ECON 120 -ESSENTIALS OF ECONOMICS

Transcription

1 Name ECON 120 -ESSENTIALS OF ECONOMICS CH 21 Measuring National Inome MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The total market value of all final goods and services produced within a given period by factors of production located within a country is A) net national product. B) gross national product. C) gross domestic product. D) net national income. 1) 2) Gross domestic product measures 2) A) the total income of everyone in the economy. B) the total spending of everyone in the economy. C) the value of all output in the economy. D) all of the above 3) Which of the following is a good or service counted in GDP? 3) A) a used tire you buy for your personal car B) tires Ford buys to put on a car C) a new tire you buy for your personal car D) used tires bought by a used car dealer to put on a car on his lot 4) Which of the following is an example of an intermediate good? 4) A) the dough you buy to fix yourself a pizza for dinner B) the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to C) the chocolate you buy to make yourself some cookies D) lumber you buy to build a house for your dog 5) Which of the following would NOT be counted in 2013's GDP? 5) A) the value of a refrigerator manufactured in 2013 but not sold in 2013 B) the commissions earned by a real estate agent in selling condominiums built prior to 2013 C) the 2013 salary of a used motorcycle salesperson D) the value of a 8 boat you purchase from a boat dealer in ) Which of the following would be counted in 2013's GDP? 6) A) the value of a TV that was produced in 2012 but not sold until 2013 B) the bonus check a stockbroker gets from his/her company in 2013 C) the value of a bond sold by the federal government D) the value of a loan you take in ) If no foreign companies produce in a country, but many of the country's companies produce abroad, then A) the country's GDP will tend to be equal to its domestic income. B) the country's GNP will tend to exceed its GDP. C) the country's GNP and GDP will tend to be equal. D) the country's GDP will tend to exceed its GNP. 7) 1

2 8) Which of the following is included in both the U.S. GDP and GNP? 8) A) The value of all cars produced by Ford in Mexico. B) The value of cars produced by Nissan in Japan and the U.S. C) The value of all cars produced by General Motors in the U.S. D) The value of all cars produced by Toyota in the U.S. 9) The value of what KFC produces in Japan is included in the U.S. and in the Japanese. A) GNP; GNP B) GNP; GDP C) GDP; GDP D) GDP; GNP 9) 10) Profits earned in the United States by foreign-owned companies are included in 10) A) neither the U.S. GDP nor GNP. B) the U.S. GDP but not GNP. C) both the U.S. GDP and GNP. D) the U.S. GNP but not GDP. 11) Income Mexican citizens earn in the U.S. counts in 11) A) U.S. GNP. B) Mexican GDP. C) Mexican GNP. D) both U.S. and Mexican GDP. 12) The equation for GDP using the expenditure approach is 12) A) GDP = C + I + G + (IM - EX). B) GDP = C + I + G - EX - IM. C) GDP = C + I + G + EX + IM. D) GDP = C + I + G + EX - IM. Refer to the information provided in Table 21.2 below to answer the questions that follow. Table 21.2 Federal purchases of goods Services Imports Change in business inventories Durable goods Nondurable goods Exports Residential investment State and local purchases Nonresidential investment $Billions ) Refer to Table Personal consumption expenditures in billions of dollars are 13) A) 900. B) 1,100. C) 1,400. D) 1, ) Refer to Table The value for gross private domestic investment in billions of dollars is 14) A) 740. B) 810. C) 850. D) ) Refer to Table The value for net exports in billions of dollars is 15) A) -. B) C) 50. D) ) Refer to Table The value of government spending in billions of dollars is 16) A). B) 600. C) 800. D) 1,000. 2

3 17) In 2012 final sales equal $ billion, and the change in business inventories is $50 billion. GDP in 2012 A) is $250 billion. B) is $ billion. C) is $150 billion. D) is $40 billion. 17) 18) If net investment in 2012 is $350 billion and gross investment in 2012 is $500 billion, depreciation in 2012 is A) $0.7 billion. B) $150 billion. C) $175 billion. D) $250 billion. 18) 19) When calculating GDP, exports are and imports are. 19) A) added; subtracted B) subtracted; added C) subtracted; subtracted D) added; added 20) If national income is $600 billion, personal income is $400 billion, personal taxes are $120 billion, then disposable income equals A) $480 billion. B) $320 billion. C) $280 billion. D) $80 billion. 20) 21) Nominal GDP measures the value of all goods and services 21) A) in fixed dollars. B) in constant dollars. C) without inflation. D) in current dollars. 22) Real GDP is gross domestic product measured 22) A) in current dollars. B) as the difference between the current year's GDP and last year's GDP. C) in the prices of a base year. D) at a constant output level but at current prices. 23) If real GDP in 2012 using 2011 prices is lower than nominal GDP of 2012, then 23) A) nominal GDP in 2012 equals nominal GDP in B) real GDP in 2012 is larger than real GDP in C) prices in 2012 are lower than prices in D) prices in 2012 are higher than prices in Refer to the information provided in Table 21.5 below to answer the questions that follow. Table 21.5 Year 1 Production Year 2 Year 3 Year 1 Prices Year 2 Year 3 Good X $1.00 $1.00 $1.40 Good Y $0.80 $0.90 $ ) Refer to Table Assume that this economy produces only two goods Good X and Good Y. The value for this economy's nominal GDP in year 1 is A) $140. B) $160. C) $180. D) $. 24) 25) Refer to Table Assume that this economy produces only two goods Good X and Good Y. The value for this economy's nominal GDP in year 3 is A) $204. B) $222. C) $250. D) $ ) 3

4 26) Refer to Table Assume that this economy produces only two goods Good X and Good Y. The value for this economy's nominal GDP in year 2 is A) $168. B) $179. C) $202. D) $ ) 27) Refer to Table Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's real GDP in year 2 is A) $168. B) $179. C) $202. D) $ ) 28) Refer to Table Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 1 is A) 1. B) 100. C) 110. D) ) 29) Refer to Table Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 2 is A) B) 100. C) D) ) 30) If nominal GDP is $8 trillion and real GDP is $6 trillion, the GDP deflator is 30) A) 48. B) 75. C) D) ) GDP is not a perfect measure of social welfare and the society's economic well-being because 31) A) it does not include all economic activities in the economy. B) GDP accounting rules do not adjust for production that causes negative externalities. C) it does not say anything about the distribution of income. D) all of the above 32) Legalizing all forms of illegal activities would 32) A) increase the size of the underground economy and reduce measured GDP. B) reduce the size of the underground economy and increase measured GDP. C) reduce measured GDP. D) reduce both the underground economy and measured GDP. 4

5 Answer Key Testname: EXERCISES CH 21 1) C 2) D 3) C 4) B 5) D 6) B 7) B 8) C 9) B 10) B 11) C 12) D 13) C 14) D 15) B 16) D 17) A 18) B 19) A 20) C 21) D 22) C 23) D 24) A 25) D 26) B 27) A 28) B 29) C 30) C 31) D 32) B 5