Macro Chapter 5
If income is unequally distributed in an economy, increases in GDP may not raise well-being in an economy.
True
Investment, as defined by economists, would include the purchase of a
computer by an accounting firm
The underground economy can be described as
economic activity that is hidden from the government to avoid taxes or because the activity is illegal.
The output of Mexican citizens who work in Texas would be included in the
gross national product of Mexico.
Nominal GDP will increase
if either the price level or the quantity of goods and services produced rises.
A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements. This will
increase GDP and decrease well-being in the economy.
If the GDP deflator is less than 100, then for that year, nominal GDP ________ real GDP.
is less than
The purchase by a household in China of a CD produced in the United States is included in U.S.
next exports
An example of an intermediate good would be
the rims on a new car.
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.
Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?
GDP will decrease
In the circular flow model, the value of total income for an economy ________ the value of total production.
Equals
If Gladys sells her 2003 Jeep Cherokee for $3,500 in 2018, the sale of her car contributes $3,500 to 2018 GDP.
False
Nominal GDP measures the value of all final goods and services at base-year prices.
False
Transfer payments are subtracted from national income to get to personal income.
False
If the GDP deflator is 142, by how much have prices changed since the base year?
Prices have increased by 42%.