Name Quiz 2 Description CH 1 Instructions Modify. Answer. Correct Feedback Correct. Incorrect. Incorrect. Feedback. Answer. Incorrect Incorrect.

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1 Name Quiz 2 Description CH 1 Instructions Modify 1 Multiple Choice Modify Remove Which of the following is not included in GDP? unpaid cleaning and maintenance of houses services such as those provided by lawyers and hair stylists the estimated rental value of owneroccupied housing production of foreign citizens living in the United States 2 Multiple Choice Modify Remove Over time people have come to rely more on marketproduced goods and less on goods that they produce for themselves. For example people eat at restaurants relatively more and prepare their own meals at home relatively less. By itself this change would make GDP fall over time. not make any change in GDP over time. make GDP rise over time. change GDP, but in an uncertain direction. 3 Multiple Choice Modify Remove Roommates Fatima and Mariam are sharing household chores and think they have an even exchange. Other things the same,

2 if instead they paid each other for the chores the other did GDP would rise. fall. be unaffected because paid or not, household chores are not included in GDP. be unaffected because paid or not, household chores are included in GDP. 4 Multiple Choice Modify Remove Darla, a Canadian citizen, only works in the Dubai. The value added to production from her employment is included in both Canada GDP and UAE GDP. included only in Dubai GDP. included only in Canda. GDP. not included in either Canada GDP or Dubai GDP. 5 Multiple Choice Modify Remove To encourage formation of small businesses, the government could provide subsidies; these subsidies would be included in GDP because they are part of government expenditures. be included in GDP because they are part of investment expenditures. not be included in GDP because they are transfer payments. not be included in GDP because the government raises taxes to pay for them.

3 6 Multiple Choice Modify Remove Unemployment compensation is part of GDP because it represents income. not part of GDP because it is a transfer payment. part of GDP because the recipients must have worked in the past to qualify. not part of GDP because the payments reduce business profits. 7 Multiple Choice Modify Remove Which of the following is included in UAE GDP? UAE exports of goods and services Social Security payments the sale of used goods None of the above are correct. 8 Multiple Choice Modify Remove Which of the following is included in the Consumption component of GDP? Social Security payments purchases of foreign goods and services purchases of newly constructed homes

4 All of the above are correct. 9 Multiple Choice Modify Remove Which of the following is included in the investment component of GDP? purchases of newly constructed homes purchases of foreign capital goods such as industrial equipment Building a stat of the art hospital All of the above are correct. 10 Multiple Choice Modify Remove If in a given year an economy has consumption of $3000, investment of $2000, government purchases of $1500, exports of $500, imports of $600, taxes of $1200, transfer payments of $400, and depreciation of $300, then GDP will equal $6400. $7000. $7600. $8900. $ Multiple Choice Modify Remove Consider the following table for the country of Ophir: Year Nominal GDP GDP Deflator 2000 $ $ $

5 From this information we can conclude that real GDP was higher in 2002 than in 2001, and real GDP in 2001 was higher than in than in 2000, and real GDP in 2001 was higher than in than in 2001, and real GDP in 2001 was higher than in than in 2002, and real GDP in 2001 was higher than in Multiple Choice Modify Remove If a small country has current nominal GDP of $25 billion and the GDP deflator is 125, what is real GDP? $312.5 billion $207.5 billion $31.25 billion $20 billion 13 Multiple Choice Modify Remove A farmer produces the same output in 2004 as in His input prices increase by 50 percent, but so does his product price. We can conclude that the farmer is better off in the farmer was better off in the farmer is equally well off in 2004 as in we cannot tell whether the farmer is better off in 2004 or in 2003 without additional information.

6 14 Multiple Choice Modify Remove Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are not measured as part of GDP. Therefore, GDP is not a useful measure of society's welfare. However, GDP is still a useful measure of society's welfare because providing these other attributes is the responsibility of government. However, GDP is still a useful measure of society's welfare because it measures a nation's ability to purchase the inputs that can be used to help produce the things that contribute to welfare. However, GDP is still the best measure of society's welfare because these other values cannot actually be measured.