chapter 6 mc

A shortcoming of nominal gross domestic product (GDP) is that a. an increase in nominal GDP can be caused by changes in either price or quantity. b. it does not measure changes in employment. c. it does not measure changes in price. d. it does not include net exports. e. it does not include the value obtained through purchases of stocks and bonds.

A

A shortcoming of real gross domestic product (GDP) is it a. does not include the underground economy. b. includes nonmarket goods. c. does not measure changes in employment. d. does not include the value obtained through purchases of stocks and bonds. e. does not account for changes in the prices of goods and services.

A

If nominal gross domestic product (GDP) changed by 6 percent and the price level changed by 2 percent, then real GDP changed by a. 4 percent. b. 3 percent. c. 8 percent. d. 12 percent. e. 6 percent.

A

The country's long-run average growth rate is 3 percent. In how many of these quarters did gross domestic product (GDP) contract? a. two b. six c. five d. four e. three

A

The percent change in the overall level of prices in the economy is called a. the inflation rate. b. the growth rate of GDP. c. GDP. d. GDP per capita. e. the interest rate.

A

Which is the largest component of U.S. gross domestic product (GDP)? a. consumption b. investment c. government purchases d. exports e. imports

A

An accurate measure of gross domestic product (GDP) is derived by adding the a. dollar value of all goods and services produced. b. value added at each stage of the production process. c. value of all materials used to make the final goods and services. d. profit earned from the sale of the final goods and services. e. value of the intermediate goods used to produce the final goods and services.

B

An index of the average prices of all goods and services throughout the economy is called a. the inflation rate. b. the GDP deflator. c. the interest rate. d. the consumer price index. e. nominal GDP.

B

Assuming the price level increased, real gross domestic product (GDP) is greater than nominal GDP if the current period is ________ the base period, and real GDP is less than nominal GDP if the current year is ________ the base period a. before; before b. before; after c. after; after d. after; before e. equal to; the same as

B

Between two given years, if real gross domestic product (GDP) and nominal GDP grow at the same rate, then a. the price level increased. b. prices must have remained constant between the two years. c. quantities must have remained constant between the two years. d. prices and quantities must have remained constant between the two years. e. prices and quantities must have grown at the same rate between the two years.

B

Company X sells leather to company Y for $60,000. Company Y uses the leather to make shoes, selling them to consumers for $180,000. The total contribution to gross domestic product (GDP) is a. $240,000. b. $180,000. c. $60,000. d. $120,000. e. $30,000.

B

Economic growth is best measured by changes in a. nominal GDP. b. real GDP. c.the inflation rate. d. the unemployment rate. e. the number of jobs.

B

Gross domestic product (GDP) is best defined as the total market value of all a. goods and services produced within a country within a given time. b. final goods and services produced within a country within a given time. c. services produced within a country within a given time. d. goods produced within a country within a given time. e. final goods produced within a country within a given time.

B

If over a period of time real gross domestic product (GDP) increases while nominal GDP decreases, then this implies a. a significant rise in the price level. b. a significant drop in the price level. c. that real GDP is much less than nominal GDP. d. that the given period occurs before the base period. e. that the given period year occurs after the base period.

B

If real gross domestic product (GDP) grew by 4 percent and nominal GDP grew by 3 percent, then the inflation rate was a. 1 percent. b. -1 percent. c. 7 percent. d. 12 percent. e. 0 percent.

B

Net exports can be defined as a. exports plus imports. b. exports minus imports. c. exports divided by imports. d. imports minus exports. e. imports divided by exports.

B

Nominal gross domestic product (GDP) increased from $14.0 trillion to $14.7 trillion, and the price level increased from 120 to 126. Which of the following is true? a. Output grew faster than the price level. b. Output grew slower than the price level. c. Real GDP grew faster than nominal GDP. d. Output grew at the same rate as the price level. e. Real GDP grew at the same rate as nominal GDP.

B

Nominal gross domestic product (GDP) increased from $15.44 trillion to $15.75 trillion, and the price level increased from 116.5 to 122.3. Which of the following is true? a. Output grew faster than the price level. b. Output grew slower than the price level. c. Real GDP grew faster than nominal GDP. d. Output grew at the same rate as the price level. e. Real GDP grew at the same rate as nominal GDP.

B

Real gross domestic product (GDP) can be calculated as a. (nominal GDP) x (the GDP deflator) x 100. b. (nominal GDP) / (the GDP deflator) x 100. c. (nominal GDP) - (the GDP deflator) x 100. d. (the GDP deflator) / (nominal GDP) x 100. e. (nominal GDP) x (the long-run trend growth rate of GDP) x 100.

B

Real gross domestic product (GDP) is GDP adjusted for changes in a. overall employment levels. b. overall price levels. c. overall output levels. d. the level of the interest rate. e. the level of unemployment.

B

The difference between nominal gross domestic product (GDP) and real GDP is a. real output growth. b. the price level. c. nominal output growth. d. long-run trend GDP. e. average output growth.

B

To avoid double counting when calculating gross domestic product (GDP), it is best to count a. the value of goods and services produced at every stage of production. b. the value added at each stage of production. c. used goods. d. stocks and bonds. e. all goods and services purchased by consumers, firms, and the government.

B

To determine a value for gross domestic product (GDP), you would add up the a. quantities of the final goods and services produced. b. dollar value of the final goods and services produced. c. dollar value of the final goods and services produced minus the dollar value of the intermediate goods and services produced. d. dollar value of all goods and services produced. e. quantities of all goods and services produced.

B

What is the value of nominal gross domestic product (GDP) in 2009? a. $50,000 million b. $500 million c. $400 million d. $600 million e. $100 million

B

Country A has a gross domestic product (GDP) of $200,000 and a population of 1,000. Country B has a GDP of $400,000 and a population of 4,000. Which of the following is true? a. The value of output is higher in country A. b. The value of income is higher in country A. c. The value of GDP per capita is higher in country A. d. The value of GDP per capita is higher in country B. e. The average living standard is higher in country B.

C

Goods that firms repackage with other goods for sale at a later stage are a. inventory b. final goods c. intermediate goods d. used goods e. value-added goods

C

If real gross domestic product (GDP) equals nominal GDP, then a. output did not grow. b. there was no inflation. c. the current year is the base year. d. the growth in output was equal to the growth in the price level. e. the growth in output was greater than the growth in the price level.

C

Nominal gross domestic product (GDP) increases if a. current prices increase, while current quantities decrease. b. current quantities increase, while current prices decrease. c. current prices or current quantities increase. d. real GDP increases. e. real GDP decreases.

C

The four major expenditure categories of gross domestic product (GDP) are a. consumption, imports, exports, and government purchases. b. consumption, government purchases, taxes, and investment. c. consumption, investment, government purchases, and net exports. d. consumption, investment, government purchases, and stocks. e. consumption, investment, taxes, and net exports.

C

The phase of the business cycle where the economy is growing faster than usual is called a. an economic trough. b. the long-run trend of gross domestic product (GDP). c. an economic expansion. d. an economic contraction. e. an economic peak.

C

What is the value of real gross domestic product (GDP) in 2010? Round to the nearest second decimal. a. $58,427.20 million b. $584.27 million c. $520.00 million d. $445.20 million e. $657.20 million

C

What is the value of the gross domestic product (GDP) deflator in 2011? Round to the nearest decimal. a. 54.6 b. 154.6 c. 110.0 d. 90.9 e. 112.0

C

If nominal gross domestic product (GDP) is increasing, which of the following may be true? a. More final goods and services are being produced. b. Prices on average are rising at a slower rate than the decline in the quantity of final goods and services produced. c. Less is being produced, and prices on average are falling. d. Production of final goods and services is increasing at a faster rate than prices are falling. e. Prices and the amount of final goods and services produced on average are constant.

D

The business cycle measures a. fluctuations in the long-run trend growth rate of GDP. b. fluctuations in the profit of businesses. c. fluctuations in consumption. d. short-run fluctuations in economic activity. e. fluctuations in the average tax rate paid by businesses.

D

The gross domestic product (GDP) deflator is a measure of the price level that includes prices of a. consumer goods and services only. b. producer goods and services only. c. final and intermediate goods and services. d. final goods and services. e. final services only.

D

To evaluate the change in average living standards over time, it is best to use a. the inflation rate. b. GDP. c. the literacy rate. d. real GDP per capita. e. the employment rate.

D

Gross domestic product (GDP) is an important indicator because it is used as a measure of all of the following EXCEPT a. economic growth. b. average living standards. c. business-cycle fluctuations. d. average income levels e. environmental quality

E