Question 1

Statistics on real GDP during World War II may give a misleading indication of whether World War II was a period of prosperity because

Accepted Answer

A)  inflation may have been considerably higher than estimated. 
B)  most of the increased production was for military goods, not consumption goods. 
C)  government agents purposely inflated the production numbers to maintain American support for the war. 
D)  government agencies were shorthanded and did a particularly poor job of collecting data. 
A)  inflation may have been considerably higher than estimated. 
B)  most of the increased production was for military goods, not consumption goods. 
C)  government agents purposely inflated the production numbers to maintain American support for the war. 
D)  government agencies were shorthanded and did a particularly poor job of collecting data.

Question 2

Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so, how?

Accepted Answer

We would double count if we co

Question 3

If the quantity of goods and services produced in the economy decreases,

Accepted Answer

A)  it may be possible for real GDP to increase. 
B)  real GDP would certainly increase. 
C)  it may be possible for nominal GDP to increase. 
D)  nominal GDP would certainly increase. 
A)  it may be possible for real GDP to increase. 
B)  real GDP would certainly increase. 
C)  it may be possible for nominal GDP to increase. 
D)  nominal GDP would certainly increase.

Question 4

Scott is a woodworker and charges $125 an hour for his time manufacturing custom-made wood products. For his wife's birthday, he designs and creates an intricate birdseye maple jewelry box that takes him 15 hours to complete. By how much and in what direction does GDP change as a result of his efforts?

Accepted Answer

A)  GDP rises by $1,875. 
B)  GDP is not affected by Scott's production of the jewelry box. 
C)  GDP rises by $125. 
D)  GDP falls by $1,875. 
A)  GDP rises by $1,875. 
B)  GDP is not affected by Scott's production of the jewelry box. 
C)  GDP rises by $125. 
D)  GDP falls by $1,875.

Question 5

Assuming that the United States is the domestic economy, ________ are goods and services produced by ________ and purchased by ________.

Accepted Answer

A)  exports; foreign countries; the United States 
B)  exports; the United States; the United States 
C)  imports; foreign countries; foreign countries 
D)  imports; foreign countries; the United States 
A)  exports; foreign countries; the United States 
B)  exports; the United States; the United States 
C)  imports; foreign countries; foreign countries 
D)  imports; foreign countries; the United States

Question 6

Table 19-25
  
-Refer to Table 19-25. Given the following information, calculate the rate of increase in the price level from 2012 to 2013. Use the percent change in the GDP deflator.

Accepted Answer

To calculate the rate of chang

Question 7

Table 19-30
  
-Refer to Table 19-30. Based on the table above, what is personal income for this economy?

Accepted Answer

A)  $1,950 billion 
B)  $2,250 billion 
C)  $2,450 billion 
D)  $5,130 billion 
A)  $1,950 billion 
B)  $2,250 billion 
C)  $2,450 billion 
D)  $5,130 billion

Question 8

GDP is not a perfect measure of well-being because

Accepted Answer

A)  the value of leisure is included in GDP. 
B)  GDP is not adjusted for pollution. 
C)  GDP is adjusted for changes in crime rates. 
D)  GDP is adjusted for increases in drug addiction. 
A)  the value of leisure is included in GDP. 
B)  GDP is not adjusted for pollution. 
C)  GDP is adjusted for changes in crime rates. 
D)  GDP is adjusted for increases in drug addiction.

Question 9

Table 19-23
2007 2013
  
-Refer to Table 19-23. Suppose that a very simple economy produces three goods: pizzas, haircuts, and backpacks. Suppose the quantities produced and their corresponding prices for 2007 and 2013 are shown in the table above. Use the information to compute real GDP in the year 2007 and 2013. Assume that 2007 is the base year. Is output higher in 2013 or 2007? Why?

Accepted Answer

Recall that real GDP is found by valuing

Question 10

The values of real GDP and real GNP are almost the same in countries where a significant fraction of domestic production takes place in foreign-owned firms.

Accepted Answer

A) True 
 B)False

Question 11

China's current rate of GDP growth is quite rapid. Its current growth rate is probably three times that of the United States. However, the levels of pollution are much higher in China. Would you consider China to be better off than the United States given this information? Why or why not?

Accepted Answer

China is not better off because of highe

Question 12

Give two reasons why GDP does not reflect total production in an economy.

Accepted Answer

The measure of GDP leaves out production

Question 13

In the United States in 2013, the Bureau of Economic Analysis began counting spending on research and development as ________, which counts as a part of GDP.

Accepted Answer

A)  investment 
B)  consumption 
C)  depreciation 
D)  intermediate goods 
A)  investment 
B)  consumption 
C)  depreciation 
D)  intermediate goods

Question 14

How are intermediate goods treated in the calculation of GDP?

Accepted Answer

A)  Their value is not counted separately, but included as part of the value of the final good for which they are an input. 
B)  Their value is counted separately, and their value is also included as part of the value of the final good for which they are an input. 
C)  Their value is counted separately, but is not included as part of the value of the final good for which they are an input. 
D)  They are included only if they are imported. 
A)  Their value is not counted separately, but included as part of the value of the final good for which they are an input. 
B)  Their value is counted separately, and their value is also included as part of the value of the final good for which they are an input. 
C)  Their value is counted separately, but is not included as part of the value of the final good for which they are an input. 
D)  They are included only if they are imported.

Question 15

If Gladys sells her 1998 Jeep Cherokee for $3,500 in 2013, the sale of her car contributes $3,500 to 2013 GDP.

Accepted Answer

A) True 
 B)False

Question 16

The best measure of the income households actually have available to spend is

Accepted Answer

A)  personal income. 
B)  disposable personal income. 
C)  national income. 
D)  net national income. 
A)  personal income. 
B)  disposable personal income. 
C)  national income. 
D)  net national income.

Question 17

What is the largest component of spending in the United States?

Accepted Answer

A)  consumption spending 
B)  investment spending 
C)  government spending 
D)  net investment spending 
A)  consumption spending 
B)  investment spending 
C)  government spending 
D)  net investment spending

Question 18

A car that is produced in 2013 is not sold until 2014. According to the definition of GDP, in which year's GDP should it be counted?

Accepted Answer

A)  2013 
B)  2014 
C)  Half of the sales price will count as part of 2013 GDP and half will count as part of 2014 GDP. 
D)  The production cost will count as part of 2013 GDP while the sales price will count as part of 2014 GDP. 
A)  2013 
B)  2014 
C)  Half of the sales price will count as part of 2013 GDP and half will count as part of 2014 GDP. 
D)  The production cost will count as part of 2013 GDP while the sales price will count as part of 2014 GDP.

Question 19

National income is derived from gross domestic product by

Accepted Answer

A)  subtracting retained earnings from gross domestic product. 
B)  adding personal taxes and depreciation to gross domestic product. 
C)  subtracting depreciation from gross domestic product. 
D)  adding personal income and transfer payments to gross domestic product. 
A)  subtracting retained earnings from gross domestic product. 
B)  adding personal taxes and depreciation to gross domestic product. 
C)  subtracting depreciation from gross domestic product. 
D)  adding personal income and transfer payments to gross domestic product.

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.

Exam 19: GDP: Measuring Total Production and Income

Statistics on real GDP during World War II may give a misleading indication of whether World War II was a period of prosperity because

Why do we not count the value of intermediate goods and services in gross domestic product? Does the value of intermediate goods and services show up in gross domestic product? If so, how?

If the quantity of goods and services produced in the economy decreases,

Assuming that the United States is the domestic economy, ________ are goods and services produced by ________ and purchased by ________.

Table 19-25 -Refer to Table 19-25. Given the following information, calculate the rate of increase in the price level from 2012 to 2013. Use the percent change in the GDP deflator.

Table 19-30 -Refer to Table 19-30. Based on the table above, what is personal income for this economy?

GDP is not a perfect measure of well-being because

The values of real GDP and real GNP are almost the same in countries where a significant fraction of domestic production takes place in foreign-owned firms.

China's current rate of GDP growth is quite rapid. Its current growth rate is probably three times that of the United States. However, the levels of pollution are much higher in China. Would you consider China to be better off than the United States given this information? Why or why not?

Give two reasons why GDP does not reflect total production in an economy.

In the United States in 2013, the Bureau of Economic Analysis began counting spending on research and development as ________, which counts as a part of GDP.

How are intermediate goods treated in the calculation of GDP?

If Gladys sells her 1998 Jeep Cherokee for $3,500 in 2013, the sale of her car contributes $3,500 to 2013 GDP.

The best measure of the income households actually have available to spend is

What is the largest component of spending in the United States?

A car that is produced in 2013 is not sold until 2014. According to the definition of GDP, in which year's GDP should it be counted?

National income is derived from gross domestic product by

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

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

Assuming that the United States is the domestic economy, are goods and services produced by and purchased by .