GDP study set

which of the following would not be included in the expenditure category called investment expenditures? -spending on new houses -a purchase of shares of preferred stock -a purchase of a copy machine by Kinko's -the cars held in inventory on a local Ford dealer's lot

a purchase of shares of preferred stock

total income in an economy is equal to the sum of: a. consumption spending b. rent c. value added by retailers d. net exports e. wages f. investment g. government spending h. value added by manufacturers i. profit j. interest

b. rent e. wages i. profit j. interest

the largest component of spending in GDP is (consumption spending/investment/government spending/net exports).

consumption spending

nominal GDP is another term for (current/constant) - dollar GDP.

current

which of the following is considered a durable good? a. medical care b. clothing c. food d. a washing machine

d. a washing machine

If China decides to enact laws to clean up the environment, GDP would (increase/decrease) if the pollution controls reduce productivity by more than the cost of the controls in the short run.

decrease

Scott is a woodworker and charges $125 an hour for his time manufacturing custom-made wood products. For his wife's birthday, he designs and creates an intricate birdseye maple jewelry box that takes him 15 hours to complete. As a result, GDP (rises/does not change/falls).

does not change

Marla is an architect who is designing a home for Chuck. Chuck is paying Marla $150 per hour to design his new home. When Chuck and Marla get married, Marla continues to work on designing the home, but she no longer charges Chuck for her work. As a result, GDP (rises/does not change/falls).

falls

an example of a final good is a natural resource used to produce a good. true or false?

false

an example of a transfer payment is a paycheck for a member of the National Guard. true or false?

false

an increase in the shares of Apple stock households own would increase gross domestic investment in an economy. true or false?

false

gross domestic product is measured by the dollar value of all goods and services produced in the economy. true or false?

false

if Gladys sells her 1992 Ford EXP for $1,500 in 2010, the sale of her car contributes $1,500 to 2010 GDP. true or false?

false

if nominal GDP is less than real GDP, then the GDP deflator will be greater than 100. true or false?

false

if real GDP increases we know for sure that prices have risen. true or false?

false

in periods when prices are falling, on average, real GDP will grow slower than nominal GDP. true or false?

false

investment spending includes spending on stocks. true or false?

false

nominal GDP measures the value of all final goods and services at base-year prices. true or false?

false

the value of leisure is counted in GDP. true or false?

false

assuming that the United States is the domestic economy, imports are goods and services produced by (the US/foreign countries) and purchased by (the US/foreign countries).

foreign countries the US

in the circular flow diagram, (households/firms) supply the factors of production, and (buy/sell) goods and services.

households buy

when measuring GDP, new automobile sales ate counted as consumption when the automobiles are purchased by (households/firms) and as investment when they are purchased by (households/firms).

households firms

would the following transactions be included in the official calculation of GDP? firestone sells $2 million worth of tires to General Motors. yes or no?

no

would the following transactions be included in the official calculation of GDP? the value of a used textbook a student buys at the bookstore. yes or no?

no

would the following transactions be included in the official calculation of GDP? you wash and wax your father's car as a favor to him. yes or no?

no

the measure of production using current prices is called (nominal/real) GDP.

nominal

the GDP deflator is a measure of the price level and is calculated by dividing (nominal/real) GDP by (nominal/real) GDP and multiplying by 100.

nominal real

the measure of production that values output using base-year prices is called (nominal/real) GDP.

real

John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes. this is an example of a transaction in the "underground economy". true or false?

true

an example of a final good is a soy latte sold by Starbucks to a student. true or false?

true

an example of an intermediate good would be the bread that goes into a sub sandwich that is sold by Quiznos. true or false?

true

an increase in the level of Apple's inventory would increase gross private domestic investment in an economy. true or false?

true

consumption expenditures do not include household purchases of new houses. true or false?

true

government spending at all levels of government (federal, state, and local) is included in gross domestic product. true or false?

true

if nominal GDP rises we can say that production has risen or prices have risen or both have risen. true or false?

true

if prices are rising, on average, then real GDP will be greater than nominal GDP in the years before the base year. true or false?

true

one effect of Hurricane Harvey is that GDP would decrease reflecting the decrease in production during the storm and the productive capacity (factories and machinery) lost in the storm. true or false?

true

one effect of Hurricane Harvey is that GDP would increase reflecting the purchase of goods and services associated with the costs of cleanup. true or false?

true

the GDP deflator is a measure of the price level calculated as nominal GDP divided by real GDP and multiplied by 100. true or false?

true

the GDP deflator will be less than 100 if there has beeb deflation relative to the base year. true or false?

true

the largest component of consumption spending in the U.S. is services. true or false?

true

the underground economy can be described as economic activity that is hidden from the government to avoid taxes or because the activity is illegal. true or false?

true

to calculate GDP using the value-added method, one would add up the value added by each firm involved in the production of final goods and services. true or false?

true

transfer payments are not considered part of government purchases. true or false?

true

when the BEA (Bureau of Economic Analysis) calculates real GDP using the average of prices in the current year and the year preceding it, and this average changes from year to year, this is called calculating GDP using chained-weighted prices. true or false?

true

would the following transactions be included in the official calculation of GDP? you buy a new iPad. yes or no?

yes

when lumber from Brazilian forests is used by a U.S.-owned company to produce furniture in Canada, the value of the furniture produced will be counted as a final good in (US/Canada's/Brazil's) GDP.

Canada's