Econ 102 exam 2 Amani Chapter 4

26. Use the information in the table above to calculate the value of net exports

$10 million

50. Real GDP in 2015 is $10 trillion. Between 2015 and 2016, using 2015 prices, GDP grew 3 percent and using 2016 prices real GDP grew 7 percent. Using the chain-weighted output index method of calculating chained-dollar real GDP, real GDP in 2016 is ________ trillion.

$10.5

22. Last year in the country of Nerf imports equaled exports. Nerf's GDP was $500 million, its consumer expenditure was $380 million, and its investment was $20 million. Nerf's government expenditure on goods and services were ________.

$100 million

21. Using the information in the table above, calculate the value of GDP.

$140 million

20. The above table shows some national income accounting data for a nation. In this nation, gross domestic product is equal to ________ billion.

$2,800

19. Using the data in the above table, gross domestic product as calculated by the income approach equals ________.

$2,925

27. The above table shows some (but not all) national income accounting data for a hypothetical country. According to these data, the value of GDP is ________ billion.

$2100

25. The above table gives data for a hypothetical nation. Gross domestic product is

$4,079 billion

46. Using the data in the above table, gross private domestic investment equals

$460.

45. Using the information in the table above, depreciation equals

$90 billion.

28. Using the information in the table above, net exports equals

-$70 billion

2. GDP equals

A) aggregate income. B) aggregate expenditure. C) the value of the aggregate production in a country during a given time period all of the above.

6. Gross domestic product is the

A) total amount that buyers spent on the final goods and services produced in a country during a specific time. B) total amount of income earned in producing the final goods and services in a country during a specific time. C) value of the final goods and services produced in a country during a specific time. D) All of the above answers are correct.

________ refers to a period when the ________ decreases.

Productivity growth slowdown; growth rate of output per person

Which of the following is NOT a reason that real GDP is a poor measure of a nation's economic welfare?

Real GDP overvalues household production

30. Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts?

Social Security expenditures

Which of the following is NOT part of GDP calculated using the expenditure approach?

Social Security payments made to the elderly

If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 BMWs for a total of $500,000 from Germany

U.S. GDP decreases because net exports are negative.

If an American firm produces goods that are sold to a German household, then

U.S. GDP increases.

36. A common definition of a recession is a time with

a decrease in real GDP for two or more successive quarters.

4. An example of "investment" in computing real GDP using the expenditure approach is the purchase of

a new set of tools by an auto mechanic, for use in repairing cars.

42. In the above figure, the distance between points S and T represents

a recession

44. The use of purchasing power parity prices

accounts for differences in the prices of the same goods in different countries when measuring real GDP

24. In the country of Darrowby, net domestic income at factor cost is $2.0 million. Gross domestic product is $3.0 million, and depreciation is $0.5 million. Indirect taxes less subsidies ________.

are $0.5 million

Reported GDP increases when, in fact, total production is unchanged when

both I and II

48. The chain-weighted output index method of calculating chained-dollar real GDP compares

compares the quantities of goods produced in consecutive years using prices in both years and averaging the percentage changes in the value of output

8. Gross investment equals net investment plus

depreciation.

Gross domestic product is a measure of the total value of all

final goods and services produced in an economy over a period of time.

38. Real GDP

fluctuates around potential GDP.

In the calculation of gross domestic product by the expenditure approach, the "investment" component is

gross investment.

In the above figure, flow B represents ________.

household purchases of goods and services

If Frito Lay, an American snack company, opens a new manufacturing facility in Mexico and produces snacks which are distributed in South America, then Mexico's GDP ________ and U.S. GDP ________.

increases; does not change

Gross domestic product is the total ________ produced within a country in a given time period.

market value of all final goods and services

16. A new 2015 Honda Civic produced in 2015 and purchased in 2016 is

part of GDP in 2015.

18. Gross private domestic investment is all purchases of newly produced business capital goods and buildings

plus the change in business inventories plus residential construction

40. In the above figure, which point represents the under use of resources?

point G

The relationship between real GDP and potential GDP is that

real GDP fluctuates about potential GDP

34. The four parts of the business cycle occur in the following order

recession, trough, expansion, peak.

10. Transfer payments

refer to payments made by the government that are not made to purchase a good or service

Real GDP decreases during

the movement from peak to trough.

When calculating GDP, underground economic activity is

the part of the economy purposely hidden.

32. A business cycle is

the pattern of short-run upward and downward movements in total output.

GDP can be computed as the sum of

the total expenditures of consumption, investment, government expenditure on goods and services, and net exports over a period of time.

Intermediate goods are excluded from GDP because

their inclusion would involve double counting.

12. Transfer payments are not included in GDP because

they are not purchases of goods or services.

14. Net investment is the

total amount of gross investment minus depreciation.

In the computation of GDP, Social Security payments count as

transfer payments and are not included in GDP.

the chain-weighted output index (method of calculating chained-dollar Real GDP)

uses prices for the current year and the previous year to calculate growth in real GDP.

The chain-weighted output index method (of calculating chained-dollar real GDP) ________.

uses the prices of two adjacent years to calculate the real GDP growth rate

Recessions are commonly defined to occur

when growth in real GDP is negative for two consecutive quarters.