Bonnel Macro Economics Chapter 8 – Flashcards
Unlock all answers in this set
Unlock answersquestion
Disposable personal income equals personal income
answer
minus personal tax payments.
question
During a business cycle expansion, total production ________ and total employment ________.
answer
increases; increases
question
Gross domestic product is calculated by summing up
answer
Correct the total market value of final goods and services produced in the economy during a period of time.
question
Gross domestic product understates the total production of final goods and services because of the omission of
answer
Correct household production.
question
If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is
answer
125
question
In 2015, Ford Motor Company's sales were rising. These events were caused by
answer
an economic expansion.
question
In 2015, the U.S. auto industry experienced rising sales. The automobile industry was experiencing the effects of
answer
the business cycle.
question
Nominal GDP is another term for
answer
current-dollar GDP.
question
Real GDP is GDP in a given year
answer
valued in the prices of the base year.
question
Recent estimates put the size of the underground economy in the United States at ________ of measured GDP.
answer
8 percent
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
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
The drawback to calculating real GDP using base-year prices is that
answer
relative prices change over time and these are not reflected in base-year prices, and this distorts GDP.
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 output of Mexican citizens who work in Texas would be included in the
answer
gross national product of Mexico.
question
The output of U.S. citizens who work in Canada would be included in the
answer
gross domestic product of Canada.
question
The size of the underground economy would tend to decrease if the government of a country
answer
decreased government regulations on businesses.
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
Which of the following accurately describes an effect of hurricane Katrina on GDP?
answer
GDP would increase reflecting the costs of cleanup.
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
Which of the following goods is directly counted in GDP?
answer
a 12-inch Subway sandwich purchased by a student
question
Which of the following is likely to increase measured GDP?
answer
Marijuana becomes legal to grow and sell.
question
Which of the following statements about the underground economy is true?
answer
Correct Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run.
question
Which of the following would be directly counted in GDP in 2016?
answer
kitchen cabinets purchased from Home Depot in 2016 to be installed in a house built in 1997
