Macroeconomics Ch. 9

If GDP rose by 5 percent per year and the GDP deflator fell by 3 percent per year, the percentage change in real GDP was 8%. -2%. 15%. 2%.

8%.

Which is not counted in GDP? Money spent by a company to build a new office park Money spent on an airline ticket Government spending on highway building A Social Security check sent to a retiree

A Social Security check sent to a retiree

Which of the following is a final good or service? A computer chip purchased by Banana Computers A box of brownies purchased by your instructor Wood pulp purchased by a paper company Potatoes purchased by a potato chip company

A box of brownies purchased by your instructor

Which one of the following is a final good or service? A will drawn up by your personal attorney A radio bought by General Motors for use in its new line of cars Chemical pesticides used by a farmer to control the incidence of crop disease Microcomputer chips for a new computer

A will drawn up by your personal attorney

Which one of the following is taken into account by GDP? Custom lawn care services Household production Leisure time Illegal production

Custom lawn care services

The difference between GDP and NDP is Who receives the profit from the sale. Who has control of the company. Depreciation. Where the money is spent.

Depreciation.

Which one of these is correct? National income - indirect business taxes = Net Domestic Product Wages + rent + indirect business taxes = national income National income + depreciation = Net Domestic Product GDP - depreciation = Net Domestic Product

GDP - depreciation = Net Domestic Product

If GDP rises and the GDP deflator falls, then there is not enough information to determine if real GDP rose, fell, or remained the same. real GDP definitely remained the same. real GDP definitely rose. real GDP definitely fell.

real GDP definitely rose.

If our output of goods and services rises, then real GDP definitely fell. GDP definitely rose. real GDP definitely rose. GDP definitely stayed the same.

real GDP definitely rose.

If GDP increases faster than the GDP deflator, real GDP will fall. real GDP will stay the same. There is not enough information to determine what happens to real GDP. real GDP will rise.

real GDP will rise.

C is about _____ of GDP. one-half four-fifths two-fifths seven-tenths

seven-tenths

Historically, real GDP has risen less rapidly than nominal GDP because exports to foreign nations have risen more rapidly than imports. the general price level has risen. technological progress has resulted in more efficient production. the general price level has fallen.

the general price level has risen.

Payments for goods and services that will be used up by households during the year are investment expenditures for the production of output. made by firms to households and called national income. called consumption expenditures. for intermediate goods and are not counted in GDP.

called consumption expenditures.

In 1984, the base year, GDP was 3000. In 1988 the GDP deflator was 98. We may conclude that real GDP declined between 1984 and 1988. there was some inflation between 1984 and 1988. GDP declined between 1984 and 1988. there was some deflation between 1984 and 1988.

there was some deflation between 1984 and 1988.

Real GDP increases at a faster rate than GDP over time. measures the current market value of aggregate production. will increase in a given year even if aggregate production declines. measures current aggregate production valued at base year prices.

measures current aggregate production valued at base year prices.

By adding together all market transactions in an economy, we would be calculating the market value of the nation's total output of final goods and services. multiple counting. underestimating GDP. calculating GDP

multiple counting.

The value actually earned by members of households who supply the inputs necessary to produce GDP is called disposable income. national income. net investment. personal income.

national income.

Susan works for no compensation at the Ronald McDonald's house near a children hospital. Her work in included in the GDP as investment. consumption. not included. government.

not included.

GDP that has been adjusted for changes in the price level is called depreciation. nominal GDP. net investment. real GDP

real GDP

If real GDP fell by 1 percent per year and the GDP deflator rose by 2 percent per year, the percentage change in GDP was 4%. 1%. 3%. -1%.

1%

If real GDP fell by 1 percent per year and the GDP deflator rose by 2 percent per year, the percentage change in GDP was 1%. 4%. 3%. -1%.

1%.

Which component of GDP is most likely to be negative? Gross private domestic investment Imports Government purchases Net exports

Net exports

Which is the least? National income Net exports Net domestic product Government expenditures

Net exports

Which is the least? Net exports National income Government expenditures Net domestic product

Net exports

We use the value added approach in calculating GDP to avoid double counting. account for market price differences. account for consumer income differences. account for changes in population.

avoid double counting.

The underground economy is a very stable percentage of GDP. causes GDP to be underestimated by 10 to 15 percent. consists only of illegal activities such as prostitution, loan-sharking, and narcotics. consists mainly of such involuntary transfer payments as savings and loan fraud and bank robberies.

causes GDP to be underestimated by 10 to 15 percent.

The change in the United States from a rural, self-sufficient economy to an urban, market-oriented economy had the effect of increasing GDP primarily through the resulting increase in the general price level. inhibiting the growth of GDP. causing the growth in GDP to understate the growth in economic well-being. causing the growth in GDP to overstate the growth in economic well-being.

causing the growth in GDP to overstate the growth in economic well-being.

Transfer payments are excluded from the personal income account. included in the national income account. included in the gross domestic product account. excluded from the gross domestic product account because they do not reflect current production.

excluded from the gross domestic product account because they do not reflect current production.

Transfer payments are included in the national income account. excluded from the gross domestic product account because they do not reflect current production. included in the gross domestic product account. excluded from the personal income account.

excluded from the gross domestic product account because they do not reflect current production.

Net domestic product is usually preferred to GDP by economists because net national product excludes indirect business taxes. excludes depreciation. includes depreciation. includes indirect business taxes.

excludes depreciation.

Net domestic product is usually preferred to GDP by economists because net national product includes indirect business taxes. excludes indirect business taxes. excludes depreciation. includes depreciation.

excludes depreciation.

GDP includes substitute but not intermediate products. intermediate but not final products. final but not intermediate products. complementary but not intermediate products.

final but not intermediate products.

Government purchases are about _____ of GDP. one-fifth one-half one-third two-fifths

one-fifth

Government purchases are about _____ of GDP. one-half one-fifth one-third two-fifths

one-fifth

GDP can increase at a faster rate than real GDP only if the unemployment rate is increasing. only if there is inflation. only if the population is growing. only if the value of the dollar is stable.

only if there is inflation.

Suppose that GDP increases in 1999 but real GDP decreases during the year. It can be concluded that inflation was zero in 1999. output declined in 1999. the price level fell in 1999. output increased in 1999.

output declined in 1999.

Suppose that GDP increases in 2015, but real GDP decreases during the year. It can be concluded that price level fell in 2015. output declined or we had deflation in 2015. output increased in 2015. inflation was zero in 2015.

output declined or we had deflation in 2015.

The primary advantage of the GPI over the GDP as a measure of the production and well-being of the economy is that it accounts for age distribution of population. productive nonmarket activities and depletion of resource base. underground activities. quality of products.

productive nonmarket activities and depletion of resource base.

The growth of GDP may understate the economy's economic well-being if the quality of products and services improves. distribution of income becomes increasingly unequal. environment deteriorates because of pollution. amount of leisure decreases.

quality of products and services improves.

GDP has grown 5 percent over the last year. The GDP deflator, during the same period, has risen from 130 to 140. We could conclude then that real GDP has fallen. real GDP is unchanged. there is insufficient information. real GDP has risen.

real GDP has fallen.

If GDP declined by 6 percent in real terms during one year, and population declined by 3 percent, then real GDP increased while nominal GDP decreased. real GDP per capita increased. nominal GDP did not change at all. real GDP per capita decreased.

real GDP per capita decreased.

If GDP rose from $4 trillion to $6 trillion, and prices rose by 50 percent, over this period real GDP stayed the same. real GDP fell by 100 percent. real GDP fell by 50 percent. real GDP rose by 50 percent.

real GDP stayed the same.

If GDP increases faster than the GDP deflator, real GDP will fall. real GDP will stay the same. There is not enough information to determine what happens to real GDP. real GDP will rise.

real GDP will rise.

If families began doing each other's laundry for pay, GDP would fall. rise. remain unchanged because services are not included in GDP. remain unchanged because laundry is not a final good.

rise

If the GDP deflator were 200 in the current year, prices have prices have risen by 200 percent since the base year. risen by 100 percent since the base year. prices have remained constant since the base year. prices have fallen by 200 percent since the base year. prices have fallen by 100 percent since the base year.

risen by 100 percent since the base year.

If the GDP deflator were 200 in the current year, prices have risen by 100 percent since the base year. prices have fallen by 100 percent since the base year. prices have risen by 200 percent since the base year. prices have fallen by 200 percent since the base year. prices have remained constant since the base year.

risen by 100 percent since the base year.

If the GDP deflator is now 125, we may conclude that since the base year prices have fallen by 25 percent. risen by 25 percent. fallen by 125 percent. risen by 125 percent.

risen by 25 percent.

If the GDP deflator is now 125, we may conclude that since the base year prices have risen by 125 percent. risen by 25 percent. fallen by 125 percent. fallen by 25 percent.

risen by 25 percent.

For a given year, GDP includes the market value of the following: bartered goods. second-hand cars. land. stocks and bonds. services.

services.

If real GDP increased and GDP decreased during the same year, we could conclude that the general price level fell during the year. net exports were negative. an inflation occurred during the year. the unemployment rate increased during the year.

the general price level fell during the year.

If real GDP increased and GDP decreased during the same year, we could conclude that the unemployment rate increased during the year. the general price level fell during the year. net exports were negative. an inflation occurred during the year.

the general price level fell during the year.

If over a certain period of time "constant dollar" GDP grows more rapidly than "current dollar" GDP, this means that the general price level has fallen. consumers' real incomes have decreased. the general price level has risen. the economy is in a recession.

the general price level has fallen.

Historically, real GDP has risen less rapidly than nominal GDP because technological progress has resulted in more efficient production. the general price level has fallen. exports to foreign nations have risen more rapidly than imports. the general price level has risen.

the general price level has risen.

GDP is the market value of final goods and services produced in a given year. equivalent to unemployment. national income after taxes. the total value of all personal consumption expenditures.

the market value of final goods and services produced in a given year.

GDP is the total value of all personal consumption expenditures. national income after taxes. equivalent to unemployment. the market value of final goods and services produced in a given year.

the market value of final goods and services produced in a given year.

GDP is the total value of all personal consumption expenditures. national income after taxes. the market value of final goods and services produced in a given year. equivalent to unemployment.

the market value of final goods and services produced in a given year.

GDP measures the market value of intermediate products produced during the year. the market value of final products and services produced in the nation during the year. the sum of the market value of final products produced and imported during the year. the sum of the market value of both final and intermediate products produced during the year

the market value of final products and services produced in the nation during the year.

GDP measures the market value of intermediate products produced during the year. the sum of the market value of both final and intermediate products produced during the year. the market value of final products and services produced in the nation during the year. the sum of the market value of final products produced and imported during the year.

the market value of final products and services produced in the nation during the year.

The concept of "net domestic investment" refers to total investment less the amount of investment goods used up in accomplishing the year's production. the amount of machinery and equipment used up in producing the GDP in a given year. gross domestic investment less net exports. the difference between the market value and book value of outstanding capital stock.

total investment less the amount of investment goods used up in accomplishing the year's production.

Net domestic product measures real GDP adjusted for the taxes and undistributed earnings of corporations that never reach households in the form of income. national income plus depreciation. GDP minus indirect business taxes. total output minus what was produced to replace capital goods that wore out during the year. GDP adjusted for inflation.

total output minus what was produced to replace capital goods that wore out during the year.

GDP is $8 trillion. If net exports are -$2 trillion, government purchases are $2 trillion and consumption is $4 trillion, then investment is $4 trillion. $1 trillion. $3 trillion. $2 trillion.

$4 trillion.

GDP is $8 trillion. If net exports are -$2 trillion, government purchases are $2 trillion and consumption is $4 trillion, then investment is $4 trillion. $3 trillion. $1 trillion. $2 trillion.

$4 trillion.

National Income is about _____ percent of GDP. 25 100 85 65 45

85

National Income is about _____ percent of GDP. 45 85 25 100 65

85

National Income is about _____ percent of GDP. 65 85 45 100 25

85

Which statement is true? Real GDP is always greater than GDP. GDP is always greater than real GDP. GDP and real GDP are equal only in the base year. GDP and real GDP are never equal.

GDP and real GDP are equal only in the base year.

If real GDP increases and the price index has increased the percentage increase in GDP must have been less than the percentage increase in the price level. GDP must have fallen. GDP must have increased. GDP may have either increased or decreased.

GDP must have increased.

In evaluating an economy's performance over a period of years, real GDP provides a better measuring rod than GDP because Real GDP is adjusted for the social and environmental costs of production, which are normally not compensated. Real GDP does not include the value of intermediate goods and services. Real GDP includes such productive endeavors as housewife services and home repairs that are performed by households without payment. GDP reflects changes in prices as well as changes in output, while real GDP only reflects changes in output.

GDP reflects changes in prices as well as changes in output, while real GDP only reflects changes in output.

In evaluating an economy's performance over a period of years, real GDP provides a better measuring rod than GDP because GDP reflects changes in prices as well as changes in output. real GDP includes such productive endeavors as housewife services and home repairs that are performed by households without payment. real GDP is adjusted for the social and environmental costs of production, which are normally not compensated. GDP is distorted by its failure to show qualitative improvements in the products we manufacture.

GDP reflects changes in prices as well as changes in output.

In evaluating an economy's performance over a period of years, real GDP provides a better measuring rod than GDP because real GDP includes such productive endeavors as housewife services and home repairs that are performed by households without payment. GDP is distorted by its failure to show qualitative improvements in the products we manufacture. real GDP is adjusted for the social and environmental costs of production, which are normally not compensated. GDP reflects changes in prices as well as changes in output.

GDP reflects changes in prices as well as changes in output.

The total market value of a nation's aggregate production of final output based on current prices for the goods and services produced during a given year is called net national product. GDP. real GDP. national income.

GDP.

Value added in a nation equals the value of intermediate products. GDP. the value of investment goods. the difference between production and income.

GDP.

Which one of these is counted in GDP? The purchase of 100 shares of IBM The purchase of a used car Government spending on a NASA project to go to Venus The purchase of a 10-year-old office building

Government spending on a NASA project to go to Venus

Net domestic product is equal to the inflation rate. NI plus indirect business taxes. gross national product. national income (NI) plus corporate profits taxes.

NI plus indirect business taxes.

Which statement is true? GDP estimates the value of household and illegal production. Per capita real GDP is found by dividing population by real GDP. GDP tells us what we produce. International comparisons of per capita real GDP may be made with less caution than comparisons over time within a given country. None of the statements are true.

None of the statements are true.

Which of the following items would be included in GDP? Welfare payments. None of the choices would be included in GDP. Purchase of new military aircraft by the government. The value of domestic services provided by homemakers in the home.

Purchase of new military aircraft by the government.

If there is a recession, which of the following will decline? Nominal income GDP Government purchases Real GDP

Real GDP

From one year to the next suppose GDP rises and the GDP deflator falls between those years. Real GDP must have fallen. Real GDP must have remained the same. There is not enough information to determine whether real GDP rose, fell, or remained the same. Real GDP must have risen.

Real GDP must have risen.

Which of the following is an intermediate product? Bread A road A TV set Steel

Steel

For time series data, what is unique about a time period where real GDP equal nominal GDP? GDP = C + I + G + Xn A high rate of inflation exist The base year for the price index Exports exceed imports

The base year for the price index

Which of the following would NOT be included in this year's GDP? The commission charged by a real estate agent The replacement of a muffler on a 1978 Chevy The tuition fee for a course in economics The services of a hair stylist The purchase of 100 shares of Microsoft stock

The purchase of 100 shares of Microsoft stock

Which of the following exclusions from GDP suggests that GDP underestimates our material well-being? The increased stress and health problems caused by the modern pressures and demands of the work place The unreported sales of narcotics The unreported earnings of people who work off the books The environmental impacts of congestion and pollution

The unreported earnings of people who work off the books

For purposes of calculating GDP using the expenditure approach, which of the following is NOT included in the government expenditures account? The welfare payments made to the poor The payroll of the federal government The government's purchase of a computer The government's purchase of pencils

The welfare payments made to the poor

The increased participation of housewives in the labor force increases GDP because a greater share of their production is included in the market. does not change GDP because the value of housewives' activities does not contribute to economic well-being. does not change GDP because the value of housewives' activities is not included in GDP. increases GDP because the value of housewives' activities is not included in GDP.

increases GDP because a greater share of their production is included in the market.

What underlying factor causes the real GDP to be above the nominal GDP in early years of time series and below in the later years? decreases in the output of the economy decreasing price levels increasing price levels increases in average income

increasing price levels

When the Noodlemans purchase a new residential structure, investment rises by the purchase price. consumption rises by the purchase price. net exports fall. GDP is unaffected.

investment rises by the purchase price.

GDP is a less than perfect measure of economic well-being. It may be faulted for each of these practices except that it does not take leisure time into account. involves multiple counting. does not take psychic costs into account. does not take psychic income into account.

involves multiple counting.

Military goods purchased by the government are not included in GDP. measured in GDP only if the government sells these goods to another country. measured in GDP by how much their goods add to the economic well-being. measured in GDP by their cost of production

measured in GDP by their cost of production