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Exam 23: Measuring a Nations Income

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Question 101

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Which of the following is included in the calculation of GDP?

A) The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.
B) The purchase of a new edition of a foreign textbook that was produced in a different nation.
C) The purchase of ink and paper supplies by a textbook company for the production of new textbooks.
D) The purchase of a used textbook from a friend who took the same class last year.

E) C) and D)
F) B) and D)

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Question 102

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For an economy as a whole, income must exceed expenditure.

A) True
B) False

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Question 103

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Consumption is $7 trillion, investment is $1.5 trillion, government expenditures are $2 trillion, government transfer payments are $1 trillion, exports are $1.50 trillion and imports are $1.25 trillion. What is GDP?

If the price of a hat is five times the price of a pair of shoes, then a pair of shoes contributes

How frequently is U.S. GDP reported? Is GDP adjusted for seasonality?

U.S. GDP excludes the production of most illegal goods.

Table 23-3 The following table reports nominal and real GDP for the U.S. from 1929 to 1932. ​ $\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Nominal GDP } \\\text { (Billions of dollars) }\end{array} & \begin{array} { c } \text { Real GDP } \\\text { (Billions of dollars) }\end{array} \\\hline 1929 & 103.6 & 977 \\\hline 1930 & 91.2 & 892.8 \\\hline 1931 & 76.5 & 834.9 \\\hline 1932 & 58.7 & 725.8 \\\hline\end{array}$ -Refer to Table 23-3. If prices had remained constant between 1929 and 1930, Nominal GDP would have decreased

Identify the largest and smallest components of GDP.

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Macroeconomic statistics include GDP, the inflation rate, the unemployment rate, retail sales, and the trade deficit.

Daniel, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

GDP does not directly measure those things that make life worthwhile, but it does measure our ability to obtain many of the inputs into a worthwhile life.

Economists use the term inflation to describe a situation in which the economy's overall production level is rising.

What three types of goods are included in investment spending?

Write the formula for calculating a country's inflation rate using the GDP deflator.

Java Hut, a U.S. coffee retailer, buys $10 million worth of coffee beans from Colombia. It also pays $5 million for paper cups and utilities, all produced in the U.S. It sells the coffee it produces using the above inputs to U.S. consumers for $50 million. Overall how do these expenditure affect net exports? How do these expenditures effect U.S. consumption?

If the GDP deflator in 2009 was 150 and the GDP deflator in 2010 was 175, then the inflation rate in 2010 was 25%.

Table 23-2 The following table contains data for country Mindalion for the year 2019. ​ $\begin{array} { | l | l | } \hline \text { Household purchases of durable goods } & \$ 1,695 \\\hline \text { Household purchases of nondurable goods } & \$ 1,717 \\\hline \text { Household purchases of services } & \$ 400 \\\hline \text { Household purchases of new housing } & \$ 704 \\\hline \text { Purchases of capital equipment } & \$ 310 \\\hline \text { Inventory changes } & \$ 399 \\\hline \text { Purchases of new structures } & \$ 611 \\\hline \text { Depreciati on } & \$ 117 \\\hline \text { Salaries of government workers } & \$ 1,422 \\\hline \text { Government expenditures on public works } & \$ 589 \\\hline \text { Transfer payments } & \$ 777 \\\hline \text { Foreign purchases of domestically produced goods } & \$ 88 \\\hline \text { Domestic purchases of foreign goods } & \$ 140 \\\hline\end{array}$ -Refer to Table 23-2. What was country Mindalion's GDP in 2019?

Explain the pattern seen between GDP per person and quality of life measures such as life expectancy, literacy, and Internet usage.