question

Nominal GDP is GDP in a given year

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valued in the prices of that year

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The nominal GDP of the US in 2010 was approximately $14.6 trillion. This means

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total spending in 2012 was around $14.6 trillion, total income in 2012 was around $14.6 trillion, and the value of output in 2012 was around $14.6 trillion

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

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gross national product of Mexico

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Disposable personal income equals personal income

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minus personal tax payments

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

answer

net exports

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

answer

increased

question

In May 2009, Ford Motor Company's sales were down 20% from a year earlier. These events were caused by

answer

an economic recession

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National income equals gross national product minus

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depreciation

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Which of the following in not directly counted in GDP?

answer

intermediate goods

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Which of the following statements about the underground economy is true?

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Excluding underground economy production from meadsured GDP causes errors in GDP growth estimates in the long run

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

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GDP is much larger than GNP

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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

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GDP understates the total production of final goods and services because of the omission of

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the underground economy

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

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prices in 2011 are lower than prices in 2010

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Depreciation is

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

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

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computer by an accounting firm

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To calculate GDP by the expenditure method, one must add

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

question

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

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decreases US GDP and increases the well-being of a typical working person in the US

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

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health insurance payments to an army private

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

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it may be possible for nominal GDP to increase

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If an American firm opened a production facility in India, the total value of the production will be included in the

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GDP of India

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The purchase by a foreign government of an airplane produced in the US is included in US

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net exports

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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 1977

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The Philippines and Vietnam have roughly the same size population. suppose the GDP of the Philippines if $1,000 billion and the GDP of Vietnam is $10,000 billion. you should conclude

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it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional info

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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

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5% higher in year 2 than in year 1

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If GDP calculations included measurements of pollution and environmental damage, GDP values would most likely be

answer

less than their values without these measurements

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

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increases; increases

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Recent estimates put the size of the underground economy in the US at _____ of measured GDP

answer

8%

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Real GDP is GDP in a given year

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valued in the prices of the base year

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T/F: GDP accounting rules do not adjust for production that pollutes the economy

answer

True

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In the first half of 2011, automobile sales in the US 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

consumption; investment

question

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

answer

averaged hours worked per week increased

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Which of the following headlines would be more closely related to what macro economists study than what micro study?

answer

Real GDP grows by 2.3% in the second quarter

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If prices in the economy rise, then

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the purchasing power of the dollar declines

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The GDP deflator is a measure of the

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

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National income equals GDP

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minus the consumption of fixed capital

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Macro, as opposed to micro, includes the study of what determines the

answer

wages paid to employees by Dell

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Suppose, in 2012, you purchased a house built in 2003. Which of the following would be included in the GDP of 2012?

answer

the value of services of the realtor

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In the circular flow model, the value of total income for an economy _____ the value of total production.

answer

equals

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The GDP deflator is

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ratio of nominal GDP to real GDP multiplied by 100

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Which of the following is not true about the composition of GDP in 2010?

answer

The majority of consumer spending is on durable goods

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The purchase of a new house is included in

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investment expenditures

question

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

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increased income tax rates

question

Which of the following is not a durable good?

answer

clothing

question

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

answer

125

question

Which of the following goods is directly counted in GDP?

answer

a 12-inch Subway sandwich purchased by a student

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