MacroEconomics Chapter 26

Orrin mines iron ore, which he sells to Thorin, who turns iron ore into steel. The steel is sold to Gorin, who turns the steel into battle axes. The battle axes are sold by a merchant in the city to adventurers. Which of the following would be considered a final good?

the battle axes sold to the adventurers

Imagine that Jack and Jill buy $500 worth of milk and $200 worth of crayons and coloring books each year for use in their day-care business. Jack and Jill also hire a day-care attendant at a salary of $14,000 per year. If Jack and Jill sell $100,000 worth of day care to parents each year, what is the contribution to GDP by Jack and Jill's Day Care?

$100,000

Tim buys a house from Betty in 2011 for $200,000. Betty receives $185,000 and $15,000 goes to Mary, the real-estate agent. Betty originally purchased the house in 2007 for $240,000. What value is added to GDP in 2011 for this transaction?

$15,000

(Table: Three-Good Economy II) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. If 2008 prices are used in the calculation of real GDP, then nominal GDP in 2009 is _____ and real GDP in 2009 is _____.

$34,310; $33,700

(Table: Prices and Quantities in a 4-Good Economy) Suppose an economy produces only the four goods listed in this table. All of the country's tomatoes are used in the production of pizzas. What is the GDP in this country?

$7,200

(Table: Prices and Quantities in a 4-Good Economy) Suppose an economy produces only the four goods listed in this table. What is the GDP in this country?

$7,700

(Table: iPhones) This table shows data for a country producing only iPhones. Its nominal GDP in 2010 is:

$9,900.

This table shows data for a country producing only iPhones. The growth rate of real GDP between 2000 and 2010 (in 2000 dollars) is:

-10%.

(Table: Three-Good Economy II) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. What is the growth rate of real GDP in 2009 if 2008 prices are used in the calculation of real GDP?

-3.71%

(Table: Wheat and Corn) Consider a country that produces only wheat and corn. Based on the data in the table, the growth rate of nominal GDP from 2005 to 2006 is:

27%.

GDP in the United States was $14,119 billion in 2009, and grew to $14,660.4 billion in 2010. This represents an annual growth rate of:

3.8%.

If GDP was $10 billion in 2010 and $11 billion in 2011 and the population grew 5% between 2010 and 2011, the growth rate of GDP per capita between 2010 and 2011 was:

5%.

Which of these transactions occurring in 2011 would contribute to GDP for 2011?

Boeing sells a 787 aircraft produced in 2011 to a Korean airline.

A set of tires installed on a vehicle in an automobile factory is counted as:

an intermediate good and its market price is not part of GDP.

In the past 100 years, there has been a decline in the use of unpaid child labor on family farms. Therefore:

changes in GDP overstate the true increase in production over the past 100 years.

GDP includes the:

current market value of government purchases of goods and services.

Gross domestic product is the market value of all:

final goods and services produced within a country in a year.

Suppose you spent $10,000 in 2010 remodeling your house, which you originally built for $200,000 in 2000. As a result, GDP in 2010 would:

increase by $10,000.

GDP is calculated by:

multiplying the quantity of all goods and services by their prices and adding together the results.

Using the national spending approach to measuring GDP, the social security checks the government sends retirees each month get included in GDP as part of:

nothing; they are not included as part of GDP.

The value of a country's GDP exceeds that of the country's GNP if the value of the:

output produced by foreign workers in the country exceeds the value of output produced by the country's permanent residents in other countries.

Consider a country that produces only wheat and corn. Based on the data in the table, the country's GDP deflator for 2008 (using 2005 prices for the calculation of real GDP) is:

142.

Which of the following statements is TRUE about GDP?

GDP does not account for the distribution of income in a country.

Which of the following is TRUE in the calculation of GDP?

GDP does not include goods and services produced privately inside the home.

In nations that have large underground, or illegal, sectors:

GDP will underestimate total production in the economy.

Which of the following is NOT considered a government purchase?

unemployment checks

(Table: Three-Good Economy II) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. What is the growth rate of real GDP in 2009 if 2009 prices are used in the calculation of real GDP?

-2.94%

(Table: Small-Town GDP) Which of the four towns in this table has the highest standard of living?

Town B

To avoid double accounting, the value of:

final goods only are included in GDP.

Growth in nominal GDP over time can be caused by:

an increase in both prices and production over time.

The value of volunteer services is:

not included in GDP, but should be because a service is produced.

This table shows data for a country producing only iPhones. Based on the GDP deflator, the increase in prices between 2000 and 2010 was:

10%.

In 2010, real GDP was $13.2 trillion (using 2005 prices) and nominal GDP was $14.6 trillion. Based on the GDP deflator, prices in 2010 were about _____ than prices in 2005.

10.6% higher

(Table: iPhones) This table shows data for a country producing only iPhones. If 2000 prices are used in the calculation of real GDP, the GDP deflator for 2010 is:

110.

Real GDP for the year 2000 (measured in 2005 dollars) is equal to:

2005 prices × 2000 quantities.

(Table: Wheat and Corn) Consider a country that produces only wheat and corn. Based on the data in the table, the growth rate of real GDP from 2007 to 2008 (in 2005 dollars) is:

8.3%.

Which of the following activities is counted as part of U.S. GDP?

Jeff stays in a hotel in Colorado while on a skiing trip.

If 2009 prices are used in the calculation of real GDP and inflation occurs between 2009 and 2010, then nominal GDP will be ____ real GDP in 2010.

greater than