ECON !20: Chapter 25:
If the government increases transfer payments, what happens to aggregate output?
Aggregate output would remain the same.
Suppose we have the following information: Real GDP 2019: $23 trillion Nominal GDP 2020: $25 trillion GDP deflator (2020): 105 What was the real GDP growth rate in 2020?
3.52%
Nominal GDP (2025): 30 trillion GDP Deflator (2025): 106 Nominal GDP (2026): 31.5 trillion GDP Deflator (2026): 107.5 Based on the information above, what was the real GDP growth rate in 2026? 5.65%
3.53%
A firm buys $1,000 worth of steel and $20,000 worth of electronics and uses them to produce 2 rockets that sell for $60,000 each, for a total of $120,000. The firm's value added is:
99,000
If you add up all the transactions in an economy, do you arrive at GDP, GNP, or something else?
Something else.
Suppose have the following information concerning the Nominal GDP and GDP deflator for 2020: Nominal GDP: $25 trillion GDP deflator: 110 What was real GDP in 2020?
$22.73 trillion
Suppose the U.S. ships soybeans to China that cost $50 billion, while the Chinese ship electronics that cost $150 billion. Based solely on these transactions what is the amount of net exports added to GDP?
-$100 billion
If a $10,000 tax refund is mailed to your mother how much has been added to GDP
0
Suppose that we have the following information about the value of the Consumer Price Index (CPI): CPI 2018: 100 CPI 2019: 113 CPI 2020: 126 What was the rate of inflation in 2019? 11.5%
13%
Which of the following best describes stock and flow concepts?
A stock concept is an amount of something at a given point in time, whereas a flow concept has a time period associated with it. Wealth is a stock; GDP is a flow.
An example of an intermediate good or service is: A social security payment by the government.
An example of an intermediate good or service is: A social security payment by the government.
Economists normally talk about GDP even though they know NDP is a better measure of economic activity. Why?
Because NDP accounts for depreciation, but measuring depreciation is difficult because asset values fluctuate.
Suppose that a government worker gets a paycheck from the government and spends the money on a meal at a restaurant. What category of GDP is the spending on the meal included in?
Consumption
What expenditure category of production is largest for most countries?
Consumption.
Why is net investment not included in GDP, while gross investment is included in GDP?
Depreciation is difficult to calculate, thus gross investment is included in GDP.
What is the largest component of aggregate income for most countries?
Employee compensation.
State whether the following actions will increase or decrease GDP: b.. An individual sells her house on her own.
GDP will not change
State whether the following actions will increase or decrease GDP: d. Government increases Social Security payments.
GDP will not change .
State whether the following actions will increase or decrease GDP: c. An individual sells his house through a broker.
GDP will rise
State whether the following actions will increase or decrease GDP: e. Stock prices rise by 20 percent.
GDP will rise
Which category generally has the greatest weight in the CPI-U? Apparel
Housing
What is the GDP deflator used for?
It is used to deflate nominal GDP and remove inflation to calculate the real GDP growth rate.
What is gross domestic product (GDP) measuring?
It measures the total amount of new production of goods and services in a given amount of time
Suppose that the total volume of nominal final sales in the economy grew by 40%, and someone states that the economy grew by 40%. What is wrong with this statement?
We are not given any information about the change in the prices. Thus we don't know what portion of the increase in nominal sales is due to price increases or quantity increases.
How do wealth accounts differ from national income accounts?
Wealth accounts are stock measures; national income accounts are flow measures
