Question 1

If on-the-job working conditions have improved over time,

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The answer of If on-the-job working conditions have improved over...

Question 2

How much would be added to this year's GDP if you sold your four-year-old automobile for $4,000 and purchased a two-year-old model from an acquaintance for $10,000.

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The answer of How much would be added to this...

Question 3

Answer the following questions:
a.
What does GDP measure, and why is it a useful tool for economists, business decision makers, and government policy makers?
b.
Explain at least two important things GDP does not measure.

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The answer of Answer the following questions:
a.
What does GDP measure,...

Question 4

Explain the two approaches to calculating GDP.

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Question 5

Use the table below to choose the correct answer. 
Gross domestic product equals

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The answer of Use the table below to choose the...

Question 6

As per capita GDP has risen in the United States and other countries,

Accepted Answer

As per capita GDP has risen in the United States and other countries, there has been an overall improvement in various quality of life variables. Life expectancy has increased and infant mortality and illiteracy rates have gone down, while leisure time has also increased. This is in line with the general trend of economic growth being positively correlated with improvements in human development indicators.

Question 7

National income is

Accepted Answer

National income is the total income earned by a country's factors of production, including employee compensation, self-employment income, interest, rents, and corporate profits. It is important to note that national income does not include taxes paid by individuals or the government's transfer payments, such as social security benefits.

Question 8

Accurate measurement of GDP is important to business decision-makers because this information will help them better determine the

Accepted Answer

Accurate measurement of GDP helps business decision-makers understand the overall course of the economy and the direction of demand for their products, which is important for making informed decisions about production, investment, and expansion. GDP does not provide information about the general happiness of a country's citizens, the economic well-being of a particular group within a country, or the amount of leisure time available and the quality of life in a country.

Question 9

In a country where many families make their own clothes, GDP will be understated because the clothes making represents

Accepted Answer

Making clothes for personal use is considered nonmarket production, which is not included in GDP calculations.

Question 10

Which of the following would increase U.S. GDP?

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The answer of Which of the following would increase U.S....

Question 11

If the GDP deflator in 2009 was 120 compared to a value of 100 during the 2004 base year, this would indicate that

Accepted Answer

The GDP deflator is a measure of the general level of prices in an economy. When the GDP deflator in 2009 was 120 compared to a value of 100 during the 2004 base year, it means that the general level of prices in 2009 was 20 percent higher than in 2004.

Question 12

If the Consumer Price Index in 2008 was 150 and the CPI in 2009 was 165, the rate of inflation between 2008 and 2009 would be

Accepted Answer

To calculate the rate of inflation:
Inflation rate = ((CPI in current year - CPI in previous year) / CPI in previous year) x 100%
= ((165 - 150) / 150) x 100%
= (15 / 150) x 100%
= 0.1 x 100%
= 10%
Therefore, the correct answer is B.

Question 13

Your father tells you he earned $3.00 per hour when he was 16 in 1977; you remember making $6.00 per hour when you were 16 in 1999. Given that the CPI was 36.7 in 1969 and 166.1 in 2007, which of the following is the 2007 real equivalent of your father's hourly earnings when he was 16?

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The answer of Your father tells you he earned $3.00...

Question 14

Economists generally use GDP to measure a nation's total output because it is

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GDP is a measure of the value of all final goods and services produced within a specific time period. While it may not be a perfect measure, it is relatively reliable and widely used by economists and policymakers to make comparisons between countries and track economic growth over time. A is incorrect because GDP is not necessarily equal to the sales value of all transactions, as intermediate goods and services are not included. B is incorrect because GDP does not necessarily reflect the true costs of production, as it does not account for externalities or the distribution of income. C is incorrect because GDP is affected by changes in the prices of products over time, as it is measured in nominal terms (i.e. current prices) and must be adjusted for inflation to provide a real measure of output.

Question 15

The dollar value of GDP increased approximately 4 percent during the year, but real GDP fell 2 percent. Which of the following best explains this data?

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Question 16

Which of the following accurately indicates how the recent outbreaks of terrorism have influenced the GDP of western nations?

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The answer of Which of the following accurately indicates how...

Question 17

Which of the following would be counted in the calculation of GDP?

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The answer of Which of the following would be counted...

Question 18

The primary value of GDP lies in its ability to

Accepted Answer

The primary value of GDP lies in its ability to indicate short-term changes in the output rate of a nation. GDP is a measure of the total value of goods and services produced within a country over a specific period of time, usually a year. By tracking changes in GDP over time, it is possible to get a sense of whether the economy is growing or contracting. While higher GDP generally indicates a stronger economy, it does not necessarily reflect the welfare of a society or the quality of a nation's products. It also does not indicate how much leisure time the people of a nation have.

Question 19

Assume that between 1999 and 2009 nominal GDP increased from $7 trillion to $12 trillion and that the GDP deflator rose from 100 to 150. Which of the following expresses GDP for 2009 in terms of 1999 prices?

Accepted Answer

To calculate real GDP in 2009 using 1999 prices, we need to divide nominal GDP in 2009 by the GDP deflator in 2009 and then multiply it by the GDP deflator in 1999:
Real GDP in 2009 = (Nominal GDP in 2009/GDP deflator in 2009) x GDP deflator in 1999
= ($12 trillion/150) x 100
= $8 trillion.

Question 20

Per capita GDP is

Accepted Answer

Per capita GDP is a measure of income per person, which is calculated by dividing real GDP by the total population. It provides a way to compare the level of economic development between countries and over time.

Quiz 7: B : Taking the Nations Economic Pulse