Deck 15: GDP: Measuring Total Production and Income

Question 1

In 2009, Emirates Airlines experienced a decrease in the demand for its services and this led to declining profits. These events were caused by

A) lower quality of service.
B) an economic recession due to the financial crisis.
C) unsuccessful marketing campaign.
D) an economic expansion that led to higher ticket prices.

Answer 1

an economic recession due to the financial crisis.

Question 2

In 2010, Al-Rashed an automobile dealership, spends $20,000 on a new car lift for its repair shop, $2,000 on a new copy machine for its sales division, and $500,000 on imported Nissan company stock. Unsold cars and trucks were valued at $600,000 on January 1, 2010 and unsold cars and trucks were valued at $900,000 on December 31, 2010. What is Al-Rashed's total investment spending in 2010?

A) $922,000
B) $522,000
C) $322,000
D) $22,000

Answer 2

$322,000

Question 3

Consider the table above showing three stages of production of an automobile.

-Refer to Table 15 -5. The value added by the automobile dealer equals

A) $25,000.
B) $15,000.
C) $18,000.
D) $7,000.

Answer 3

$7,000.

Question 4

Consider the table above showing three stages of production of an automobile.

-Refer to Table 15 -5. The value of each automobile in gross domestic product equals

A) $15,000.
B) $25,000.
C) $7,000.
D) $18,000.

Question 5

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

A) a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines.
B) a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines.
C) a typical person in Vietnam is 10 times as well off as the typical person in the Philippines.
D) it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information.

Question 6

Many Arab countries have a larger informal sector of the economy relative to developed countries. What effect would this have on the GDP of Arab countries?

A) Understate the GDP of Arab countries.
B) It has no effect on the GDP of Arab countries.
C) Overstate the GDP of Arab countries.
D) None of the above.

Question 7

Consider the data shown above for a fictional economy that produces only two products: oranges and shirts.

-Refer to Table 15 -10. Real GDP for this fictional economy for 1998 using 2000 as the base year equals

A) $4,620.
B) $5,300.
C) $5,850.
D) $5,100.

Question 8

Consider the data shown above for a fictional economy that produces only two products: oranges and shirts.

-Refer to Table 15 -10. Nominal GDP for this fictional economy for 1998 equals

A) $5,300.
B) $5,100.
C) $4,620.
D) $5,850.

Question 9

If real GDP in 2007 (using 2002 prices) is lower than nominal GDP of 2006, then

A) prices in 2007 are lower than prices in 2006.
B) prices in 2007 are higher than prices in 2006.
C) nominal GDP in 2007 equals nominal GDP in 2006.
D) real GDP in 2007 is larger than real GDP in 2006.

Question 10

-Refer to Table 15 -11. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 1999 equals

A) 104.1.
B) 95.5.
C) 105.6.
D) 104.7.

Question 11

-Refer to Table 15 -12. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 1998 equals

A) 96.9.
B) 104.2.
C) 103.2.
D) 105.7.

Question 12

In 2009 Kuwait's nominal GDP declined by 30 percent, while the economy registered growth of more than 4 percent. Which of the following is true?

A) Both Nominal and Real GDP Growth are not good indicators of production growth.
B) The growth in Real GDP is a good indicator of how production increased from one year to another.
C) The growth in Nominal GDP is a good indicator of how production increased from one year to another.
D) Both Nominal GDP and Real GDP growth are good indicators of production growth.

Question 13

The output of Bahraini citizens who work in Saudi Arabia would be included in the

A) gross domestic product of the Bahrain.
B) gross national product of Saudi Arabia.
C) gross domestic product of Saudi Arabia.
D) gross national product of Saudi Arabia and the gross national product of Bahrain.

Question 14

Which of the following is a key economic policy measure that the head of the IMF' Middle East and Central Asia recommended in May 2009?

A) Maintain or increase public spending where possible
B) Reduce oil prices
C) Relax control on financial systems
D) Increase exports