Macro Ch 10
Gross domestic product can be measured as the sum of A. Consumption, investment, government purchases, and net exports B. Consumption, transfer payments, wages, and profits C. Investment, wages, profits, intermediate production D. Final goods and services, intermediate goods, transfer payments, and rent E. Net national product, gross national product, and disposable personal income
A. Consumption, investment, government purchases, and net exports
If U.S. GDP exceeds U.S. GNP, then A. Foreigners are producing more in the United States than Americans are producing in foreign countries B. Americans producing more foreign countries than foreigners are producing in the United States C. Real GDP exceeds nominal GDP D. Real GNP exceeds nominal GNP E. Intermediate production exceeds final production
A. Foreigners are producing more in the United States than Americans are producing in foreign countries
Real GDP is measured in _____ prices while nominal GDP is measured in ____ prices. A. current year; base year B. Base year; current year C. Intermediate; final D. Domestic; foreign E. Foreign; domestic
B. Base year; current year
How is your purchase of a $40,000 BMW automobile that was produced entirely in Germany recorded in the U.S. GDP accounts? A. Investment increases by $40,000, and net exports increase by $40,000 B. Consumption increases by $40,000, and net exports increase by $40,000 C. Net exports decrease by $40,000 D. Net exports increase by $40,000 E. There is no impact because this transaction does not involve domestic production
B. Consumption increases by $40,000, and net exports increase by $40,000
The value of plant and equipment worn out in the process of manufacturing goods and services is measured by A. Consumption B. Depreciation C. Net national product D. Investment E. Intermediate production
B. Depreciation
If your grandparents buy a new retirement home, this transaction would affect A. Consumption B. Investment C. Government purchases D. Net exports E. None of the above
B. Investment
U.S. gross domestic product (in contrast to gross national product) measures the production and income of A. Americans and their factories no matter where they are located in the world B. People and factories located within the borders of the United States C. The domestic service sector only D. The domestic manufacturing sector only E. None of the above
B. People and factories located within the borders of the United States
If a Conner buys leather for $100 and thread for $50 and uses them to produce and sell $500 worth of shoes to consumers, the contribution to GDP is A. $50 B. $100 C. $500 D. $600 E. $650
C. $500
Which of the following would be excluded from 2013 GDP? The sale of A. A 2013 Honda made in Tennessee B. A haircut C. A realtor's services D. A home built in 2012 and first sold in 2013 E. All of the above should be counted in 2013 GDP
D. A home built in 2012 and first sold in 2013
GDP would include which of the following? A. Housework B. Illegal drug sales C. Intermediate sales D. Consulting services E. The value of taking a day off from work
D. Consulting services
U.S. GDP would exclude which of the following? A. Lawyer services purchased by a home buyer B. Lawn care services purchased by a homeowner C. A new bridge purchased by the state of Texas D. Cotton purchased by Lee Jeans E. The purchase of a new Mazda produced in Illinois
D. Cotton purchased by Lee Jeans
If nominal GDP in 2013 exceeds nominal GDP in 2012, then the production of output must have A. Risen B. Fallen C. Stay the same D. Risen or fallen because there is not enough information to determine what happened to real output
D. Risen or fallen because there is not enough information
Gross domestic product is the sum of the market value of the A. Intermediate goods B. Manufactured goods C. Normal goods and services D. Inferior goods and services E. Final goods and services
E. Final goods and services
An example of a transfer payment is A. Wages B. Profit C. Rent D. Government purchases E. Unemployment benefits
E. Unemployment benefits
A measure of the price level calculated as the ratio of nominal GDP to real GDP then multiplied by 100
GDP deflator
The year from which prices are used to measure real GDP
base year
Spending by households on goods and services, excluding new housing
consumption
Value of worn-out equipment and structures
depreciation
Net national product always exceeds a nation's GNP because of depreciation
false; GNP - depreciation = NNP
In the United States, investment is the largest component of GDP
false; consumption is the largest component of GDP
the production of an apple contributes more GDP than the production of a gold ring because food is necessary for life itself
false; contribution is based on market value
A new car produced in 2012, but first sold in 2013, should be counted in 2013 GDP because that is when it was first sold as a final good
false; goods are counted in the year produced
If nominal GDP in 2013 exceeds nominal GDP in 2012, real output must have risen
false; prices or real output could have risen
If the lumberyard sells $1000 of lumber to a carpenter and the carpenter uses the lumber to build a garage that he sells for $5,000, contribution to GDP is $6,000
false; the garage is the final good, valued at $5,000
When the city of Chicago purchases a new school building, the investment component of GDP increases
false; the purchase is included in government purchases
Wages are an example of a transfer payment because there is a transfer of payment from the firm to the worker
false; transfer payments are expenditures for which no good or service is received in return
Finished products sold to the end user
final production
Spending on goods and services by all levels of government
government purchases
Market value of all final goods and services produced within a country in a given period of time Measured by Bureau of Economic Analysis
gross domestic product
market value of all final goods and services produced by a nation's residents in a given period of time
gross national product
The rate at which prices are rising
inflation
Goods that are are produced by one firm to be further processed by another firm
intermediate production
Spending on capital equipment, inventories, and structures, including household purchases of new housing
investment
The study of economy-wide phenomena
macroeconomics
The study of how households and firms make decisions and how they interact in markets
microeconomics
Spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
net exports
The production of goods and services valued at current prices
nominal GDP
The production of goods and services valued at base-year prices
real GDP
Period of decline in GDP
recession
Consumption, investment, government purchases, and net exports
total expenditure
Wages, rent, and profit
total income
Expenditures by government for which they receive no goods and services
transfer payment
A country with a larger GDP per person generally has a greater standard of living or quality of life than a country with a smaller GDP per person
true
A recession occurs when real GDP declines
true
Cigarettes should be valued in GDP at $5.50 per pack even though $1.00 of that price is tax because the buyers paid $5.50 per pack
true
Depreciation is the value of the wear and tear on the economy's equipment and structures
true
For an economy as a whole, income equals expenditure because the income of the seller must be equal to the expenditure of the buyer
true
If U.S. GDP exceeds U.S. GNP, the. Foreigners produce more in the United States than U.S. citizens produce in the rest of the world
true
Nominal GDP employs current prices to value output while real GDP employs constant base-year prices to value output
true
Percent of the labor force that is out of work
unemployment