CHAPTER 9 TEST

Which statement is the most accurate? Although GDP has many shortcomings, it is still a very useful economic concept We may be underestimating our GDP by as much as 50 percent by not taking into account the underground economy. Within the next five years, China will have a larger GDP than the United States. Bartered goods and services are generally counted in GDP.

Although GDP has many shortcomings, it is still a very useful economic concept

Suppose the GDP of Argentina were 10 times thatof Uruguay. Which statement would be most accurate? Argentina's output is greater than that of Uruguay. Argentina's output is 10 times that of Uruguay. There is no way of comparing the output of Argentina and Uruguay. Argentina's output is probably around 10 times that of Uruguay.

Argentina's output is probably around 10 times that of Uruguay.

Which statement is true? Real GDP has risen faster than GDP since 1999. Consumption is a little over half of GDP. Government purchases are about 30 percent of GDP. Consumption as a percentage of GDP is higher today than it was in 1979.

Consumption as a percentage of GDP is higher today than it was in 1979.

Which of the following statements would you agree with? As a measure of national well-being, GDP has no major shortcomings. GDP takes into account many more economic, social, and environmental activities than GPI. GDP includes only market transactions, while GPI includes both market transactions and other factors affecting our national well-being. GPI is a very accurate measure of national well-being.

GDP includes only market transactions, while GPI includes both market transactions and other factors affecting our national well-being.

Which statement is the most valid? The standard of living of the average American is about twice that of the average Russian. The American standard of living is, by far, the highest in the world. If the underground economy, illegal production, and household production were accurately measured and added to GDP, our GDP would probably rise by less than 1 percent. GDP per capita in the United States in 2009 was almost half of that in Luxembourg.

GDP per capita in the United States in 2009 was almost half of that in Luxembourg.

Which statement is true? GDP tells us what we produce GDP tells us neither how much we produce nor what we produce. GDP tells us how much we produce as well as what we produce. GDP tells us how much we produce

GDP tells us how much we produce

Which equation is correct? NDP − Depreciation = GDP GDP + NDP = Depreciation GDP − Depreciation = NDP

GDP − Depreciation = NDP

Which statement is the most accurate? The difference between GDP and GPI is the annual rate of inflation. On a per capita basis, GPI is greater than GDP. GPI is about one-quarter of GDP on a per capita basis. GPI has more than doubled over the last 40 years.

GPI is about one-quarter of GDP on a per capita basis.

We would like to compare per capita real GDP. Which would be the most valid comparison? Nigeria in 1960 and the United Kingdom in 1990 China in 2004 and Thailand in 2004 Germany in 2002 and 2004 The United States in 1980 and 2004

Germany in 2002 and 2004

Which is the most accurate statement about the underground economy? It adds hundreds of billions of dollars to our GDP. It is run almost entirely by organized crime. It provides employment to hundreds of thousands of illegal immigrants. It makes the rich richer and the poor poorer.

It provides employment to hundreds of thousands of illegal immigrants.

Which statement is the most accurate? There is almost no underground economy in the United States. The production of the underground economy is included in our GDP. Most of our lawn maintenance and domestic help is supplied by the underground economy. Nearly half the goods and services that Americans consume are produced by the underground economy.

Most of our lawn maintenance and domestic help is supplied by the underground economy.

Which statement is true? The Japanese have a larger GDP than we do. None of the above. The Japanese have a higher standard of living than we do. The typical Japanese family has more living space than the typical American family.

None of the above.

Which statement is true? Over the short run, say, up to 10 years, comparisons of per capita real GDP are quite valid. None of the above Over longer and longer periods of time, comparisons of per capita real GDP become increasingly valid. International comparisons of per capita real GDP may be made with less caution than comparisons over time within a given country.

Over the short run, say, up to 10 years, comparisons of per capita real GDP are quite valid.

Which statement is true? The American economy is larger than the next five economies put together. Japan has the world's second largest economy. China's economy is almost as large as ours. There are more than a dozen trillion-dollar economies.

There are more than a dozen trillion-dollar economies.

Which statement is true? Our GDP would grow faster if we had less inflation. There is an inconsistency between the definition of GDP and the way it is compiled by the U.S. Department of Commerce. U.S. GDP figures include estimates for production in the underground economy. GDP is an accurate measure of production in the United States.

There is an inconsistency between the definition of GDP and the way it is compiled by the U.S. Department of Commerce.

Which is not counted in GDP? money spent by a company to build a new office park a Social Security check sent to a retiree government spending on highway building money spent on an airline ticket

a Social Security check sent to a retiree

GDP may be found by ____________. adding together money spent on goods and services and incomes received by the factors of production adding the money spent on final goods and services subtracting incomes received by the factors of production from the money spent on goods and services subtracting the money spent on goods and services from the incomes received by the factors of production

adding the money spent on final goods and services

The largest sector of GDP is net exports investment consumer spending government spending

consumer spending

Per capita real GDP is found by___________. dividing real GDP by population adding population to real GDP multiplying real GDP by population dividing population by real GDP

dividing real GDP by population

Which of the following is counted in GDP? household production leisure time illegal production voluntary work government spending

government spending

Since World War II our per capita real GDP has risen by 50 percent more than tripled stayed about the same risen by almost 700 percent

more than tripled

GDP is ____ GPI. much lower than about the same size as much higher than

much higher than

When there is inflation _________________. nominal GDP and real GDP increase at the same rate real GDP increases faster than nominal GDP nominal GDP increases faster than real GDP there is no way of telling whether nominal GDP or real GDP increases faster

nominal GDP increases faster than real GDP

During a period of inflation, if real GDP rose, then nominal GDP rose at the same rate as real GDP. nominal GDP stayed the same. nominal GDP rose at a faster rate than real GDP nominal GDP fell.

nominal GDP rose at a faster rate than real GDP

Pirated CDs and DVDs are __________. sold by recording studios and Hollywood movie producers sold only in other countries encouraged by the federal government because their manufacture and sale provides tens of thousands of jobs to marginal workers part of underground economy

part of underground economy

Nearly all of our output is produced by _______________. individual consumers private business firms the government

private business firms

If GDP rose from $6 trillion to $9 trillion and prices rose by 50 percent over this period, ______________. real GDP stayed the same real GDP rose by 50 percent real GDP fell by 50 percent real GDP fell by 100 percent real GDP rose by 100 percent

real GDP stayed the same

In 2030 Nigeria had a GDP of $700 billion and depreciation of $100 billion. The price level did not rise in 2031, but its GDP rose to $710 billion and its depreciation rose to $180 billion. Most economists would say that ______________. the Nigerian economy did better in 2031 the Nigerian economy did better in 2030 there is no way of determining which year was better

the Nigerian economy did better in 2030

Which one of these goes into the investment sector of GDP? the purchase of a new factory the purchase of a 10-year-old office building the purchase of a U.S. savings bond the purchase of 100 shares of Intel stock

the purchase of a new factory