true of the relationship between nominal GDP and real GDP?
Disposable personal income
The best measure of the income households actually have available to spend is
Total production experiences periods of increases and periods of decreases.
The business cycle exists because _________________.
Microeconomics studies smaller parts of the economy such as markets and individuals, while macroeconomics studies the economy as a whole
The difference between microeconomics and macroeconomics is
Consumer spending on services is less than the sum of spending on durable and nondurable goods.
The figure above shows the values of the components of GDP for the year 2014. Based on the data shown, which of the following statements regarding the components of GDP are false?
6.1%
The inflation rate between Year 1 and Year 2 is ____________.
Wages
The largest component of gross domestic income is ___________________.
Gross domestic product of Canada
The output of U.S. citizens who work in Canada would be included in the
Net exports
The purchase by a foreign government of an airplane produced in the United States is included in U.S.
Consumption expenditures on durable goods
The purchase of a new automobile is included in
Increased income tax rates
The size of the underground economy would tend to increase if the government of a country
Gross domestic income is measured precisely.
The table and figure above show GDP measured in terms of the total income received by households. Use the table and figure to help determine which of the following statements about the division of income is false.
Economic activity that is hidden from the government to avoid taxes or because the activity is illegal
The underground economy can be described as
GNP; GDP
The value of what a U.S. owned McDonald's produces in South Korea is included in the U.S. ________ and the South Korean _________.
Households
The circular-flow diagram shows that all sources of income are owned by
Total expenditure; total income
The circular-flow diagram shows that ________ should equal ________.
Consumption spending, investment spending, government spending, and net exports
To calculate GDP by the expenditure method one must add
Real GDP
To examine how the total production of an economy has changed over time, it would be better to examine
The sum of wages, interest, rent, and profit
Total income in an economy is equal to
Transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service
Transfer payments are not included in GDP calculations because ______________.
Greater than
Wages earned by households make up ___________ 50% of the total income earned in the US economy.
Wages, interest, rent, and profit
What are the four major categories of income?
Consumption, investment, government purchases, and net exports
What are the four major categories of expenditure?
Consumption spending
What is the largest component of spending in the U.S.?
Reduce purchases of durable goods than nondurable goods
When consumers are less confident about their jobs or incomes, they are more likely to
Households can use some of their income to purchase goods from foreigners as imports
When examining the circular-flow diagram, ________________.
Wages
When looking at GDP as the amount of total income, the largest component of total income in the U.S. is ________________.
The price level rises and the quantity of final goods and services produced falls.
Which of the following could cause nominal GDP to increase, but real GDP to decrease?
GDP = C + I + G + NX
Which of the following equations correctly measures GDP in an economy?
Y = C + I + G + NX
Which of the following equations sums up the components of Gross Domestic Product (GDP)?
a 12 inch Subway sandwich purchased by a student
Which of the following goods is directly counted in GDP?
Real GDP grows by 2.3% in the second quarter
Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?
The value of all cars produced by General Motors in the US
Which of the following is included in both the U.S. GDP and U.S. GNP?
Spending on services is smaller than the amount of consumption spending on durable and nondurable goods.
Which of the following statements about the consumption component of GDP is not correct? - Since 1960, the consumption component of GDP has generally increased as a fraction of GDP. - The consumption component of GDP in the US is greater than all three of the other components (government, investment, and net exports) combined - Consumption as a fraction of total GDP in the US is larger compared to all other high income nations in the world. - Spending on services is smaller than the amount of consumption spending on durable and nondurable goods.
Your father buys a new John Deere riding lawn mower.
Which of the following transactions represents the purchase of a final good?
Production from a US firm that operates in Mexico
Which of the following would be included in the gross national product (GNP) of the United States?
GDP does not include household production or production from the underground economy.
Why is GDP an imperfect measurement of total production in the economy?
The value of the services of the real estate agent
Suppose, in 2016, you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2016?
Profit; entrepreneurship
________ is/are the payment for the factor of production ________.
