Chapter 7 quiz MacroEcon – Flashcards

True/false the simplest way to calculate GDP is to sum the total sales of all business firms including firms providing input materials and intermediate goods.

true/false a nation's gross domestic product can be found by summing C+In+G+Xn

true/false if depreciation exceeds the domestic investment, we can conclude that net investment is negative.

true/false the purchase of Wal-Mart sock is a part of gross investment, but not of net investment.

true/false if the given year's prices are higher than the base year, the index will be more than 100.

true/false nominal GDP reflects the value of GDP after it has been corrected for price changes compared to the price level in a reference year.

suppose the total monetary value of all final goods and services produced in a particular country in 2008 is $500 billion and the total monetary value of final goods and services sold is $450 billion. we can conclude that: A) GDP in 2008 is $450 billion B) NDP in 2008 is $450 billion C) GDP in 2008 is $500 billion D) inventories in 2008 fell by $50 billion

The value added of a firm is the market value of: A) a firms output plus the value of the inputs bought from others B) a firms output less the value of the inputs bought from others C) of the firms output D) of the firms inputs bought from others

Which of the following transactions would be included in GDP? A) Mary buys a used book for $5 at a garage sale B) Nick buys $5000 worth of stock in Microsoft C) Olivia receives a tax refund of $500 D) Peter buys a newly constructed house

The GDP tends to: A) overstate economic welfare because it does not include certain non market activities such as the productive work of housewives. B) understate economic welfare because it includes expenditures undertaken to offset or correct pollution C) understate economic welfare because it does not take into account increases in leisure D) overstate economic welfare because it does not reflect improvements in product quality

The largest component of GDP with expenditure approach is: A) compensation of employees B) net exports C) investments D) consumption spending

A price index is: A) a comparison of the current price of a market basket to a fixed point of reference B) a comparison of real GDP in one period relative to another C) a comparison of nominal GDP in one period relative to another D) a ratio of real GDP to nominal GDP

In the second quarter (3 month period) of 2001, U.S. nominal GDP increased but U.S. real GDP declined. We can conclude that: A) nominal income declined by more than personal income B) the price level rose by more than nominal GDP C) real wages declined by more than real GDP D) the price level fell by more than real GDP