Macro Chapter 4 Quiz

Which of the following is not directly counted in GDP?

intermediate goods

The purchase of a new house is included in

investment expenditures

Nominal GDP is another term for

current dollar GDP

In a small economy, consumption spending in 2012 is $6,000, government spending is $1,200, gross investment is $1,500, exports are $2,000, and imports are $1,000. What is gross domestic product in 2012?

9,700

Suppose that nominal GDP in 2011 was less than real GDP in 2011. Given this information, we know for certain that

B) the price level in 2011 was less than the price level in the base year.

In May 2009, the U.S. auto industry experienced a 34 percent decline in sales compared to May 2008. The automobile industry was experiencing the effects of

C. The business cycle

If China decides to enact laws to clean up the environment, what would be the effect on GDP?

GDP would decrease if the pollution controls reduce productivity by more than the cost of the controls.

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?

Real GDP grows by 2.3% in the second quarter.

Under what circumstances would the GDP deflator be less than 100 after the base year?

The GDP deflator will be less than 100 if there has been deflation relative to the base year.

Nominal GDP will increase

c. if either the price level or the quantity of goods and services produced rises (and neither fall).

Investment, as defined by economists, would include the purchase of a

computer by an accounting firm

The underground economy can be described as

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

The drawback to calculating real GDP using base-year prices is that

relative prices change over time and these changes are not reflected in base-year, and this distorts GDP

Gross domestic product is calculated by summing up

the total market value of final goods and services produced in the economy during a period of time

The nominal GDP of the U.S. in 2010 was approximately $14.6 trillion. This means that

the value of output in 2010 was around $14.6 trillion. total income in 2010 was around $14.6 trillion. total spending in 2010 was around $14.6 trillion.

Nominal GDP is GDP in a given year

valued in the prices of that year

Real GDP is GDP in a given year

valued in the prices of the base year