Eco 2315 Test 2 Chapter 8

Refer to table 8-5. The value of each automobile is gross domestic product equals

$25,000

Refer to table 8-13. Nominal GDP for Vicuna for 2009 equals

$4,920

Refer to table 8-13. Real GDP for Vicuna for 2009 using 2011 as the base year equals

$5,650

In 2013, Kendall Ford, an automobile dealership, spent $20,000 on a new car lift for its repair shop, $2,000 on a new copy machine for its sales division, and $600,000 on Ford Motor company stock. Unsold cars and trucks were valued at $400,000 on January 1, 2013 and unsold cars and trucks were valued at $900,000 on December 31, 2013. What is Kendall Ford's total investment spending in 2013?

$522,000

Refer to table 8-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simply economy equals ______________

$6,400

An example of business fixed investment spending is _____________

A purchase of a computer by an accounting firm

An example of a transfer payment is

a welfare payment.

The nominal GPD for the U.S. in 2012 was approximately $16.2 trillion. This means that ________

all of the above are true

Investment spending includes spending on

changes in business inventories

The purchase of a new automobile is included in ________

consumption expenditures on durable goods

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

Which of the following headlines would be more closely related to what macroeconomusts study than what microeconomists study?

Real GDP grows by 2.3% in the second Quarter

Refer to table 8-16. Given the information above, what can we say has happened in the economy from 2012 to 2013?

The price level has risen

Legalizing all forms of illegal activities

increases GDP and reduces the size of the underground economy

The purchase of a new house is included in ________

investment expenditures.

If the quantity of goods and services produced in the economy decreases,

it may be possible for nominal GDP to increase

Value added equals the market price of the firm's product minus _______

the price of intermediate goods

Caroline is an artist. She purchases canvas, paints, brushes, and accessories for $75. She sells one of her original paintings to an art gallery for $1,500, even though an art lover would pay $4,500 for that painting. How much value does Caroline add?

$1,425

Refer to Table 8 4. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

$1,600

Refer to Table 8-5. The value added by the automobile dealer equals

$7,000

In a small economy, consumption spending in 2013 is $6,000, government spending is $1,200, gross investment is $1,500, exports are $2,000, and imports are $1,000. What is gross domestic product in 2013?

$9,700

Refer to table 8-18. What is the GDP deflator in 2013 if 2013 is the base year?

100

Refer to table 8-15.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2012 equals

106.2

A car that is produced in 2013 is not sold until 2014. According to the definition of GDP, in which year's GDP should it be counted?

2013

The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is

5% higher in year 2 than in year 1.

What is the largest component of spending in the United States

Consumption Spending

To calculate GDP by the expenditure method, one must add __________

Consumption spending, investment spending, government spending and net exports

Consumption spending is $4.5 billion, gross private domestic investment is $3 billion, and government expenditures are $2 billion. If GDP is $14 billion, which of the following could be true regarding exports and imports in the economy?

Exports are $15 billion, and imports are $10.5 billion.

During a business cycle expansion, total production ______ and total employment ______.

Increases; Increases

In the United States in 2013, the Bureau of Economic Analysis began counting spending on research and development as ________, which counts as a part of GDP.

Investment

In 2012, which component of GDP had a negative value

Net Exports

Home Depot sells new and used doors to contractors who build new homes. Home Depot also sells new and used doors to homeowners. Which of the following would be counted in GDP?

The sale of a new door to a home owner

Suppose in 2014, you purchase a house built in 2003. Which of the following would be included in the gross domestic product for 2014?

The value of the services of the real estate agent

How are intermediate goods treated in the calculation of GDP?

Their value is not counted separately, but included as part of the value of the final good for which they are an input.

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

Which of the following goods is directly in GDP?

a 12-inch subway sandwich purchased by a student

Real GDP will increase

only if the quantity of final goods and services produced rises.

The GDP deflator is the

ratio of nominal GDP to real GDP multiplied by 100

Gross domestic product is calculated by summing up _______

the total market value of final goods and services produced in the economy during a period of time