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Exam 10: Measuring a Nations Income

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Question 111

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Which of the following is included in GDP?

A) the market value of rental housing services, but not the market value of owner-occupied housing services.
B) the market value of owner-occupied housing services, but not the market value of rental housing services
C) both the market value of rental housing services and the market value of owner-occupied housing services
D) neither the market value of owner-occupied housing services nor the market value of rental housing services.

E) B) and D)
F) All of the above

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Question 112

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If total spending rises from one year to the next, then which of the following could not be true?

A) the economy is producing a smaller output of goods and services, and goods and services are selling at higher prices.
B) the economy is producing a larger output of goods and services, and goods and services are selling at lower prices.
C) the economy is producing a larger output of goods and services, and goods and services are selling at higher prices.
D) the economy is producing a smaller output of goods and services, and goods and services are selling at lower prices.

E) All of the above
F) A) and C)

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Question 113

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Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide and sells it to Chewy Chomp, Inc., which uses the rawhide to produce and sell dog chews. With each $1 worth of rawhide that it buys from Rolling Rawhide, Chewy Chomp, Inc. produces a dog chew and sells it for $2.50. Neither firm had any inventory at the beginning of 2014. During that year, Rolling Rawhide produced enough rawhide for 2000 dog chews. Chewy Chomp, Inc. bought 90% of that rawhide for $1800 and promised to buy the remaining 10% for $200 in 2015. Chewy Chomp, Inc. produced 1800 dog chews during 2014 and sold each one during that year for $2.50. What was the economy's GDP for 2014?

Nominal GDP will definitely increase when

Which of the following statements about GDP is correct?

A farmer sells five pounds of pecans to a Smith's Fresh Pecans for $10. Smith's Fresh Pecans resells three pounds for $4.50 per pound. The remaining pecans are shelled and canned and sold for a total of $8.00 Taking these transactions into account, how much is added to GDP?

Which of the following is included in the investment component of GDP?

Table 23-8 A country produces only meat and potatoes in the quantities and prices listed below. Use 2011 as the base year. -Refer to Table 23-8. In 2012, nominal GDP is

In the United States in 2012, purchases of capital equipment, inventories, and structures represented approximately

Table 23-9 A country produces only ice cream and pie. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Prices and Quantities -Refer to Table 23-9. In 2009, this country's

While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services provided by teachers and exterminators.

Nominal GDP uses constant base­year prices to place a value on the economy's production of goods and services, while real GDP uses current prices to place a value on the economy's production of goods and services.

In 2012 a country had a real GDP $15.4 trillion and GDP deflator of 125. If that country's GDP deflator equals 115 in 2013, what is the rate of inflation in 2013?

If the U.S. government reports that GDP in the third quarter was $16 trillion at an annual rate, then the amount of income and expenditure during quarter three was $4 trillion.

Table 23-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 23-4. What are the GDP deflator and the inflation rate for 1931?

James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to GDP?

The government of country A, which has adopted American GDP accounting conventions, has calculated that the seasonally-adjusted market value of all final goods and services produced within country A in quarter 1 was $5 billion. The government will report that GDP in quarter 1 was

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarters) doesdo) these transactions raise consumption?

GDP does not make adjustments for leisure time, environmental quality, or volunteer work.

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP?