Exam 18: Measuring the Production, Income, and Spending of Nations

In which spending category would you enter the following transaction if you were trying to calculate U.S. GDP? "People in France flock to see the latest Brad Pitt movie that was produced in Hollywood."

National saving is defined as

Transfer payments

In which spending category would you enter the following transaction? Company A successfully launches a hostile takeover of Company B, in which it purchases all the assets of Company B.

The spending approach to calculating GDP is the only approach in which double counting needs to be avoided.

Assume a simple economy with no government and no foreign trade. The firm produces 100 units of output, sells 80 to consumers for a price of $1, and adds the remaining 20 to its inventory at a price of $0.75. Each unit costs $0.75 to produce, which is equal to the labor cost. There are no other costs associated with production.

Exhibit 18-6 Multiple Choice -According to the data in Exhibit 18-6, using 2016 as the base year, prices rose

Which of the following statements about dissaving is the most accurate?

One trillion is equal to 1 million millions, or 1,000,000,000,000.

Exhibit 18-5 -According to the data in Exhibit 18-5, nominal GDP in 2016 equaled

Which of the following is the correct ordering if we want to rank the four spending components, as a share of U.S. GDP in 2015, in descending (from highest to lowest) order?

If net exports are negative, spending by households, firms, and government must be greater than the income people earn in producing GDP.

All of the following are approaches for calculating GDP EXCEPT

In 2015, the imports of the United States were $516 billion higher than its exports.

Which of the following statements is false?

Which of the following best describes what is meant by the term underground economy?

Net exports are

Answer the questions below:

If we calculate GDP by adding the dollars of all goods that buyers pay, we make an error as a result of

If inventories increase in a given year, they should be added in when calculating GDP.