Chapter Ten (MACRO)
Susan sells a house built several years ago. The house sells for $300,000, but $20,000 of this is her real estate agents' commission fee. How much does this transaction add to GDP?
$20,000
John plows snow from driveways. He spends $2 on gas and charges $25 each time he plows. What's the total contribution to GDP each time John plows a driveway?
$25
If a cobbler buys leather for $100 and thread for $50 and uses them to produce and sell $500 worth of shoes to consumers, the contribution to GDP is
$500
An economy produces 10 cookies in year 1 at a price of $2 per cookie and 12 cookies in year 2 at a price of $3 per cookie. From year 1 to year 2, real GDP increases by:
20%
Which of the following would be excluded from 2019 GDP? The scale of:
A home built in 2018 and first sold in 2019
GDP deflator
A measure of the price level calculated as the ratio of nominal GDP to real GDP times 100
How is your purchase of a $40,000 BMW automobile that was produced entirely in Germany recorded in the U.S. GDP accounts?
Consumption increases by $40,000 and net exports decrease by $40,000.
Gross domestic product can be measured as the sun of:
Consumption, investment, govt purchases, and net exports
If an economy's income falls, then it must be the case that the economy's:
GDP and expenditures both fell
GDP is an imperfect measure of well-being because:
Ignores the environmental degradation from economic activity
Real GDP will decrease:
Only when output decreases
If all quantities produced rise by 5 percent, and all prices fall by 5 percent, which of the following occurs?
Real GDP rises by 5 percent, while noninal GDP is unchnaged
Which of the following would be a topic you could expect to study in microeconomics? Inflation GDP growth Supply and demand Monetary policy
Supply and demand
A manufacturer produces 500,000 MP3 players in the first quarter of the year. It sells 400,000 of them and adds 100,000 of them to inventory. All the players added to inventory are purchased by consumers in the second quarter. How are the 100,000 that go into inventory counted in GDP?
The MP3 players will be counted as a change in inventory in the first quarter, and so will be included in first quarter GDP as part of investment.
Gross Domestic Product (GDP)
The market value of all finals goods and services produced within a country in a given period of time
Real GDP is computed using
base-year prices and current quantities.
Real GDP is measured in ______ prices; nominal GDP is measured in ______ prices.
base-year; current year
GDP would include which of the following?
consulting services
U.S. GDP would exclude which of the following?
cotton purchased by Lee Jeans
The value of plant and equipment worn out in the process of manufacturing goods and services is measured by
depreciation
Unemployment benefits are
excluded from GDP because they do not reflect the economy's current production.
If Mr. Keating quits his job as a teacher to home school his own children, GDP
falls because his market income decreases.
Gross domestic product is the sum of the market value of the:
final goods and services
If U.S. GDP exceeds U.S. GNP, then
foreigners are producing more in the United States than Americans are producing in foreign countries.
Which of the following items is included in US GDP?
goods produced by Mexican citizens working in the United States
Which of the following is not included in the consumption component of GDP
household purchases of newly constructed homes.
If your grandparents buy a new retirement home, this transaction would affect
investment
U.S. gross domestic product (in contrast to gross national product) measures the production and income of
people and factories located within the borders of the United States.
If nominal GDP in 2019 exceeds nominal GDP in 2018, then the production of output must have:
risen or fallen because there is not enough information to determine what happened to real output.
Consumption
spending by households on goods and services, with the exception of purchases of new housing
investment
spending on business capital, residential capital, and inventories
Net exports
spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
Government Purchases
spending on goods and services by local, state, and federal governments
Real GDP
the production of goods and services valued at constant prices
Nominal GDP
the production of goods and services valued at current prices
An example of a transfer payment is
unemployment benefits
