ch 8 econ

Which of the following is not directly counted in GDP? consumer goods investment expenditures intermediate goods government purchases

intermediate goods

The purchase of a new house is included in consumption expenditures. net exports. investment expenditures. government purchases.

investment expenditures.

Which of the following would be directly counted in GDP in 2012? kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a brand new country-style home kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a farm house built in 1950 kitchen cabinets purchased from Home Depot in 2012 to be installed in a house built in 1997 none of the above

kitchen cabinets purchased from Home Depot in 2012 to be installed in a house built in 1997

Gross national product, GNP, of the United States is the market value of all final goods and services produced by citizens of the United States anywhere in the world. produced within the United States. consumed within the United States. consumed by citizens of the United States anywhere in the world.

produced by citizens of the United States anywhere in the world.

Nominal GDP is GDP in a given year valued in the prices of that year. adjusted for inflation. valued in the prices of the base year. adjusted for anticipated inflation.

valued in the prices of that year.

Real GDP is GDP in a given year valued in the prices of that year. valued in the prices of the base year. adjusted only for unanticipated inflation. adjusted only for anticipated inflation.

valued in the prices of the base year.

In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up. values goods at their market prices, multiplies them by the quantity produced, and then adds them up. simply counts the total number of goods and services produced in the marketplace and then adds them up. simply counts the total number of goods produced in the market place and then adds them up.

values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.

Table 8-8 Year Guns Produced Price of Guns Butter Produced Price of Butter 2005 80 $5 40 $4 2011 90 6 60 10 Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Refer to Table 8-8. Nominal GDP for Tyrovia in 2011 equals $1,140. $880. $690. $560.

$1,140.

Table 8-3 Consumption expenditures $800 Investment expenditures 200 Government purchases 300 Exports 100 Imports 200 Wages 800 Refer to Table 8-3. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals $2,200. $1,600. $1,400. $1,200.

$1,200.

Table 8-8 Year Guns Produced Price of Guns Butter Produced Price of Butter 2005 80 $5 40 $4 2011 90 6 60 10 Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Refer to Table 8-8. Real GDP for Tyrovia for 2011 using 2005 as the base year equals $1,140. $880. $690. $560.

$690.

Table 8-1 Product Quantity Price Sweatshirts 50 $35.00 Dental examinations 40 75.00 Coffee drinks 1,000 4.00 Coffee beans 2,000 0.50 Refer to Table 8-1. Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nominal GDP for this simple economy equals 3,090 units. $7,250. $8,750. $9,750.

$8,750.

In the United States, households were saving about ________ of their income in the mid 1980s, and by 2005, saving ________. 64 percent; increased to 70 percent. 2 percent; dropped to negative 15 percent. 5 percent; increased to 25 percent 10 percent; dropped to about 1 percent.

10 percent; dropped to about 1 percent.

Table 8-11 Year Nominal GDP Real GDP 2010 14,078 13,254 2011 14,441 13,312 Refer to Table 8-11. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2011 equals 92.2. 102.6. 108.5. 109.1.

108.5

Table 8-9 Year Nominal GDP Real GDP 2008 $7,400 $7,537 2009 7,813 7,813 2010 8,301 8,165 2011 8,760 8,516 Refer to Table 8-9. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is 2008. 2009. 2010. 2011.

2009

The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is 5% higher in year 2 than in year 1. 105% higher in year 1 than in year 5% higher in year 1 than in year 2. 105% higher in year 2 than in year

5% higher in year 2 than in year 1.

Recent estimates put the size of the underground economy in the United States at ________ of measured GDP. 2 percent 8 percent 13 percent over 50 percent

8 percent

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study? Real GDP grows by 2.3% in the second quarter. Airlines raise ticket prices in response to rising fuel costs. The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. Avocado prices rise due to a late frost in California.

Real GDP grows by 2.3% in the second quarter.

Which of the following transactions represents the purchase of a final good? Delta buys a new European-made jetliner. Apple computer buys computer processors from Intel. Starbucks purchases coffee beans. Your father buys a new John Deere riding lawn mower.

Your father buys a new John Deere riding lawn mower.

Which of the following goods is directly counted in GDP? the lettuce that Subway purchases for its sandwiches the plastic bags that Subway purchases to wrap its sandwiches a 12-inch Subway sandwich purchased by a student the bread that Subway purchases for its sandwiches

a 12-inch Subway sandwich purchased by a student

An example of business fixed investment spending is $200 million of unsold cars at a car dealership. a purchase of a computer by an accounting firm. a purchase of a bond by General Electric Corporation. a purchase of a home by a household.

a purchase of a computer by an accounting firm.

The nominal GDP of the U.S. in 2010 was approximately $14.6 trillion. This means that total income in 2010 was around $14.6 trillion. the value of output in 2010 was around $14.6 trillion. total spending in 2010 was around $14.6 trillion. all of the above are true.

all of the above are true.

In May 2009, Ford Motor Company's sales were down 20 percent from a year earlier. These events were caused by declining quality of service. an economic recession. an economic expansion. a reduction in advertising.

an economic recession.

The GDP deflator is a measure of the average level of prices of final goods and services in the economy. total production of the economy unadjusted for inflation. average level of prices of intermediate goods and services in the economy. total production of the economy adjusted for inflation.

average level of prices of final goods and services in the economy.

Macroeconomics, as opposed to microeconomics, includes the study of what determines the quantity of Dell employees. wages paid to employees by Dell. average price levels of goods and services in the economy. price charged for laptop computers by Dell.

average price levels of goods and services in the economy.

Investment, as defined by economists, would not include which of the following? Ford adds 1,000 new cars to inventories. builds another assembly plant in the United States. buys U.S. government bonds.

buys U.S. government bonds.

Which of the following is not a durable good? automobile furniture clothing refrigerator

clothing

Investment, as defined by economists, would include the purchase of a share of stock in ExxonMobil. government bond. corporate bond. computer by an accounting firm.

computer by an accounting firm.

The purchase of a new automobile is included in consumption expenditures on nondurable goods investment expenditures. consumption expenditures on services. consumption expenditures on durable goods.

consumption expenditures on durable goods.

What is the largest component of spending in the United States? investment spending government spending consumption spending net investment spending

consumption spending

To calculate GDP by the expenditure method, one must add consumption spending, investment spending, government spending and net exports. consumption spending, investment spending, government spending and exports. labor, natural resources, entrepreneurship, and capital. wages, rents, interest, and profits.

consumption spending, investment spending, government spending and net exports.

The best measure of the income households actually have available to spend is disposable personal income. national income. net national income. personal income.

disposable personal income.

Macroeconomics seeks to understand product demand, product cost, and profit maximization. industry sales, marketing strategies and corporate growth. public choices, private choices, and consumer maximization. economic growth, business cycles, and inflation.

economic growth, business cycles, and inflation.

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of output of a specific firm. output of a specific industry. employment in a specific industry. employment in the economy.

employment in the economy.

In the circular flow model, the value of total income for an economy ________ the value of total production. is less than may be greater than or less than equals is greater than

equals

The output of Mexican citizens who work in Texas would be included in the gross domestic product of Mexico. gross national product of the United States. gross national product of Mexico. net national product of the United States.

gross national product of Mexico.

Which of the following is not an example of a transfer payment? health insurance payments to an army private social security payments to disabled persons social security payments to retirees unemployment insurance payments

health insurance payments to an army private

Gross domestic product understates the total production of final goods and services because of the omission of household production. exports. intermediate goods. inflation.

household production.

In the United States since the mid-1980s, consumption as a percentage of GDP has increased. remained the same. dropped by more than half. slowly decreased.

increased.

Legalizing all forms of illegal activities increases GDP and increases the size of the underground economy. increases GDP and reduces the size of the underground economy. reduces GDP and the size of the underground economy. reduces GDP and increases the size of the underground economy.

increases GDP and reduces the size of the underground economy.

During a business cycle expansion, total production ________ and total employment ________. increases; increases decreases; increases decreases; decreases increases; decreases

increases; increases

Disposable personal income equals personal income minus government transfer payments plus personal tax payments. plus government transfer payments. minus personal tax payments. minus personal tax payments plus government transfer payments.

minus personal tax payments.

The purchase by a foreign government of an airplane produced in the United States is included in U.S. government purchases. investment expenditures. net exports consumption expenditures.

net exports.

The purchase by a household in China of a CD produced in the United States is included in U.S. consumption expenditures. government purchases. net exports investment expenditures.

net exports.

Presently, GDP is ________ to compensate for the costs of environmental damage. partially adjusted not adjusted fully adjusted adjusted on a chain-weight basis

not adjusted

In May 2009, the U.S. auto industry experienced a 34 percent decline in sales compared to May 2008. The automobile industry was experiencing the effects of the business cycle. the underground economy. depreciation. deflation.

the business cycle.

Suppose that nominal GDP in 2011 was less than real GDP in 2011. Given this information, we know for certain that the price level in 2011 was less than the price level in the base year. real GDP in 2011 was greater than real GDP in the base year. the price level in 2011 was greater than the price level in the base year. real GDP in 2011 was less than real GDP in the base year.

the price level in 2011 was less than the price level in the base year.

Value added equals the market price of the firm's product minus the price of all factors of production. depreciation on plant and equipment. the price of intermediate goods. wages and salaries.

the price of intermediate goods.

Gross domestic product understates the total production of final goods and services because of the omission of intermediate goods. inflation. exports. the underground economy.

the underground economy.

Which of the following is included in both the U.S. GDP and U.S. GNP? the value of all cars produced by General Motors in the United States the value of all cars produced by Ford in Mexico the value of all cars produced by Toyota in the United States the value of all cars produced by Nissan in Japan and the United States

the value of all cars produced by General Motors in the United States

Suppose, in 2012, you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2012? the value of the services of the real estate agent the value of the house in 2012 the value of the house in 2003 the value of the house in 2012 minus depreciation

the value of the services of the real estate agent