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Exam 19: GDP: Measuring Total Production and Income

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Question 21

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

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.

E) None of the above
F) A) and C)

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Question 22

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Transfer payments are subtracted from national income to get to personal income.

A) True
B) False

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Question 23

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If an American firm opens a production facility in India,the total value of the production will be included in the

Table 19-2 -Refer to Table 19-2.Suppose that a simple economy produces only four goods and services: shoes,DVDs,tomatoes,and ketchup.Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households.Using the information in the above table,nominal GDP for this simple economy equals

Table 19-7 -Refer to Table 19-7.Suppose that a simple economy produces only four goods and services: sweaters,CDs,sugar,and soft drinks.Assume one half of the sugar is used in making the soft drinks and the other half of the sugar is purchased by households.Calculate nominal GDP for this simple economy.

Table 19-6 -Refer to Table 19-6.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.

To examine how the total production of an economy has changed over time,it would be better to examine

For developed countries like the United States,GDP will always exceed GNP.

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

Value added equals the market price of the firm's product minus

In the circular flow diagram,the value of all the income in the economy is greater than the value of goods and services produced in the economy.

Which of the following is not an example of a transfer payment?

Table 19-8 Consider the following data for Tyrovia, a country that produces only two products: guns and butter. -Refer to Table 19-8.Real GDP for Tyrovia for 2011 using 2005 as the base year equals

Which of the following is likely to increase measured GDP?

Which of the following is not a durable good?

Table 19-9 -Refer to Table 19-9.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

Macroeconomics,as opposed to microeconomics,includes the study of what determines the level of

If prices rise on average in the U.S.economy,the purchasing power of a dollar declines.

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?

Macroeconomics,as opposed to microeconomics,includes the study of what determines the