econ ch 4 hw

What are the four categories of​ income?

​Wages, Interest,​ Rent, and Profit.

The nominal GDP of the U.S. in 2016 was approximately $18.6 trillion. This means that

all of the above are true.

What is the largest component of spending in the United States?

consumption spending

GDP is not a perfect measure of well-being because

GDP is not adjusted for pollution.

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.

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

do not pay taxes to the government.

The underground economy can be described as

economic activity that is hidden from the government to avoid taxes or because the activity is illegal.

In the circular flow model, the value of total income for an economy ________ the value of total production.

equals

In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services.

equals

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

increases; increases

Which of the following is not directly counted in GDP?

intermediate goods

If the GDP deflator is less than 100, then for that year, nominal GDP ________ real GDP.

is less than

In 2016, Ford's sales were rising, but in early 2017, Ford's sales declined. Ford and the U.S. automobile industry were experiencing the effects of

the business cycle.

Value added equals the market price of the firm's product minus

the price of intermediate goods.

Real GDP is GDP in a given year

valued in the prices of the base year.

Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Refer to Table 8-11. Nominal GDP for Tyrovia in 2018 equals

$1,140.

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

$1,200.

Refer to Table 8-4. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

$1,600.

Refer to Table 8-18. What is real GDP in 2018, using 2013 as the base year?

$10,275

Refer to Table 8-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals

$6,400.

Refer to Table 8-11. Real GDP for Tyrovia for 2018 using 2009 as the base year equals

$690.

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

$8,750.

Refer to Table 8-19. Given the information above, calculate the GDP deflator in 2017.

105

Refer to Table 8-14. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2018 equals

108.5.

Refer to Table 8-19. Given the information above, calculate the GDP deflator in 2018.

114

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.

Which of the following equations correctly measures GDP in an economy?

GDP = C + I + G + NX

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

GDP deflator; nominal GDP; real GDP

If the GDP deflator is 142, by how much have prices changed since the base year?

Prices have increased by 42%.

The purchase by a household in China of a CD produced in the United States is included in U.S.

net exports.

To examine how the total production of an economy has changed over time, it would be better to examine

real GDP.