Macro quiz gdp

Suppose the following hypothetical numbers describe an economy: In 2011, nominal GDP = $3000, the price level = 100, and the population = 5. In 2014, nominal GDP = $8000, the price level = 200, and the population = 10. Per capita real GDP equals ________ for 2014 and the economic growth rate equals ________. a) $800; approximately 33% b) $1600; approximately 33% c) $1600; approximately 167% d) $8000; approximately 75%

a) $800; approximately 33%

Don has built an addition to his house. This transaction will be: a) not included in GDP because it is not produced for the marketplace. b) included in GDP because Don is a professional builder. c) not included in GDP because it is an intermediate good. d) included in GDP because building is Don's hobby.

a) not included in GDP because it is not produced for the marketplace.

If real GDP falls when nominal GDP increases, then prices have fallen.

False

Nominal GDP in the U.S. was $5,803 billion in 1994 and $11,734 billion in 2008, so we can conclude that aggregate output roughly doubled over that 14-year period in the United States.

False

The total value of all final goods and services produced in an economy during a given year, calculated with current prices in the year in which output is produced, is real GDP.

False

The most important use of GDP is to measure the size of the economy, which can be used to compare economic performance over time or between countries.

True

The underlying principle of the circular-flow diagram implies that the flows of money into each sector or market in the economy are equal to those coming out of each sector or market.

True

Of the following items, which would NOT be included in GDP? a) the dollar value of a repair job done by your cousin on her own car b) the dollar value of a lawyer's services c) new car sales by a local dealer d) production of new cars that were not sold in the current year

a) the dollar value of a repair job done by your cousin on her own car

Which of the following is a good example of an "intermediate" good? a) a smartphone purchased by a college student b) stocks and bonds purchased by a business executive c) a wedding ring purchased by an engineer d) tires purchased by General Motors for their 2018 electric cars

d) tires purchased by General Motors for their 2018 electric cars

GDP excludes all of the following EXCEPT: a) the value of leisure. b) damage to the environment. c) the value of housework. d) the value of illegal market activity. e) the value of additions to the stock of capital by firms.

e) the value of additions to the stock of capital by firms.