ECO 202 Quiz 10
Which of the following identities defines GDP using the product approach?
GDP = Business production + Household and institution production + Government production
Net national product is defined as
GDP minus depreciation
Which one of the following is NOT a sector in the Bureau of Economic Analysis' system of national accounts?
the service sector
The three methods for calculating GDP are
the spending approach, the income approach, and the product approach.
Consumer durable goods are those goods that are expected to last longer than
three years
A motor vehicle manufactured in the United States but sold in Europe would represent an addition to the gross domestic product of the United States.
true
In an open economy as measured in the system of national accounts, savings is equal to investment plus net exports.
true
In the traditional macro model investment is assumed to be done by the business sector.
true
Net national product is defined as GDP minus depreciation.
true
Taking the number 72 and dividing by an annual growth rate will give you approximately the number of years it will take for an amount to double if it grows at that constant rate.
true
The contribution of governments and non-profit institutions towards GDP is often calculated by imputation.
true
The foreign sector does not contribute to the gross domestic product using the product approach.
true
The identity used to represent the economy in the traditional macro model is Y = C + I + G + NX.
true
The three methods for calculating GDP are referred to as the income approach, the spending approach, and the product approach.
true
In the "traditional macroeconomic model" investment is assumed to be done by which sector?
Business sector
Suppose that an economy is growing at a real rate of 6% per year. About how long will it take for this economy to double in size?
12 years
Suppose that an economy is growing at a real rate of 3% per year. About how long will it take for this economy to double in size?
24 years
According to the text, what is the difference between a closed economy and an open economy?
A closed economy has no foreign sector while an open economy includes a foreign sector.
Which one of the following statements is FALSE?
A constant dollar approach to calculating real GDP yields a unique estimate of the growth rate.
Suppose that a small economy produces only one good. In Year 1 the economy's GDP is $500 and the price (per unit) of the good is $10. In Year 2 the economy's GDP is $600 but the price of the good is $12. Using the constant dollar method, what is the real GDP growth rate for this economy from Year 1 to Year 2?
0
Suppose nominal GDP in an economy is $11 trillion and real GDP is $10 trillion. What would be the implicit price deflator?
110
What is the main problem of a price index based on constant weights?
It fails to account for the potential for substitution as prices change.
Using the spending approach, which one of the following economic agents is responsible for the largest component of the gross domestic product of the United States?
Private households and institutions
What are the sectors used in the Bureau of Economic Analysis' system of national accounts?
The household and institutions, business, government, and foreign sectors
A nonprofit hospital in Chicago would be classified into which sector in the Bureau of Economic Analysis' system of national accounts?
The households and institutions sector
Which one of the following would, in principle, be counted in an estimate of the gross domestic product of the United States?
The value of a new CD you buy from a store.
The identity used to represent the economy in the traditional macro model is
Y = C + I + G + NX.
Using the product approach, which one of the following economic agents is the largest contributor to the gross domestic product of the United States?
businesses
The implicit price deflator is obtained by
dividing nominal GDP by real GDP.
A motor vehicle manufactured in Europe but sold in the United States would represent an addition to the gross domestic product of the United States.
false
A potential problem with price indices is that they tend to understate inflation for periods after the base year because they don't consider that prices tend to rise at different rates for different income groups.
false
Net national product is defined as GDP minus net exports
false
Suppose nominal GDP in an economy is $6 trillion and real GDP is $3 trillion. The implicit price deflator would be 30.
false
The U.S. Census Bureau is the government agency in charge of compiling the national accounts of the United States.
false
