Question 1

National income equals gross national product minus

Accepted Answer

A) imports. 
B) depreciation. 
C) inventories. 
D) changes in inventories. 
A) imports. 
B) depreciation. 
C) inventories. 
D) changes in inventories.

Question 2

In the first half of 2011,automobile sales in the United States were lower than they were in the first half of 2010.The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when purchased by businesses.

Accepted Answer

A) nondurable goods;durable goods 
B) consumption;investment 
C) investment;consumption 
D) durable goods;nondurable goods 
A) nondurable goods;durable goods 
B) consumption;investment 
C) investment;consumption 
D) durable goods;nondurable goods

Question 3

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 4

The values of real GDP and real GNP are almost the same for the United States.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Table 19-24
 $$\begin{array} { | l | c | c | c | c | } 
\hline & \mathbf { 2 0 1 1 } & & \mathbf { 2 0 1 6 } & \
\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \
\hline \text { Pizzas } & 100 & \$ 10 & 120 & \$ 12 \
\hline \text { Haircuts } & 50 & 15 & 45 & 20 \
\hline \text { Backpacks } & 200 & 40 & 210 & 45 \
\hline
\end{array}$$
-Refer to Table 19-24.Suppose that a very simple economy produces three goods: pizzas,haircuts,and backpacks.Suppose the quantities produced and their corresponding prices for 2011 and 2016 are shown in the table above.Use the information to compute real GDP in the year 2011 and 2016.Calculate real GDP in 2016 assuming the base year is 2011.Do the same calculation assuming the base year is 2016.Are the calculations different? Why?

Accepted Answer

Recall that real GDP is found by valuing

Question 7

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 8

Marla is an architect who is designing a home for Chuck.Chuck is paying Marla $150 per hour to design his new home.When Chuck and Marla get married,Marla continues to work on designing the home,but she no longer charges Chuck for her work.As a result,GDP ________ because ________.

Accepted Answer

A) falls;Marla's work takes place in the underground economy once she's married 
B) falls;Marla's work becomes less valuable once she's married 
C) falls;Marla's architectural design services are no longer bought by Chuck once they're married 
D) rises;Marla becomes more productive once she's married 
A) falls;Marla's work takes place in the underground economy once she's married 
B) falls;Marla's work becomes less valuable once she's married 
C) falls;Marla's architectural design services are no longer bought by Chuck once they're married 
D) rises;Marla becomes more productive once she's married

Question 9

How can a firm have a negative valued added,as supposedly some state-owned businesses did in the former Soviet Union? What has to be true for value added to be negative?

Accepted Answer

A negative value added means that the co

Question 10

Emily is a writer.She buys pens and paper for $20 and writes a 500-page novel that she sells to a publishing company for $500,000.If the publisher prints 1 million copies that sell for $25 each,what is the contribution to GDP of Emily's novel?

Accepted Answer

A) $25 million 
B) $20 million 
C) $500,000 
D) $50,000 
A) $25 million 
B) $20 million 
C) $500,000 
D) $50,000

Question 11

What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

Accepted Answer

The underground economy is that part of

Question 12

Gross domestic product in the economy is measured by the

Accepted Answer

A) total number of goods and services produced in the economy. 
B) dollar value of all final goods and services produced in the economy. 
C) total number of goods produced in the economy. 
D) total number of services produced in the economy. 
A) total number of goods and services produced in the economy. 
B) dollar value of all final goods and services produced in the economy. 
C) total number of goods produced in the economy. 
D) total number of services produced in the economy.

Question 13

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 14

If the GDP deflator rises from 185 to 190,what is the rate of inflation between the two years?

Accepted Answer

A) 270% 
B) 50% 
C) 5% 
D) 2.7% 
A) 270% 
B) 50% 
C) 5% 
D) 2.7%

Question 15

An example of an intermediate good would be

Accepted Answer

A) the bread that goes into a sub sandwich that is sold by Quiznos. 
B) the soda pop sold by Quiznos. 
C) a sub sandwich sold by Quiznos. 
D) the potato chips sold by Quiznos. 
A) the bread that goes into a sub sandwich that is sold by Quiznos. 
B) the soda pop sold by Quiznos. 
C) a sub sandwich sold by Quiznos. 
D) the potato chips sold by Quiznos.

Question 16

Legalizing all forms of illegal activities

Accepted Answer

A) reduces GDP and reduces the size of the underground economy. 
B) reduces GDP and increases the size of the underground economy. 
C) increases GDP and reduces the size of the underground economy. 
D) increases GDP and increases the size of the underground economy. 
A) reduces GDP and reduces the size of the underground economy. 
B) reduces GDP and increases the size of the underground economy. 
C) increases GDP and reduces the size of the underground economy. 
D) increases GDP and increases the size of the underground economy.

Question 17

In periods when prices are falling,on average,

Accepted Answer

A) real GDP will grow slower than nominal GDP. 
B) real GDP will grow faster than nominal GDP. 
C) real GDP will grow as fast as nominal GDP. 
D) one cannot calculate real GDP. 
A) real GDP will grow slower than nominal GDP. 
B) real GDP will grow faster than nominal GDP. 
C) real GDP will grow as fast as nominal GDP. 
D) one cannot calculate real GDP.

Question 18

Explain the difference between Gross Domestic Product and Gross National Product.Give an example of each.

Accepted Answer

Gross Domestic product is the value of f

Question 19

Disposable personal income is defined as

Accepted Answer

A) personal income less personal taxes plus indirect sales taxes. 
B) personal income less transfer payments plus personal taxes. 
C) personal income less personal taxes. 
D) personal income less depreciation. 
A) personal income less personal taxes plus indirect sales taxes. 
B) personal income less transfer payments plus personal taxes. 
C) personal income less personal taxes. 
D) personal income less depreciation.

Question 20

Table 19-31
 $$\begin{array} { | l | r | } 
\hline & \begin{array} { r } 
\text { Billions of } \
\text { Dollars }
\end{array} \
\hline \text { National income } & \$ 7,400 \
\hline \text { Retained earnings } & 480 \
\hline \text { Depreciation } & 660 \
\hline \text { Interest on government bonds } & 450 \
\hline \text { Transfer payments } & 1,000 \
\hline \text { Personal taxes } & 1,100 \
\hline
\end{array}$$
-Refer to Table 19-31.The table above represents hypothetical data from the National Income Accounts for 2015.Use the data to calculate personal income and disposable personal income.

Accepted Answer

Personal Income = National income - Reta

Exam 19: Gdp: Measuring Total Production and Income

National income equals gross national product minus

In the first half of 2011,automobile sales in the United States were lower than they were in the first half of 2010.The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when purchased by businesses.

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

The values of real GDP and real GNP are almost the same for the United States.

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

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

Marla is an architect who is designing a home for Chuck.Chuck is paying Marla $150 per hour to design his new home.When Chuck and Marla get married,Marla continues to work on designing the home,but she no longer charges Chuck for her work.As a result,GDP ________ because ________.

How can a firm have a negative valued added,as supposedly some state-owned businesses did in the former Soviet Union? What has to be true for value added to be negative?

Emily is a writer.She buys pens and paper for $20 and writes a 500-page novel that she sells to a publishing company for $500,000.If the publisher prints 1 million copies that sell for $25 each,what is the contribution to GDP of Emily's novel?

What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

Gross domestic product in the economy is measured by the

National income is derived from gross domestic product by

If the GDP deflator rises from 185 to 190,what is the rate of inflation between the two years?

An example of an intermediate good would be

Legalizing all forms of illegal activities

In periods when prices are falling,on average,

Explain the difference between Gross Domestic Product and Gross National Product.Give an example of each.

Disposable personal income is defined as

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

In the first half of 2011,automobile sales in the United States were lower than they were in the first half of 2010.The decrease in auto sales impacts GDP because new automobiles are counted as when purchased by households and when purchased by businesses.

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

Marla is an architect who is designing a home for Chuck.Chuck is paying Marla $150 per hour to design his new home.When Chuck and Marla get married,Marla continues to work on designing the home,but she no longer charges Chuck for her work.As a result,GDP because .