econ chptr 6

Which of the following is included in both the U.S. GDP and GNP? A) The value of all cars produced by Ford in Mexico. B) The value of all cars produced by General Motors in the U.S. C) The value of all cars produced by Toyota in the U.S. D) The value of cars produced by Nissan in Japan and the U.S.

B

Depreciation is A) the decrease in the overall price level. B) the additional capital stock in a year. C) the amount of used up machinery in a year. D) the amount of decline in business inventories.

C

Gross domestic product measured in terms of the prices of a fixed, or base, year is A) current GDP. B) base GDP. C) real GDP. D) nominal GDP.

C

If net investment is zero, then A) gross investment is greater than depreciation. B) gross investment is less than depreciation. C) gross investment equals depreciation. D) depreciation is zero.

C

If real GDP in 2007 using 2006 prices is lower than nominal GDP of 2007, then A) prices in 2007 are lower than prices in 2006. B) nominal GDP in 2007 equals nominal GDP in 2006. C) prices in 2007 are higher than prices in 2006. D) real GDP in 2007 is larger than real GDP in 2006.

C

In 2007, GDP was exactly equal to final sales. This implies that A) there was accumulation of inventories that year. B) there was a decline in inventories that year. C) there was no change in inventories that year. D) GDP did not grow that year compared to the year before.

C

Net investment equals A) GDP minus final sales. B) gross investment minus final sales. C) gross investment minus depreciation. D) depreciation plus GDP.

C

Personal income is national income minus A) depreciation. B) net factor income to the rest of the world. C) the amount of national income not going to households. D) imports.

C

Real GDP is gross domestic product measured A) at a constant output level but at current prices. B) in current dollars. C) in the prices of a base year. D) as the difference between the current yearʹs GDP and last yearʹs GDP.

C

The GDP deflator is the A) difference between real GDP and nominal GDP multiplied by 100. B) difference between nominal GDP and real GDP multiplied by 100. C) ratio of nominal GDP to real GDP multiplied by 100. D) ratio of real GDP to nominal GDP multiplied by 100.

C

The single largest expenditure component in GDP is A) government spending. B) investment. C) consumption. D) net exports.

C

What type of tax affects the amount of money you pay for a product? A) direct tax B) income tax C) indirect tax D) all of the above

C

Which of the following is NOT counted in the GNP of the United States? A) The wage of a U.S. citizen who works in a foreign country for a foreign firm. B) The interest earned by a U.S. bank on loans to a business firm located in Brazil. C) The profit earned by a restaurant located in the United States but owned by a Mexican company. D) The value of services that are produced by state and local governments in the United States.

C

Which of the following is a good or service counted in GDP? A) tires Ford buys to put on a car B) a used tire you buy for your personal car C) a new tire you buy for your personal car D) used tires bought by a used car dealer to put on a car on his lot

C

If no foreign companies produce in a country, but many of the countryʹs companies produce abroad, then A) the countryʹs GNP will tend to exceed its GDP. B) the countryʹs GDP will tend to exceed its GNP. C) the countryʹs GNP and GDP will tend to be equal. D) the countryʹs GDP will tend to be equal to its domestic income.

A

If real GDP in 2008 using 2007 prices is higher than nominal GDP of 2008, then A) prices in 2008 are lower than prices in the base year. B) nominal GDP in 2008 equals nominal GDP in 2007. C) prices in 2008 are higher than prices in the base year. D) real GDP in 2008 is larger than real GDP in 2007.

A

Profits earned in the United States by foreign-owned companies are included in A) the U.S. GDP but not GNP. B) neither the U.S. GDP nor GNP. C) the U.S. GNP but not GDP. D) both the U.S. GDP and GNP.

A

The base year of an index is A) the year chosen for the weights in a fixed weight procedure. B) the year currently being calculated. C) the last year of the index. D) the first year of the index.

A

The total market value of all final goods and services produced within a given period by factors of production located within a country is A) gross domestic product. B) gross national product. C) net national product. D) net national income.

A

Double counting can be avoided by A) including the value of intermediate goods in the current year. B) not counting the value of intermediate goods in GDP. C) including the value of intermediate goods in the GNP but not in the GDP. D) including the value of intermediate goods in the production year but not in the selling year of those goods.

B

If in a year there is a positive inventory investment, then final sales A) exceed GDP. B) are less than GDP. C) equal GDP. D) are zero.

B

Income Mexican citizens earn in the U.S. counts in A) U.S. GNP. B) Mexican GNP. C) Mexican GDP. D) both U.S. and Mexican GDP.

B

Legalizing all forms of illegal activities would A) reduce measured GDP. B) reduce the size of the underground economy and increase measured GDP. C) reduce both the underground economy and measured GDP. D) increase the size of the underground economy and reduce measured GDP.

B

Nominal GDP measures the value of all goods and services A) in constant dollars. B) in current dollars. C) in fixed dollars. D) without inflation.

B

The GDP includes A) the value of all intermediate goods and services. B) the value of all final goods and services. C) the value of both intermediate and final goods and services. D) the value of all transactions.

B

GDP is not a perfect measure of social welfare and the societyʹs economic well-being because A) it does not say anything about the distribution of income. B) GDP accounting rules do not adjust for production that causes negative externalities. C) it does not include all economic activities in the economy. D) all of the above

D

Gross domestic product measures A) the total spending of everyone in the economy. B) the value of all output in the economy. C) the total income of everyone in the economy. D) all of the above

D

Gross national product is the total market value of A) all final and intermediate goods and service produced by resources owned by a country in a given year. B) all final and intermediate goods and services produced in a country, regardless of who owns the resources. C) all final goods and services produced in a country in a given year, regardless of who owns the resources. D) all final goods and services produced by resources owned by a country, regardless of where production takes place.

D

If the change in business inventories is zero, then final sales are A) zero. B) less than GDP. C) greater than GDP. D) equal to GDP.

D

The personal saving rate is A) the difference between total personal spending and personal saving. B) the difference between personal income and disposable personal income. C) the ratio of personal income to personal saving. D) the percentage of disposable personal income that is saved.

D

The total value of all capital goods newly produced in a given period is A) the change in business inventories. B) depreciation. C) net investment. D) gross investment.

D