Question 1

Residential investment includes spending by firms on office buildings.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a true statement about the impact of World War II on the U.S. economy?

Accepted Answer

A)  U.S. GDP decreased dramatically from 1941 to 1945. 
B)  The war time years were a period of prosperity for U.S. consumers. 
C)  Less than 10% of the labor force was in the military or producing war goods. 
D)  Increased production of tanks, ships, planes, and munitions accounted for most of the increase in GDP. 
A)  U.S. GDP decreased dramatically from 1941 to 1945. 
B)  The war time years were a period of prosperity for U.S. consumers. 
C)  Less than 10% of the labor force was in the military or producing war goods. 
D)  Increased production of tanks, ships, planes, and munitions accounted for most of the increase in GDP.

Question 3

Table 19-7
  
-Refer to Table 19-7. Suppose that a simple economy produces only four goods and services: iPods, t-shirts, bottled water, and oranges. Calculate nominal GDP for this simple economy.

Accepted Answer

Nominal GDP equals (

Question 4

Suppose in 2014, you purchase a house built in 2003. Which of the following would be included in the gross domestic product for 2014?

Accepted Answer

A)  the value of the house in 2014 
B)  the value of the house in 2003 
C)  the value of the house in 2014 minus depreciation 
D)  the value of the services of the real estate agent 
A)  the value of the house in 2014 
B)  the value of the house in 2003 
C)  the value of the house in 2014 minus depreciation 
D)  the value of the services of the real estate agent

Question 5

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 6

An example of an intermediate good would be

Accepted Answer

A)  a new car. 
B)  a used car. 
C)  the rims on a new car. 
D)  new rims to replace old rims on a used car. 
A)  a new car. 
B)  a used car. 
C)  the rims on a new car. 
D)  new rims to replace old rims on a used car.

Question 7

Investment spending includes spending on

Accepted Answer

A)  stocks. 
B)  food. 
C)  changes in business inventories. 
D)  transfer payments. 
A)  stocks. 
B)  food. 
C)  changes in business inventories. 
D)  transfer payments.

Question 8

The measure of production that values output using base-year prices is called

Accepted Answer

A)  real GDP. 
B)  nominal GDP. 
C)  value-added GDP. 
D)  underground GDP. 
A)  real GDP. 
B)  nominal GDP. 
C)  value-added GDP. 
D)  underground GDP.

Question 9

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 base year used in calculating real GDP is

Accepted Answer

A)  2008. 
B)  2009. 
C)  2010. 
D)  2011. 
A)  2008. 
B)  2009. 
C)  2010. 
D)  2011.

Question 10

An increase in national income could by caused by which of the following?

Accepted Answer

A)  an increase in depreciation 
B)  an increase in personal taxes 
C)  a decrease in personal income 
D)  an increase in gross domestic product 
A)  an increase in depreciation 
B)  an increase in personal taxes 
C)  a decrease in personal income 
D)  an increase in gross domestic product

Question 11

Table 19-19
  
-Refer to Table 19-19. Given the information above, calculate the GDP deflator in 2012.

Accepted Answer

A)  87 
B)  95 
C)  105 
D)  114 
A)  87 
B)  95 
C)  105 
D)  114

Question 12

________ is/are the payment for the factor of production ________.

Accepted Answer

A)  Wages; capital 
B)  Interest; labor 
C)  Profit; entrepreneurship 
D)  Rent; capital 
A)  Wages; capital 
B)  Interest; labor 
C)  Profit; entrepreneurship 
D)  Rent; capital

Question 13

Increases in real GDP would overstate the increase in the well-being of a country over time if, over that time period, the

Accepted Answer

A)  average hours worked per week increased. 
B)  amount of pollution decreased. 
C)  price level increased. 
D)  crime rate decreased. 
A)  average hours worked per week increased. 
B)  amount of pollution decreased. 
C)  price level increased. 
D)  crime rate decreased.

Question 14

During a business cycle expansion, total production ________ and total employment ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 15

Table 19-21
  
-Refer to Table 19-21. Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2013, using 2011 as the base year. Show your work.

Accepted Answer

Nominal GDP for 2013 equals (2

Question 16

Table 19-27
   The components of national income for an economy are represented in Table 19-27 above. All values are in billions of dollars.
-Refer to Table 19-27. What is the level of personal income for this economy?

Accepted Answer

A)  $1,140 billion 
B)  $1,010 billion 
C)  $990 billion 
D)  $860 billion 
A)  $1,140 billion 
B)  $1,010 billion 
C)  $990 billion 
D)  $860 billion

Question 17

Since real GDP is adjusted for inflation and nominal GDP is not, nominal GDP must always be higher than real GDP. Do you agree or disagree? Why?

Accepted Answer

Disagree. It depends on whether the year

Question 18

When lumber from Brazilian forests is used by a U.S.-owned company to produce furniture in Canada, the value of the furniture produced will be counted as a final good in

Accepted Answer

A)  U.S. GDP. 
B)  Canada's GDP. 
C)  Brazil's GDP. 
D)  Brazil's GNP. 
A)  U.S. GDP. 
B)  Canada's GDP. 
C)  Brazil's GDP. 
D)  Brazil's GNP.

Question 19

Which of the following accurately describes an effect of hurricane Katrina on GDP?

Accepted Answer

A)  GDP would decrease reflecting the costs of cleanup. 
B)  GDP would increase reflecting the costs of cleanup. 
C)  GDP would increase reflecting the decrease in production that occurred during the storm and the productive capacity lost in the storm. 
D)  GDP would increase well-being. 
A)  GDP would decrease reflecting the costs of cleanup. 
B)  GDP would increase reflecting the costs of cleanup. 
C)  GDP would increase reflecting the decrease in production that occurred during the storm and the productive capacity lost in the storm. 
D)  GDP would increase well-being.

Question 20

If nominal GDP rises we can say that

Accepted Answer

A)  production has risen and prices remain constant. 
B)  prices have risen and production remains constant. 
C)  production has risen or prices have risen or both have risen. 
D)  production has fallen and prices have risen. 
A)  production has risen and prices remain constant. 
B)  prices have risen and production remains constant. 
C)  production has risen or prices have risen or both have risen. 
D)  production has fallen and prices have risen.

Exam 19: GDP: Measuring Total Production and Income

Residential investment includes spending by firms on office buildings.

Which of the following is a true statement about the impact of World War II on the U.S. economy?

Table 19-7 -Refer to Table 19-7. Suppose that a simple economy produces only four goods and services: iPods, t-shirts, bottled water, and oranges. Calculate nominal GDP for this simple economy.

Suppose in 2014, you purchase a house built in 2003. Which of the following would be included in the gross domestic product for 2014?

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

An example of an intermediate good would be

Investment spending includes spending on

The measure of production that values output using base-year prices is called

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 base year used in calculating real GDP is

An increase in national income could by caused by which of the following?

Table 19-19 -Refer to Table 19-19. Given the information above, calculate the GDP deflator in 2012.

________ is/are the payment for the factor of production ________.

Increases in real GDP would overstate the increase in the well-being of a country over time if, over that time period, the

During a business cycle expansion, total production ________ and total employment ________.

Table 19-21 -Refer to Table 19-21. Consider the following data for a simple economy: Calculate nominal GDP and real GDP for 2013, using 2011 as the base year. Show your work.

Table 19-27 The components of national income for an economy are represented in Table 19-27 above. All values are in billions of dollars. -Refer to Table 19-27. What is the level of personal income for this economy?

Since real GDP is adjusted for inflation and nominal GDP is not, nominal GDP must always be higher than real GDP. Do you agree or disagree? Why?

When lumber from Brazilian forests is used by a U.S.-owned company to produce furniture in Canada, the value of the furniture produced will be counted as a final good in

Which of the following accurately describes an effect of hurricane Katrina on GDP?

If nominal GDP rises we can say that

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

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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

is/are the payment for the factor of production .

During a business cycle expansion, total production and total employment .