Gross national product, GNP, of the United States is the market value of all final goods and services
  • produced by citizens of the United States anywhere in the world.
  • Household Production
  • increase GDP and decrease well being in the economy.
  • Marijuana becomes legal to grow and sell.
In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services.
  • True
  • Equals
  • Real GDP
  • Net Exports
The best measure of the income households actually have available to spend is
  • consumption spending.
  • disposable personal income.
  • decreased government regulations on businesses.
  • do not pay taxes to the government.
Presently, GDP is ________ to compensate for the costs of environmental damage.
  • the underground economy
  • Not Adjusted
  • True
  • Buys U.S. government bonds.
If prices rise on average in the U.S. economy, the purchasing power of a dollar declines
  • False
  • net exports.
  • True
  • Equals
The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.
  • Equals
  • net exports.
  • Net Exports
  • False
If an American firm opens a production facility in India, the total value of the production will be included in the
  • Household Production
  • gross domestic product of India.
  • do not pay taxes to the government.
  • Wages, rents, interest, and profits.
Suppose that nominal GDP in 2011 was less than real GDP inGiven this information, we know for certain that
  • The price of intermediate goods
  • Real GDP grows by 2.3% in the second quarter
  • the price level in 2011 was less than the price level in the base year.
  • increase GDP and decrease well being in the economy.
The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S. ________ and the South Korean ________.
  • GNP; GDP
  • increased income tax rates.
  • 5% higher in year 2 than in year 1.
  • Equals
Which of the following is likely to increase measured GDP?
  • Wages, rents, interest, and profits.
  • minus the consumption of fixed capital.
  • Marijuana becomes legal to grow and sell.
  • decreased government regulations on businesses.
The output of Mexican citizens who work in Texas would be included in the
  • decreased government regulations on businesses.
  • Marijuana becomes legal to grow and sell.
  • gross national product of Mexico.
  • gross domestic product of India.
Which of the following is not a durable good?
  • Real GDP grows by 2.3% in the second quarter
  • Clothing
  • the value of all cars produced by General Motors in the United States
  • consumption spending.
Macroeconomics seeks to expand:
  • decreased government regulations on businesses.
  • ratio of nominal GDP to real GDP multiplied by 100.
  • minus the consumption of fixed capital.
  • Economic growth, business cycles and inflation
To calculate GDP by the expenditure method, one must add
  • Marijuana becomes legal to grow and sell.
  • valued in the prices of that year.
  • Wages, rents, interest, and profits.
  • The price of intermediate goods
In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA
  • the value of all cars produced by General Motors in the United States
  • most of the increased production was for military goods, not consumption goods.
  • Values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.
  • Wages, rents, interest, and profits.
National income equals gross domestic product
  • Wages, rents, interest, and profits.
  • valued in the prices of that year.
  • Marijuana becomes legal to grow and sell.
  • minus the consumption of fixed capital.
Nominal GDP will increase
  • average level of prices of final goods and services in the economy.
  • valued in the prices of that year.
  • if either the price level or the quantity of goods and services produced rises.
  • only if the quantity of final goods and services produced rises.
Which equation represents the relationship between GDP and the four major expenditure components?
  • household production.
  • An economic expansion
  • Real GDP grows by 2.3% in the second quarter
  • Y = C + I + G + NX
If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is
  • A. total income in 2010 was around $14.6 trillion.B. the value of output in 2010 was around $14.6 trillion.C. total spending in 2010 was around $14.6 trillion. Incorrect
  • 125
  • True
  • Not Adjusted
During a business cycle expansion, total production ____ and total employment _____ :
  • Y = C + I + G + NX
  • buys U.S. government bonds
  • increases; increases
  • the underground economy
Home Depot sells new and used doors to contractors who build new homes. Home Depot also sells new and used doors to homeowners. Which of the following would be counted in GDP?
  • Real GDP grows by 2.3% in the second quarter
  • the price level in 2011 was less than the price level in the base year.
  • increased income tax rates.
  • The sale of a new door to homeowner
Real GDP per capita is calculated by dividing the value of real GDP for a country by the country's adult population.
  • not adjusted
  • True
  • household production.
  • False
If the quantity of goods and services produced in the economy decreases,
  • buys U.S. government bonds
  • decreased government regulations on businesses.
  • The price of intermediate goods
  • it may be possible for nominal GDP to increase.
Statistics on real GDP during World War II may give a misleading indication of whether World War II was a period of prosperity because
  • 5% higher in year 2 than in year 1.
  • the price level in 2011 was less than the price level in the base year.
  • most of the increased production was for military goods, not consumption goods.
  • only if the quantity of final goods and services produced rises.
CANOES-R-US makes canoes. It buys the shell of the canoe from another firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $The retail canoe store then sells the canoe to a consumer for $1,Refer to Scenario 8-The value of each canoe in gross domestic product equals
  • True
  • $1200
  • $215 billion.
  • False
The factors of production include
  • Clothing
  • Equals
  • Capital
  • consumption spending.
If income is unequally distributed in an economy, increases in GDP may not raise well-being in an economy.
  • gross domestic product of India.
  • 8%
  • Equals
  • True
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
  • 5% higher in year 2 than in year 1.
  • the underground economy
  • The price of intermediate goods
  • disposable personal income.
In 2012, which component of GDP had a negative value?
  • An economic expansion
  • government spending
  • consumption spending.
  • investment expenditures.
National income equals gross domestic product (GDP) minus
  • minus the consumption of fixed capital.
  • $215 billion.
  • government spending
  • depreciation.
The GDP deflator is the
  • Economic growth, business cycles and inflation
  • ratio of nominal GDP to real GDP multiplied by 100.
  • only if the quantity of final goods and services produced rises.
  • the purchasing power of a dollar declines.
CANOES-R-US makes canoes. It buys the shell of the canoe from another firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $The retail canoe store then sells the canoe to a consumer for $1,Refer to Scenario 8-The value added of CANOES-R-US for each canoe equals
  • Real GDP
  • True
  • Equals
  • $500
Which of the following is included in both the U.S. GDP and U.S. GNP?
  • Real GDP grows by 2.3% in the second quarter
  • Marijuana becomes legal to grow and sell.
  • the value of all cars produced by General Motors in the United States
  • The sale of a new door to homeowner
The size of the underground economy would tend to decrease if the government of a country
  • increase GDP and decrease well being in the economy.
  • increased income tax rates.
  • increases; increases
  • decreased government regulations on businesses.
Real GDP is GDP in a given year
  • valued in the prices of the base year.
  • if either the price level or the quantity of goods and services produced rises.
  • Wages, rents, interest, and profits.
  • ratio of nominal GDP to real GDP multiplied by 100.
In the circular flow model, the value of total income for an economy ________ the value of total production.
  • Equals
  • True
  • GNP; GDP
  • Real GDP
The purchase of a new house is included in
  • government spending
  • investment expenditures.
  • Net Exports
  • net exports.
Nominal GDP is GDP in a given year
  • valued in the prices of that year.
  • only if the quantity of final goods and services produced rises.
  • minus the consumption of fixed capital.
  • Wages, rents, interest, and profits.
The largest component of spending in GDP is
  • disposable personal income.
  • government spending
  • investment expenditures.
  • consumption spending.
Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?
  • household production.
  • GDP will decrease.
  • The sale of a new door to homeowner
  • government spending
The purchase by a foreign government of an airplane produced in the United States is included in U.S.
  • not adjusted
  • investment expenditures.
  • net exports.
  • depreciation.
Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?
  • 5% higher in year 2 than in year 1.
  • Marijuana becomes legal to grow and sell.
  • do not pay taxes to the government.
  • Real GDP grows by 2.3% in the second quarter
Recent estimates put the size of the underground economy in the United States at ________ of measured GDP.
  • 8%
  • the underground economy
  • True
  • Buys U.S. government bonds.
Gross domestic product is calculated by summing up
  • the total market value of final goods and services produced in the economy during a period of time
  • A. total income in 2010 was around $14.6 trillion.B. the value of output in 2010 was around $14.6 trillion.C. total spending in 2010 was around $14.6 trillion. Incorrect
  • average level of prices of final goods and services in the economy.
  • the underground economy
If prices in the economy rise, then
  • valued in the prices of the base year.
  • Wages, rents, interest, and profits.
  • ratio of nominal GDP to real GDP multiplied by 100.
  • the purchasing power of a dollar declines.
Real GDP will increase
  • ratio of nominal GDP to real GDP multiplied by 100.
  • average level of prices of final goods and services in the economy.
  • only if the quantity of final goods and services produced rises.
  • increases GDP and reduces the size of the underground economy.
Which of the following goods is directly counted in GDP?
  • Marijuana becomes legal to grow and sell.
  • it may be possible for nominal GDP to increase.
  • 12-inch Subway sandwich purchased by a student
  • Real GDP grows by 2.3% in the second quarter
Investment, as defined by economists, would not include which of the following? General Motors
  • Buys U.S. government bonds.
  • the underground economy
  • disposable personal income.
  • gross domestic product of India.
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