Exam 10: Measuring a Nations Income

Fine Edge manufactures lawn mowers. In 2014 it had $2 million worth of lawn mowers in inventory. In 2015 it sold $10 million worth of lawn mowers to consumers and had $1 million worth of lawn mowers in inventory. How much did the lawn mowers produced by Fine Edge add to GDP in 2015?

If nominal GDP is $12 trillion and real GDP is $10 trillion, then the GDP deflator is

Table 23-2 The table below contains data for country A for the year 2010. -Refer to Table 23-2. What was country A's GDP in 2010?

Which of the following is not correct?

Consider two cars manufactured by Chevrolet in 2014. During 2014, Chevrolet sells one of the two cars to Emily for $20,000. Later in the same year, Emily sells the car to Jim for $18,000. The second automobile, with a market value of $19,000, is unsold at the end of 2014 and it remains in Chevrolet's inventory. The transactions just described contribute how much to GDP for 2014?

GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because

GDP

If the prices of all goods and services produced in the economy rose while the quantity of all goods and services stayed the same, which would rise?

Net exports equal

If nominal GDP is $12,000 and the GDP deflator is 80, then real GDP is $15,000.

Are sales of used goods included in GDP? Explain why or why not. Hint: Remember how GDP is defined.

The income that households and noncorporate businesses receive is called

U.S. GDP includes estimates of the value of items that are produced and consumed at home, such as housework and car maintenance.

Expenditures on a nation's domestic production

Otherwise legal transactions that go unreported or unrecorded are called

A country reported a nominal GDP of $85 billion in 2010 and $100 billion in 2009. It also reported a GDP deflator of 100 in 2010 and 105 in 2009. Between 2009 and 2010,

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year and thus enjoy less leisure per year). Based on this scenario, which of the following statements is correct?

If total spending rises from one year to the next, then the economy must be producing a larger output of goods and services.

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

GDP can measure either the total income of everyone in the economy or the total expenditure on the economy's output of goods and services, but GDP cannot measure both at the same time.