Macro: Chapter 8

Recent estimates put the size of the underground economy in the United States at _______ of measured GDP

8%

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

Real GDP grows by 2.3% in the second quarter

Which of the following could cause nominal GDP to decrease, but real GDP to increase

The price level falls and quantity of final goods and services produced rises

Suppose that nominal GDP in 2013 was less than real GDP in 2013. Given this information, we know for certain that

The price level in 2013 was less than the price level in the base year

Value added equals the market price of the firms product minus

The price of intermediate goods

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

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

Values goods and services at their market prices, multiplies them by the quantity produced and then adds them up

Which of the following transactions represents the purchase of a final good?

Your father buys a new John Deere riding lawn mower

Which of the following goods is directly counted in GDP

a 12-inch subway sandwich purchased by a student

In 2013, ford motor comapnys sales were rising. These events were caused by

an ecomoic expanison

The US work week has declined from 60 hours in 1890 to 40 hours today. The impact of the decline in working hours

decreases US GDP and increases the well being of a typical working person in the US

The informal sector can be significant drag on the economies of developing countries because the firms in the informal sector

do not pay taxes to the government

Gross domestic product understates the total production of final goods and services because of the omission of

household production

The size of the underground economy would tend to increase if the government of a country

increased income tax rates

Which of the following would be directly counted in GDP in 2014?

kitchen cabinets purchased from Home Depot in 2014 to be installed in a house built in 1997

Gross domestic product is calucated by summing up

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

Gross domestic product understates the total production of final goods and services because of the omission of

the underground economy

Suppose in 2014, you purchase a house built 2003. Which of the following would be included in the gross domestic product for 2014?

the value of the services of the real estate agent

GDP is not a perfect measure of well being because

GDP is not adjusted for pollution

Scott is a woodworker and charges $125 an hour for his time manufacturing custom made wood products. For his wifes birthday, he designs and creates an intricate a birdseye maple jewelry box that takes him 15 hours to compete. By how much and in what direction does GDP change as a result of his efforts?

GDP is not affected by Scotts production of the Jewelry box

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

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

Which of the following accurately describes an effect of hurrican katrina on GDP?

GDP would increase reflecting the costs of cleanup

"Household production" refers to

Goods and services people produce for themselves

To examine how the total production of an economy has changed over time, it would be better to examine

Real GDP

The underground economy can be described as

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

Macroeconomics seeks to understand

Economic growth, business cycles, and inflation

Maria is an architect who is designing a home for Chuck. Chuck is paying Maria $150 per hour to design his new home. When Chuck & Marla get married, Marla continues to work on designing the home, but she no longer charges Chuck for her work as a result GDP ________ because ________

Falls; Marlas architectural design services are no longer bought by chuck once theyre married

Which of the following is not directly counted in GDP

Intermediate goods

Real GDP will increase

Only if the quantity of final goods and services produced rises