Econ: test 3
Automatic Stabilizers are:
provisions in a government's budget that cause government spending to rise (fall) or taxes to fall (rise) automatically without legislator when GDP falls (rise
(C) personal consumption expenditures
shoes bike haircut
Does the size of the pizza affect the amount of pizza available to each person
Yes-the larger pizza, given same number of people, means more pizza per person
The government increases its defense expenditures by One million dollars
government
If the real GDP of Duoland grew by 3 percent last year, and the population of Duoland grew by 1 percent, the standard of living in Duoland:
improved
The government's purchase of a new submarine for the Navy
included government expenditures
A farmer's purchase of a new tractor
included investment
An increase in business inventories
included investment
A barber's income from cutting hair
included service
If the growth of real GDP is sluggish-that is, below trend-in order to stimulate the economy, policymakers may choose to:
increase the money supply
Definition of GDP
the market value of all final goods and services produced within the borders of a country during a year
Real GDP is:
the market value of all final goods and services produced within the borders of a country in a year adjusted for price changes
Nominal GDP is:
the market value of all final goods and services produced within the borders of a country in a year, measured in today's prices
In measuring Gross Domestic Product (GDP), market value refers to:
the price at which a good or service sells in the market place
Which of the following is an example of an automatic stabilizer?
unemployment insurance
(G) government expenditures
county fireman US military state highway
A monthly check received by an economics students who has been granted a government scholarship
excluded Transfer Payment
Income received from the sale of Nike stock
excluded financial transaction
The services of a mechanic in fixing the radiator on his car
excluded non market transaction
The cashing of a U.S. government bond
excluded purely financial transaction
A social security check paid by the government to a retired store clerk
excluded transfer payment
A plumber's purchase of a used truck
excluded used
In the United States, the trend growth rate of real GDP is about:
3 percent annually
The country of Duoland has a GDP of $400,000, and the country of Unoland has a GDP of $100,000. The standard of living in Duoland:
Cannot be determined from the information provided
An accountant pays a tailor $175 to sew a suit for her
Consumption
You spend $7 to attend a movie
Consumption
What are the components of GDP?
Consumption (C) Investment (I) Government Spending (G) Net Exports (X-M)
You pay tuition to attend college
Consumption or government
Suppose that country A has an annual GDP of $1 million and a population of 200,000 and COuntry B has an annual GDP of $5 million and a populations of 250,000. Which country has the higher standard of living?
Country A's per capita GDP is $5
When the growth of real GDP is sluggish, that is, below trend growth. What policy options may be appropriate
Decrease taxes increase government spending increase the money supply
We count only the final retail price of a new good or service in GDP. Why?
Do not want to double count
A purely financial transaction will not be counted in GDP. Why not?
No new output No physical item
A family pays $75,000 for a house built three years ago
Not counted in GDP
A homemaker works hard caring or her spouse and two children
Not counted in GDP
R.J. Reynolds Company buys control of Nabisco
Not counted in GDP
If prices have risen, and GDP is calculated based on current prices, the change in the size of GDP could be due to the increased prices. To measure the economy's grown from year to year, economists adjust nominal GDP for price changes. To do this, they compute GDP in terms of the dollar prices in a base year. The resulting measurement is known as:
Real GDP
Products (goods and services) included when computing U.S. GDP
a toyota auto made at a plant in Kentucky a Boeing airplane made in Seattle
To maintain the current standard of living an economy must grow:
at least as fast as its population is growing
Which of the following is a final good produced by a bakery?
cake
Suppose that country A has an annual GDP of $1 million and country B has an annual GDP of $5 million. Which country has the higher standard of living?
cannot be determined
You pay $300 a month to rent an apartment
consumption
A family pays a contractor $100,000 for a house he built for them this year
investment
Apple computer company builds a new factory
investment
Ford Motor Company buys new auto-making robots
investment
at the end of the year, a flour-milling firm finds that its inventories of grain and flour are $10,000 above the amounts of its inventories at the beginning of the year
investment
A utility company builds a new nuclear reactor that is counted as part of the current year's GDP. The nuclear reactor would be counted as part of:
investment spending
Per capita GDP:
measure the standard of living in a country the GDP of a country divided by that country's population
A growing economy is important in order to:
meet citizen's expectations for more goods and services per capita
(I) investment expenditures
new warehouse for company new copier for company new truck
GDP that has not been adjusted for price changes is referred to as
nominal GDP
When a homeowner does home improvement work, the value of the labor is not counted in GDP. Why not?
non market transaction
You buy a new Toyota that was made in Japan
not counted in GDP
You buy general motors stock or $1,000 in the stock market
not counted in GDP
the government makes a $90 social security payment to a retired person
not counted in GDP
to complete your report, which of the following reasons would explain why you use real GDP to compare GDP over time
real GDP reflects quantity changes in production rather than changes that result from differences in prices from year to year
