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

When there is a trade deficit, as a share of GDP, the sum of consumption, investment, and government purchases will be greater than 100 percent.

In 2015, the exports of the United States exceeded its imports.

The state of individual well-being affects the production of goods and services in the economy.

If you own and operate an antique store, this does not count in GDP because you are buying and selling used goods.

Refer to Exhibit 18-5. Suppose that real GDP increased 3 percent from 2015 to 2016 and increased 5 percent from 2016 to 2017. What was the average increase in real GDP from 2015 to 2017?

Which of the following statements is true about the GDP of the United States in 2015?

The CPI tends to overstate inflation because too little weight is placed on goods with rising prices and too much weight is placed on goods with falling prices.

In 2015, the United States imported more than it exported; therefore, the sum of consumption plus investment plus government purchases overstated what was produced in America.

The concept of value added refers to

The imports of the United States in 2010 were $20 million higher than its exports.

Total spending in the economy is divided into

If nominal GDP is $5 trillion, and the GDP price deflator is 1.25, what is real GDP?

You buy a new bed that was produced last year. GDP will increase this year by the value of the bed because the bed was sold this year.

Exhibit 18-8 -According to the economy described in Exhibit 18-8, if 2016 is the base year, what was the GDP deflator in 2017?

Answer the questions below:

National saving is the sum of private and government saving.

A reduction in the government budget deficit reduces national saving.