question

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

answer

increases; increases

question

Which of the following is not directly counted in GDP

answer

intermediate goods

question

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

answer

6,400

question

The nominal GDP of the U.S. in 2015 was approximately $17.3 trillion. This means that

answer

all of the above are true. the value of output in 2015 was around $17.3 trillion. total income in 2015 was around $17.3 trillion. total spending in 2015 was around $17.3 trillion

question

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

answer

computer by an accounting firm.

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question

The purchase by a foreign government of an airplane produced in the United States is included in U.S

answer

net exports

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question

Gross domestic product in the economy is measured by the

answer

dollar value of all final goods and services produced in the economy.

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question

Which of the following are not considered part of government purchases?

answer

welfare benefits ARE APART: -Teachers' salaries paid by a local government -a tank purchased by the federal government -a bridge purchased by the state government

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question

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

answer

household production.

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question

Real GDP is GDP in a given year

answer

valued in the prices of the base year.

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question

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

answer

2014.

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question

Suppose that nominal GDP in 2016 was less than real GDP in 2016. Given this information, we know for certain that

answer

the price level in 2016 was less than the price level in the base year.

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question

If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is

answer

125.

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question

What is the GDP deflator in 2016 if 2016 is the base year?

answer

100

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question

If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years?

answer

2.7%

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question

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

answer

gross national product of Mexico.

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question

Residential investment includes spending by firms on office buildings.

answer

False

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question

Developing countries with large informal sectors tend to have firms that invest less in capital equipment.

answer

True

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question

If nominal GDP is less than real GDP, then the GDP deflator will be greater than 100.

answer

False

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question

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

answer

False

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ECON HW 5 – Flashcards

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