Macroeconomics chapter 7

25. Real GDP refers to:

GDP data that have been adjusted for changes in the price level (aka inflation).

4. Suppose the total monetary value of all final goods and services produced in a particular country in 2010 is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that:

GDP in 2010 is $500 billion.

39. Assume that the size of the underground economy increases both absolutely and relatively over time. As a result:

GDP will tend to increasingly understate the level of output through time.

27. If real GDP falls from one period to another, we can conclude that:

None of these necessarily occurred.

11. Net exports are negative when:

a nation's imports exceed its exports

12. Suppose that inventories were $40 billion in 2007 and $50 billion in 2008. In 2008, accountants would:

add $10 billion to other elements of investment in calculating total investment.

10. In national income accounting, consumption expenditures include:

consumer durable goods, consumer nondurable goods, and services.

9. GDP can be calculated by summing:

consumption, investment, government purchases, and net exports.

14. The smallest component of aggregate spending in the United States is:

net exports.

31. If real disposable income fell during a particular year, we can conclude that:

none of these necessarily occurred.

15. In national income accounting, government purchases include:

purchases by Federal, state, and local governments.

37. The growth of GDP may understate changes in the economy's economic well-being over time if the:

quality of products and services improves.

16. The value of U.S. imports is:

subtracted from exports when calculating GDP because imports do not constitute production in the United States.

30. Historically, real GDP has increased less rapidly than nominal GDP because:

the general price level has increased.

36. GDP excludes:

the market value of unpaid work in the home.

35.The GDP tends to:

understate economic welfare because it does not take into account increases in leisure.

34. A large underground economy results in an:

understated GDP.

3. GDP is the:

. monetary value of all final goods and services produced within the borders of a nation in a particular year.

2. A nation's gross domestic product (GDP):

can be found by summing C + Ig + G + Xn.

1. The National Income and Product Accounts (NIPA) help economists and policymakers to:

follow the long-run course of the economy to determine whether it has grown or stagnated.

33. Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?

goods and services produced in the underground economy