econ chapter 7
the GDP would be overstated.
If intermediate goods and services were included in GDP:
real GDP may either rise or fall.
If nominal GDP rises:
not counted.
In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are:
add increases in inventories or subtract decreases in inventories.
In calculating the GDP, national income accountants:
the price level may change over time.
In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because:
the price level rose by more than nominal GDP.
In the second quarter (three-month period) of 2001, U.S. nominal GDP increased but U.S. real GDP declined. We can conclude that:
Increase it
In the short run, how will an increase in C, I, G causing an increase in aggregate demand likely affect real GDP?
add exports, but subtract imports, in calculating GDP.
In the treatment of U.S. exports and imports, national income accountants:
Peter buys a newly constructed house.
Which of the following transactions would be included in GDP?
current output at base year prices.
Real GDP measures:
GDP. B. PI. C. DI. D.none of these.
Environmental pollution is accounted for in:
goods and services purchased by ultimate users, rather than for resale or further processing.
Final goods and services refer to:
the market value of unpaid work in the home.
GDP excludes:
monetary value of all final goods and services produced within the borders of a nation in a particular year.
GDP is the:
government consumption goods and public capital goods.
Government purchases include government spending on:
Government construction of new highways and dams
Gross domestic private investment, as defined in national income accounts, would include the following, except:
None of these necessarily occurred.
If real GDP falls from one period to another, we can conclude that:
GDP price index.
In determining real GDP, economists adjust the nominal GDP by using the:
Gross domestic private investment
Money spent on the purchase of a new house is included in the GDP as a part of:
only counting final goods.
National income accountants can avoid multiple counting by:
any increase in business inventories.
National income accountants define investment to include:
a nation's imports exceed its exports.
Net exports are negative when:
exports less imports.
Net exports are:
the GDP price index.
Nominal GDP is adjusted for price changes through the use of:
the sum of all monetary transactions involving final goods and services that occur in the economy in a year.
Nominal GDP is:
$12 trillion
Over a five year period nominal GDP increased from $10 trillion to $15 trillion, while the GDP price index increased from 100 to 125. Approximately how much is GDP in year five, stated in terms of year-one dollars? (what is real GDP year 1 as base year)
the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.
Real GDP is:
GDP data that have been adjusted for changes in the price level.
Real GDP refers to:
We need more information to determine whether GDP has changed.
Suppose Smith pays $100 to Jones
GDP in 2010 is $500 billion
Suppose the total monetary value of all final goods and services produced in a particular country in 2010 is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that:
understate economic welfare because it does not take into account increases in leisure.
The GDP tends to:
suggests that the general price level has risen.
The fact that nominal GDP has risen faster than real GDP:
quality of products and services improves.
The growth of GDP may understate changes in the economy's economic well-being over time if the:
subtracted from exports when calculating GDP because imports do not constitute production in the United States.
The value of U.S. imports is:
Excluded from the calculation of GDP because they make no contribution to current production of goods and services
The value of corporate stocks and bonds traded in a given year is:
productive but is excluded from GDP because no market transaction occurs.
Tom Atoe grows fruits and vegetables for home consumption. This activity is:
excluded when calculating GDP because they do not reflect current production.
Transfer payments are:
Goods and services produced in the underground economy.
Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?
The child-care services provided by stay-at-home parents.
Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?
tax cuts increase disposable income, which leads to higher national income and additional consumer spending
Which of the following best explains why a $7 billion tax cut can lead to a $9 billion increase in consumer spending in the short run
The purchase of a new house.
Which of the following do national income accountants consider to be investment?
A haircut purchased by a father for his 12 year-old son.
Which of the following is a final good or service?
building a new factory
Which of the following is classified as investment in national income (GDP) accounting?
a household rents a condominium during a vacation
Which of the following is included in gross domestic product (GDP)? Assume the following transactions occur with in the US
The purchase of 100 shares of AT&T by a retired business executive
Which of the following is not economic investment?
Purchases of mutual funds by consumers
Which of the following is not included in personal consumption expenditures?
A fishing-company owner buys new fishing gear
Which would be considered an investment according to economists?
understated GDP.
A large underground economy results in an:
can be found by summing C + Ig + G + Xn
A nation's gross domestic product (GDP):
is the dollar value of all final output produced within the borders of the nation during a specific period of time.
A nation's gross domestic product (GDP):
a comparison of the current price of a market basket to a fixed point of reference.
A price index is:
$1,200.
Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for $700. Donita sells the dresses for $1,200 to kids attending the prom. The total contribution to GDP of this series of transactions is:
GDP will tend to increasingly understate the level of output through time.
Assume that the size of the underground economy increases both absolutely and relatively over time. As a result:
More than they sell, and the inventory increase is added to GDP
Business inventories increase when firms produce: