question

The U.S. work week has declined from 60 hours in 1890 to 40 hours today. The impact of the decline in working hours

answer

decreases U.S. GDP and increases the well-being of a typical working person in the U.S.

question

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

answer

household production.

question

Legalizing all forms of illegal activities

answer

increases GDP and reduces the size of the underground economy

question

Which of the following goods is directly counted in GDP?

answer

a 12-inch Subway sandwich purchased by a student

question

Investment, as defined by economists, would not include which of the following? Ford

answer

buys U.S. government bonds.

question

Which of the following is not a durable good?

answer

Clothing

question

Which of the following is included in both the U.S. GDP and U.S. GNP?

answer

the value of all cars produced by General Motors in the United States

question

The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector

answer

do not pay taxes to the government.

question

The GDP deflator is a measure of the

answer

average level of prices of final goods and services in the economy.

question

When consumers are less confident about their jobs or incomes, they are more likely to

answer

reduce purchases of durable goods than nondurable goods.

question

Depreciation is

answer

the value of worn-out equipment, machinery, and buildings.

question

In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services.

answer

equals

question

Which of the following statements is true?

answer

GDP accounting rules do not adjust for production that pollutes the economy.

question

Which of the following would be directly counted in GDP in 2012?

answer

kitchen cabinets purchased from Home Depot in 2012 to be installed in a house built in 1997

question

The purchase of a new automobile is included in

answer

consumption expenditures on durable goods.

question

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

answer

5% higher in year 2 than in year 1.

question

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.

answer

D) consumption; investment

question

The purchase of a new house is included in

answer

D) investment expenditures.

question

f prices in the economy rise, then

answer

the purchasing power of a dollar declines.

question

The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S. ________ and the South Korean ________.

answer

GNP; GDP

question

The output of Mexican citizens who work in Texas would be included in the

answer

gross national product of Mexico.

question

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

answer

it may be possible for nominal GDP to increase

question

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

answer

health insurance payments to an army private

question

Presently, GDP is ________ to compensate for the costs of environmental damage

answer

not adjusted

question

In the United States since the mid-1980s, consumption as a percentage of GDP has

answer

increased.

question

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

answer

disposable personal income.

question

If nominal GDP exceeds real GDP for a specific year, then the GDP deflator must be

answer

greater than 100.

question

The size of the underground economy would tend to increase if the government of a country

answer

increased income tax rates.

question

To calculate GDP by the expenditure method, one must add

answer

consumption spending, investment spending, government spending and net exports.

question

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

answer

GDP is much larger than GNP.

question

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

answer

GDP is much larger than GNP.

question

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will

answer

increase GDP and decrease well being in the economy.

question

Which of the following is likely to increase measured GDP?

answer

Marijuana becomes legal to grow and sell.

question

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?

answer

GDP will decrease.

question

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

answer

the price of intermediate goods.

question

In 2010, which component of GDP had a negative value?

answer

net exports

question

The size of the underground economy would tend to decrease if the government of a country

answer

decreased government regulations on businesses.

question

If real GDP in 2011 (using 2002 prices) is lower than nominal GDP of 2010, then

answer

prices in 2011 are lower than prices in 2010.

question

During a business cycle expansion, total production ________ and total employment ________.

answer

increases; increases

question

Which of the following could cause nominal GDP to decrease, but real GDP to increase?

answer

The price level falls and the quantity of final goods and services produced rises.

question

Increases in real GDP would understate the well-being of a country over time if, over that time period, the

answer

amount of pollution decreased.

question

Investment, as defined by economists, would include the purchase of a

answer

computer by an accounting firm.

question

Which of the following could cause nominal GDP to increase, but real GDP to decrease?

answer

The price level rises and the quantity of final goods and services produced falls.

Macro Ch. 8 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards