Question 1

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

Accepted Answer

A)  produce goods and services no one wants. 
B)  sell their goods and services to citizens in other countries. 
C)  do not pay taxes to the government. 
D)  employ illegal immigrants from other countries. 
A)  produce goods and services no one wants. 
B)  sell their goods and services to citizens in other countries. 
C)  do not pay taxes to the government. 
D)  employ illegal immigrants from other countries.

Question 2

If an American firm opens a production facility in India,the total value of the production will be included in the

Accepted Answer

A)  gross domestic product of the United States. 
B)  national income of the United States. 
C)  gross domestic product of India. 
D)  national income of India. 
A)  gross domestic product of the United States. 
B)  national income of the United States. 
C)  gross domestic product of India. 
D)  national income of India.

Question 3

Which of the following could cause nominal GDP to decrease,but real GDP to increase?

Accepted Answer

A)  The price level rises and the quantity of final goods and services produced rises. 
B)  The price level falls and the quantity of final goods and services produced rises. 
C)  The price level rises and the quantity of final goods and services produced falls. 
D)  The price level falls and the quantity of final goods and services produced falls. 
A)  The price level rises and the quantity of final goods and services produced rises. 
B)  The price level falls and the quantity of final goods and services produced rises. 
C)  The price level rises and the quantity of final goods and services produced falls. 
D)  The price level falls and the quantity of final goods and services produced falls.

Question 4

The Philippines and Vietnam have roughly the same size population.Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion.You should conclude

Accepted Answer

A)  a typical person in Vietnam is 10 times as well off as the typical person in the Philippines. 
B)  a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. 
C)  a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines. 
D)  it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information. 
A)  a typical person in Vietnam is 10 times as well off as the typical person in the Philippines. 
B)  a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. 
C)  a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines. 
D)  it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information.

Question 5

Which of the following statements about the underground economy is true?

Accepted Answer

A)  The underground economy in developing countries amounts to less than 10% of measured GDP. 
B)  Most transactions that occur in the underground economy are included in the calculation of GDP. 
C)  Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run. 
D)  Income that is earned but not reported as income for tax purposes is included in the calculation of GDP. 
A)  The underground economy in developing countries amounts to less than 10% of measured GDP. 
B)  Most transactions that occur in the underground economy are included in the calculation of GDP. 
C)  Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run. 
D)  Income that is earned but not reported as income for tax purposes is included in the calculation of GDP.

Question 6

Which of the following transactions represents the purchase of a final good?

Accepted Answer

A)  Starbucks purchases coffee beans. 
B)  Delta buys a new European-made jetliner. 
C)  Apple computer buys computer processors from Intel. 
D)  Your father buys a new John Deere riding lawn mower. 
A)  Starbucks purchases coffee beans. 
B)  Delta buys a new European-made jetliner. 
C)  Apple computer buys computer processors from Intel. 
D)  Your father buys a new John Deere riding lawn mower.

Question 7

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

Accepted Answer

A) True 
 B)False

Question 8

The size of the underground economy would tend to increase if the government of a country

Accepted Answer

A)  decreased government regulations on businesses. 
B)  increased income tax rates. 
C)  legalized prostitution. 
D)  legalized marijuana. 
A)  decreased government regulations on businesses. 
B)  increased income tax rates. 
C)  legalized prostitution. 
D)  legalized marijuana.

Question 9

The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.

Accepted Answer

A)  equals 
B)  is greater than 
C)  is less than 
D)  is sometimes greater than and other times less than 
A)  equals 
B)  is greater than 
C)  is less than 
D)  is sometimes greater than and other times less than

Question 10

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements.This will

Accepted Answer

A)  increase GDP and increase well being in the economy. 
B)  increase GDP and decrease well being in the economy. 
C)  decrease GDP and increase well being in the economy. 
D)  decrease GDP and decrease well being in the economy. 
A)  increase GDP and increase well being in the economy. 
B)  increase GDP and decrease well being in the economy. 
C)  decrease GDP and increase well being in the economy. 
D)  decrease GDP and decrease well being in the economy.

Question 11

Gross domestic product understates the total production of final goods and services because of the omission of

Accepted Answer

A)  the underground economy. 
B)  intermediate goods. 
C)  inflation. 
D)  exports. 
A)  the underground economy. 
B)  intermediate goods. 
C)  inflation. 
D)  exports.

Question 12

High-income countries such as the United States spend a greater amount on services as compared to goods.

Accepted Answer

A) True 
 B)False

Question 13

Table 19-13
  
-Refer to Table 19-13.Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2011,using 2009 as the base year.Show your work.

Accepted Answer

Nominal GDP for 2011 equals (2

Question 14

The purchase of a new automobile is included in

Accepted Answer

A)  consumption expenditures on services. 
B)  consumption expenditures on nondurable goods. 
C)  consumption expenditures on durable goods. 
D)  investment expenditures. 
A)  consumption expenditures on services. 
B)  consumption expenditures on nondurable goods. 
C)  consumption expenditures on durable goods. 
D)  investment expenditures.

Question 15

Table 19-12
  
-Refer to Table 19-12.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2010 equals

Accepted Answer

A)  94.1. 
B)  105.1. 
C)  106.2. 
D)  108.5. 
A)  94.1. 
B)  105.1. 
C)  106.2. 
D)  108.5.

Question 16

The GDP deflator in year 2 is 105,using year 1 as the base year.This means that,on average,the cost of goods and services is

Accepted Answer

A)  5% higher in year 2 than in year 1. 
B)  105% higher in year 2 than in year 1. 
C)  5% higher in year 1 than in year 2. 
D)  105% higher in year 1 than in year 2. 
A)  5% higher in year 2 than in year 1. 
B)  105% higher in year 2 than in year 1. 
C)  5% higher in year 1 than in year 2. 
D)  105% higher in year 1 than in year 2.

Question 17

When consumers are less confident about their jobs or incomes,they are more likely to

Accepted Answer

A)  reduce purchases of durable goods than nondurable goods. 
B)  reduce purchases of nondurable goods and increase purchases of durable goods. 
C)  increase investment spending and decrease consumption spending. 
D)  increase consumption spending and decrease investment spending. 
A)  reduce purchases of durable goods than nondurable goods. 
B)  reduce purchases of nondurable goods and increase purchases of durable goods. 
C)  increase investment spending and decrease consumption spending. 
D)  increase consumption spending and decrease investment spending.

Question 18

Real GDP will increase

Accepted Answer

A)  only if the price level rises. 
B)  only if the price level falls. 
C)  only if the quantity of final goods and services produced rises. 
D)  if either the price level rises or the quantity of final goods and services produced rises. 
A)  only if the price level rises. 
B)  only if the price level falls. 
C)  only if the quantity of final goods and services produced rises. 
D)  if either the price level rises or the quantity of final goods and services produced rises.

Question 19

In the circular flow model,the value of total income for an economy ________ the value of total production.

Accepted Answer

A)  equals 
B)  is greater than 
C)  is less than 
D)  may be greater than or less than 
A)  equals 
B)  is greater than 
C)  is less than 
D)  may be greater than or less than

Question 20

The factors of production include

Accepted Answer

A)  wages. 
B)  capital. 
C)  investment. 
D)  transfers. 
A)  wages. 
B)  capital. 
C)  investment. 
D)  transfers.

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

If an American firm opens a production facility in India,the total value of the production will be included in the

Which of the following could cause nominal GDP to decrease,but real GDP to increase?

The Philippines and Vietnam have roughly the same size population.Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion.You should conclude

Which of the following statements about the underground economy is true?

Which of the following transactions represents the purchase of a final good?

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

The size of the underground economy would tend to increase if the government of a country

The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements.This will

Gross domestic product understates the total production of final goods and services because of the omission of

High-income countries such as the United States spend a greater amount on services as compared to goods.

Table 19-13 -Refer to Table 19-13.Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2011,using 2009 as the base year.Show your work.

The purchase of a new automobile is included in

Table 19-12 -Refer to Table 19-12.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2010 equals

The GDP deflator in year 2 is 105,using year 1 as the base year.This means that,on average,the cost of goods and services is

When consumers are less confident about their jobs or incomes,they are more likely to

Real GDP will increase

In the circular flow model,the value of total income for an economy ________ the value of total production.

The factors of production include

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 8: Gdp: Measuring Total Production and Income

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

If an American firm opens a production facility in India,the total value of the production will be included in the

Which of the following could cause nominal GDP to decrease,but real GDP to increase?

The Philippines and Vietnam have roughly the same size population.Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion.You should conclude

Which of the following statements about the underground economy is true?

Which of the following transactions represents the purchase of a final good?

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

The size of the underground economy would tend to increase if the government of a country

The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements.This will

Gross domestic product understates the total production of final goods and services because of the omission of

High-income countries such as the United States spend a greater amount on services as compared to goods.

Table 19-13 -Refer to Table 19-13.Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2011,using 2009 as the base year.Show your work.

The purchase of a new automobile is included in

Table 19-12 -Refer to Table 19-12.Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2010 equals

The GDP deflator in year 2 is 105,using year 1 as the base year.This means that,on average,the cost of goods and services is

When consumers are less confident about their jobs or incomes,they are more likely to

Real GDP will increase

In the circular flow model,the value of total income for an economy ________ the value of total production.

The factors of production include

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting,and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters