Chapter 7 – Flashcards

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question
A nation's gross domestic product (GDP):
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can be found by summing C + Ig + G + Xn.
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Net exports are:
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exports less imports.
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If there are no statistical discrepancies, NDP (net domestic product) is:
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NI minus net foreign factor income.
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Historically, real GDP has increased less rapidly than nominal GDP because:
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the general price level has increased.
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If nominal GDP rises:
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real GDP may either rise or fall.
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In calculating the GDP, national income accountants:
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add increases in inventories or subtract decreases in inventories.
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Assume that the size of the underground economy increases both absolutely and relatively over time. As a result:
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GDP will tend to increasingly understate the level of output through time.
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The purchase of Walmart stock is a part of gross investment, but not of net investment.
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false
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Government purchases include government spending on:
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government consumption goods and public capital goods.
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Welfare payments to low-income families are included in national income.
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false
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What is the difference between national income and personal income?
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National income represents income earned by American-owned resources, while personal income measures received income, whether earned or unearned.
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All expenditures on new construction are included as investment in calculating GDP.
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true
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The value of U.S. imports is:
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subtracted from exports when calculating GDP because imports do not constitute production in the United States.
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Real GDP refers to:
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GDP data that have been adjusted for changes in the price level.
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If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.
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true
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The National Income and Product Accounts (NIPA) help economists and policymakers to:
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follow the long-run course of the economy to determine whether it has grown or stagnated.
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A large underground economy results in an:
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understated GDP
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In 1933, net private domestic investment was a minus $6.0 billion. This means that:
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the production of 1933's GDP used up more capital goods than were produced in that year.
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Consumption of fixed capital (depreciation) can be determined by:
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subtracting NDP from GDP.
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The growth of GDP may understate changes in the economy's economic well-being over time if the:
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quality of products and services improves.
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(Last Word) Which of the following is a source of data for the consumption component of the U.S. GDP?
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The Census Bureau's Retail Trade Survey.
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If real GDP rises and the GDP price index has increased:
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nominal GDP must have increased.
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Suppose nominal GDP was $360 billion in 1990 and $450 billion in 2000. The appropriate price index (1985 = 100) was 120 in 1990 and 125 in 2000. Between 1990 and 2000 real GDP:
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increased by $60 billion
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The ZZZ Corporation issued $25 million in new common stock in 2013. It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans. As a result, investment:
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of $18 million has occured
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If depreciation exceeds gross investment:
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the economy's stock of capital is shrinking.
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Tom Atoe grows fruits and vegetables for home consumption. This activity is:
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productive but is excluded from GDP because no market transaction occurs
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Which of the following do national income accountants consider to be investment?
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The purchase of a new house.
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If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.
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true
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Answer the question on the basis of the following data. All figures are in billions of dollars: Government Purchases $15 Consumption 90 Gross investment 20 consumption of fixed capital 5 exports 8 imports 12 Refer to the data. GDP is:
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$121
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Answer the question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per unit prices of these three goods are A = $2, B = $3, and C = $1. (Advanced analysis) Refer to the information. If the per unit prices of the three goods were each $1 in a base year used to construct a GDP price index, then real GDP in the current year is:
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$45
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Answer the question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per unit prices of these three goods are A = $2, B = $3, and C = $1. (Advanced analysis) Refer to the information. If the per unit prices of the three goods were each $1 in a base year used to construct a GDP price index, then the GDP price index in the current year is: Question 29 options:
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255.5
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Suppose that inventories were $40 billion in 2012 and $50 billion in 2013. In 2013, national income accountants would:
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add $10 billion to other elements of investment in calculating total investment.
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Which of the following is a final good or service?
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haircut
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Answer the question on the basis of the following national income data for the economy. All figures are in billions of dollars. Personal Consumption Expenditures 400 Government Purchases 128 Gross Private Domestic Investment 88 Net Exports 7 Net Foreign Factor Income 0 Consumption of Fixed Capital 43 Taxes on Production and Imports 50 Compensation of Employees 369 Rents 12 Interests 15 Proprietor's Income 52 Corporate Income Taxes 36 Dividends 24 Undistributed Corporate Profits 22 Statistical Discrepancy 0 The gross domestic product for the above economy is:
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$623
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Answer the next question(s) on the basis of the following data. All figures are in billions of dollars. Personal taxes $40 Social Security Contributions 15 Taxes on Production and Imports 20 Corporate Income Taxes 40 Transfer Payments 22 US Exports 24 Undistributed Corporate Profits 35 Government Purchases 90 Gross Private Domestic Investment 75 US Imports 22 Personal Consumption Expenditures 250 Consumption of Fixed Capital 25 Net Foreign Factor 10 Statistical Discrepancy 0 Refer to the above data. DI is:
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$274
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Answer the question on the basis of the following national income data. All figures are in billions of dollars. Net Private Domestic Investment 33 Net Exports 6 National Income 278 US Exports 20 Gross Private Domestic Investment 56 Disposable Income 220 Taxes on Production and Imports 32 Undistributed Corporate Profits 15 Proprietor's Income 45 Net Foreign Factors Income 0 Statistical Discrepancy 0 Refer to the data. The gross domestic product is:
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$301
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