Question 1

Suppose that in year 1 every adult in the country works 40 hours a week and GDP is $6.7 trillion.In year 2 every adult in the country works 45 hours a week and GDP is $7.5 trillion.Which of the following statements is true?

Accepted Answer

The increase in GDP from year 1 to year 2 does not necessarily mean per-capita GDP is higher or that people are "better off," as it doesn't account for the increased hours worked or how the GDP is distributed among the population. Statement C about government transfer payments is unrelated to the information provided.

Question 2

Which of the following is a macroeconomic measurement used to gauge macroeconomic activity?

Accepted Answer

All of the given choices are macroeconomic measurements used to gauge macroeconomic activity. Net domestic product measures the value of goods and services produced within a country's borders. National income measures the total income earned by a country's citizens and businesses. Personal income measures the income received by individuals from all sources. Disposable income measures the income remaining after taxes and other mandatory deductions have been taken out.

Question 3

If GDP in year 1 is the same dollar amount as the GDP in year 2,does it follow that Real GDP in year 1 is the same as Real GDP in year 2?

Accepted Answer

Just because the GDP in dollar amount is the same in two different years, it does not indicate that the Real GDP is the same. Real GDP takes into account changes in prices which may fluctuate between the two years. Therefore, if prices are not the same in both years, Real GDP will differ.

Question 4

Look at the following data: durable goods = $200 billion;nondurable goods = $350 billion;services = $600 billion;fixed investment + inventory investment = $200 billion;government purchases = $400 billion;exports = $30 billion;imports = $79 billion.GDP is equal to

Accepted Answer

GDP = C + I + G + (X-M)= (200+350+600) + (200+400) + (30-79)= 1150 + 600 - 49= 1701 billion

Question 5

In which phase of the business cycle does a recession occur?

Accepted Answer

A recession occurs during the contraction phase of the business cycle when economic activity is declining and unemployment is rising.

Question 6

Which of the following goods is an intermediate good?

Accepted Answer

Intermediate goods are those used in the production of final goods. Both lettuce for sandwiches and tires for cars are used in producing final products (meals and cars, respectively).

Question 7

The sale of __________ goods is omitted from current GDP because __________.

Accepted Answer

The answer of The sale of __________ goods is omitted...

Question 8

Real GDP is the value of all __________ goods and services produced in a given year in __________ prices.

Accepted Answer

Real GDP is calculated using constant (or base-year) prices to account for inflation and changes in prices over time. Final goods and services refers to those that are meant for consumption or investment, as opposed to intermediate goods which are used to produce other goods.

Question 9

Look at the following data: GDP = $11,920 billion;investment = $2,100 billion;exports = $500 billion;government purchases = $1,450 billion;consumption = $8,500 billion.What does import spending equal?

Accepted Answer

Import spending equals GDP minus consumption, investment, government purchases, and exports. In this case, import spending equals $11,920 billion - $8,500 billion - $2,100 billion - $1,450 billion - $500 billion = $630 billion.

Question 10

Suppose you have data on durable goods,nondurable goods,fixed investment,government purchases,exports,and imports.Can you compute GDP?

Accepted Answer

The answer of Suppose you have data on durable goods,nondurable...

Question 11

The standard definition of "recession" is

Accepted Answer

The standard definition of a recession is two consecutive quarters of falling Real GDP. This indicates a decline in economic activity and production. A positive frictional unemployment rate, the lowest point in a business cycle, or negative inflation may be indicators of a recession, but they are not the standard definition.

Question 12

The base year is the year

Accepted Answer

The base year serves as a reference point or benchmark for measuring changes in prices and economic activity. It is not necessarily the year with the highest or lowest prices or output, and it does not indicate whether prices are stable or unstable.

Question 13

Increases in import spending _____________________,ceteris paribus.

Accepted Answer

Increases in import spending, ceteris paribus, mean that more money is flowing out of the country to purchase foreign goods and services, which reduces the domestic demand and thus lowers the Gross Domestic Product (GDP).

Question 14

Real GDP is always measured in

Accepted Answer

Real GDP is adjusted for inflation by using base-year dollars, which allows for a comparison of economic output over time. This is in contrast to nominal GDP, which is measured in current (or nominal) dollars and does not account for changes in prices.

Question 15

Which of the following statements is true?

Accepted Answer

The answer of Which of the following statements is true?
...

Question 16

Look at the following data: consumption = $915 billion;exports = $40 billion;imports = $33 billion;inventory investment = $123 billion;fixed investment = $500 billion;government purchases = $300 billion.GDP is equal to

Accepted Answer

The answer of Look at the following data: consumption =...

Question 17

The typical U.S.business cycle,measured peak to peak,lasts approximately

Accepted Answer

The answer of The typical U.S.business cycle,measured peak to peak,lasts...

Question 18

"Economic growth" has occurred if

Accepted Answer

Economic growth is measured by an increase in Real GDP from one year to the next, which means that the value of goods and services produced in the current year is greater than the value produced in the previous year. Therefore, choice D is the correct answer.

Question 19

Is it possible for a country with a relatively large GDP to have a relatively small per-capita GDP?

Accepted Answer

A country with a large GDP could have a large population, which would divide the GDP among many people and result in a relatively small per-capita GDP.

Question 20

Which of the following does GDP omit?

Accepted Answer

GDP measures the market value of all final goods and services produced within a country in a given period. It omits stock purchases (A) because they are financial transactions, not production of goods or services. Personal non-market activities (B), like mowing one's lawn or doing one's laundry, are also excluded because they do not involve a market transaction. Social Security payments (C) are transfers, not payments for goods or services produced, and thus are not included in GDP.

Quiz 7: Macroeconomic Measurements, part II: GDP and Real GDP