chapter 23 mankiw/taylor
t/f: A new car produced in 2004, but first sold in 2005, should be counted in 2005 GDP because that is when it was first sold as a final good.
F
t/f: If a timber yard sells €1,000 of timber to a carpenter and the carpenter uses the timber to build a garage which he sells for €5,000, the contribution to GDP is €6,000.
F
t/f: If nominal GDP in 2005 exceeds nominal GDP in 2004, real output must have risen.
F
t/f: In the UK, investment is the largest component of GDP.
F
t/f: Net National Product always exceeds a nation's total income because of depreciation and taxes.
F
t/f: The production of an apple contributes more to GDP than the production of a gold ring because food is necessary for life itself.
F
t/f: Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker.
F
t/f: When the city council of Southampton purchases a new school building, the investment component of GDP increases.
F
t/f: A country with a larger GDP per person generally has a greater standard of living or quality of life than a country with a smaller GDP per person.
T
t/f: A recession occurs when real GDP declines.
T
t/f: Cigarettes should be valued in GDP at €7.50 per pack even though €5.00 of that price is tax because the buyers paid €7.50 per pack.
T
t/f: Depreciation is the value of the wear and tear on the economy's equipment and structures.
T
t/f: For an economy as a whole, income equals expenditure because the income of the seller must be equal to the expenditure of the buyer.
T
t/f: If UK GDP exceeds UK GNP, then foreigners produce more in the UK than UK citizens produce in the rest of the world.
T
t/f: Nominal GDP employs current prices to value output while real GDP employs constant base-year prices to value output.
T
How is your purchase of a €40,000 BMW automobile that was produced entirely in Germany recorded in the UK GDP accounts? a.Consumption increases by €40,000 and net exports decreases by €40,000. b.Net exports increases by €40,000. c.There is no impact because this transaction does not involve domestic production. d.Investment increases by €40,000 and net exports increases by €40,000. e.Net exports decreases by €40,000.
a.Consumption increases by €40,000 and net exports decreases by €40,000.
If your grandparents buy a newly built retirement home, this transaction would affect a.investment. b.net exports. c.government purchases. d.consumption. e.none of these answers.
a.investment.
GDP would include which of the following? a.the value of taking a day off from work b.consulting services c.intermediate sales d.illegal drug sales e.housework
b.consulting services
Gross Domestic Product can be measured as the sum of a.final goods and services, intermediate goods, transfer payments, and rent. b.consumption, investment, government purchases, and net exports. c.consumption, transfer payments, wages, and profits. d.Net National Product, Gross National Product, and Disposable personal income. e.investment, wages, profits, and intermediate production.
b.consumption, investment, government purchases, and net exports.
Gross Domestic Product is the sum of the market value of the a.intermediate goods. b.final goods and services. c.manufactured goods. d.inferior goods and services. e.normal goods and services.
b.final goods and services.
If UK GDP exceeds UK GNP, then a.intermediate production exceeds final production. b.foreigners are producing more in the UK than Britons are producing in foreign countries. c.real GNP exceeds nominal GNP. d.real GDP exceeds nominal GDP. e.Britons are producing more in foreign countries than foreigners are producing in the UK.
b.foreigners are producing more in the UK than Britons are producing in foreign countries.
UK GDP would exclude which of the following? a.Lawyer services purchased by a home buyer. b.The purchase of a new Nissan produced in Sunderland. c.Copper purchased by tap manufacturer Bristan. d.A new art gallery purchased by the city of Newcastle. e.Lawn care services purchased by a home owner.
c.Copper purchased by tap manufacturer Bristan.
An example of a transfer payment is a.profit. b.rent. c.unemployment benefits. d.government purchases. e.wages.
c.unemployment benefits.
Real GDP is measured in ________ prices while nominal GDP is measured in ________ prices. a.foreign; domestic b.current year; base year c.domestic; foreign d.base year; current year e.intermediate; final
d.base year; current year
The value of plant and equipment worn out in the process of manufacturing goods and services is measured by a.intermediate production. b.Net National Product. c.investment. d.depreciation. e.consumption.
d.depreciation.
If nominal GDP in 2005 exceeds nominal GDP in 2004, then the production of output a.must have fallen. b.must have risen. c.must have stayed the same. d.may have risen, fallen, or stayed the same because there is not enough information to determine what happened to real output.
d.may have risen, fallen, or stayed the same because there is not enough information to determine what happened to real output.
UK Gross Domestic Product (in contrast to Gross National Product) measures the production and income of a.British-owned firms no matter where they are located in the world. b.none of these answers. c.the domestic service sector only. d.people and factories located within the borders of the UK. e.the domestic manufacturing sector only.
d.people and factories located within the borders of the UK.
If a cobbler buys leather for €100 and thread for €50 and uses them to produce and sell €500 worth of shoes to consumers, the contribution to GDP is a.€50. b.€100. c.€650. d.€500. e.€600.
d.€500.
Which of the following would be excluded from UK GDP for 2005? The sale of a.a haircut. b.the value of a lawyer's services. c.a 2005 Honda made in Swindon. d.All of things mentioned in these answers should be counted in 2005 GDP. e.a home built in 2004 and first sold in 2005.
e.a home built in 2004 and first sold in 2005.