Question 1

International data on GDP and socioeconomic variables

Accepted Answer

The international data on GDP and socioeconomic variables indicate that a nation's GDP is closely associated with its citizens' standard of living. While there may be additional factors that influence the well-being of citizens, the data clearly demonstrate a strong correlation between GDP and standard of living.

Question 2

Suppose that twenty-five years ago a country had nominal GDP of $1,000,a GDP deflator of 200,and a population of 100.Today it has nominal GDP of $3,000,a GDP deflator of 400,and population of 150.What happened to the real GDP per person?

Accepted Answer

The answer of Suppose that twenty-five years ago a country...

Question 3

Which of the following statements regarding GDP is correct?

Accepted Answer

GDP only takes into account the monetary value of goods and services produced, without factoring in any negative externalities such as environmental harm.

Question 4

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

Accepted Answer

International studies have consistently shown that countries with higher GDP per person tend to have longer life expectancies and higher literacy rates. This is because higher GDP per person often means better access to healthcare, education, and other basic necessities that contribute to overall quality of life. Therefore, option B is the correct choice.

Question 5

The information for 2008 in millions in the table below was reported by the World Bank.On the basis of this information,which list below contains the correct ordering of real GDP per person from highest to lowest?

Accepted Answer

According to the table, Japan had the highest real GDP per person in 2008, followed by the United States and then Germany. Therefore, the correct ordering is Japan, United States, Germany, which is only found in choice B.

Question 6

GDP is used as the basic measure of a society's economic well-being.A better measure of the economic well-being of individuals in society is

Accepted Answer

While GDP is a useful measure of a country's overall economic output, it does not necessarily reflect the well-being of individuals within a society. GDP per person (also known as per capita GDP) takes into account the size of the population, providing a better measure of the average economic well-being of individuals in a society. Saving per person, government expenditures per person, and investment per business firm do not provide a comprehensive measure of economic well-being for individuals in society.

Question 7

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.It follows that

Accepted Answer

GDP measures the economic output of a nation, which indirectly indicates the resources available to invest in welfare-enhancing goods and services, such as education and healthcare. It does not directly measure welfare but suggests the capacity to support it.

Question 8

Suppose the government passes a law eliminating holidays and,as a result,the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year).Based on this scenario,which of the following statements is correct?

Accepted Answer

GDP is a measure of the market value of all final goods and services produced within a country in a given period of time. GDP calculation excludes non-market activities, such as leisure time, and only includes market production. Therefore, if the elimination of holidays leads to an increase in market production, GDP would definitely increase, since leisure time is not factored in.

Question 9

Suppose the government eliminates all environmental regulations and,as a result,the production of goods and services increases,but there is considerably more pollution.Based on this scenario,which of the following statements is correct?

Accepted Answer

GDP only measures the market value of goods and services produced within a country, so it excludes environmental quality. Therefore, if the production of goods and services increases due to the elimination of environmental regulations, GDP would increase. However, this increase in GDP would not account for the negative impact on environmental quality.

Question 10

During a presidential campaign,the incumbent argues that he should be reelected because nominal GDP grew by 12 percent during his 4-year term in office.You know that population grew by 4 percent over the period and that the GDP deflator increased by 6 percent during the past 4 years.You should conclude that real GDP per person

Accepted Answer

Nominal GDP growth includes the effects of both inflation and real growth. To calculate real GDP per person, we need to adjust for both factors. Real GDP per person can be calculated as:

Real GDP per person = Nominal GDP / (Population x GDP deflator)

Using the given information, we can calculate that real GDP per person grew by:

Real GDP per person = (12% / (1 + 0.06)) / (1 + 0.04) = 5.14%

Therefore, real GDP per person grew by less than 12 percent. The correct choice is B.

Question 11

Last year country A had a nominal GDP of $600 billion,a GDP deflator of 150 and a population of 40 million.Country B had a nominal GDP of $720 billion,a GDP deflator of 120 and a population of 50 million.From these numbers which country is likely to have had the higher standard of living?

Accepted Answer

The best measure to compare the standard of living between countries is real GDP per person. Real GDP per person measures the value of goods and services produced within a country adjusted for inflation and divided by the population. Country B has a higher real GDP per person because it has a lower GDP deflator, which means that prices are relatively lower than in Country A. Therefore, option D is the correct answer.

Question 12

Otherwise legal transactions that go unreported or unrecorded are called

Accepted Answer

The answer of Otherwise legal transactions that go unreported or...

Question 13

Suppose that over the last twenty-five years a country's nominal GDP grew to three times its former size.In the meantime,population grew by 40 percent and prices rose by 100 percent.What happened to real GDP per person?

Accepted Answer

Real GDP per person can be calculated by dividing nominal GDP by a price index (such as the GDP deflator) and then dividing by population. In this scenario, nominal GDP grew to three times its former size, which means that if the price index had remained constant, real GDP per person would have tripled as well. However, prices rose by 100 percent over the 25-year period, so the increase in nominal GDP was partially due to inflation. Accounting for inflation, the increase in real GDP per person is less than triple, but still greater than double. Therefore, the correct answer is B, which states that it increased, but it is less than double.

Question 14

The information below for 2008 in millions was reported by the World Bank.On the basis of this information,which list below contains the correct ordering of GDP per person from highest to lowest? Country
GDP (Constant US$)
GDP(Current US$)
Population
Argentina
$394,595
$328,465
39)88
Bolivia
$11,373
$16,674
9)69
Peru
$84,241
$129,109
28)84

Accepted Answer

GDP per person is calculated by dividing GDP by population. Based on this calculation, the correct order from highest to lowest GDP per person is:

Argentina: $8,307 
Peru: $4,704 
Bolivia: $1,726

Therefore, the correct choice is B: Argentina, Peru, Bolivia.

Question 15

GDP is not a perfect measure of well-being;for example,

Accepted Answer

GDP fails to account for the quality of the environment, which is an important factor in well-being. While options A and B are valid critiques of GDP, they do not directly relate to the environment.

Question 16

The information below for 2008 in millions was reported by the World Bank.On the basis of this information,which list below contains the correct ordering of GDP per person from highest to lowest? Country
GDP (Constant US$)
GDP(Current US$)
Population
Ghana
7,690
16,653
23)35
Kenya
17,569
30,354
38)76
Tanzania
15,394
20,490
41)276

Accepted Answer

The answer of The information below for 2008 in millions...

Question 17

GDP is not a perfect measure of well-being;for example,

Accepted Answer

All the given options are correct. GDP does not take into account the value of volunteer work, which can contribute significantly to the well-being of a society. Additionally, GDP does not address the distribution of income within a society, which can lead to inequality and social unrest. Finally, GDP does not address environmental quality, which can have significant impacts on the health and well-being of individuals and societies.

Question 18

GDP does not reflect

Accepted Answer

GDP only measures the monetary value of final goods and services produced within a country in a given period of time. It does not consider the value of leisure as it only accounts for monetary transactions. It also excludes the value of goods and services produced at home as they are not sold in the market. Additionally, GDP does not reflect the quality of the environment, as it only measures economic activity without taking into account its impact on the environment.

Question 19

Countries with low GDP per person tend to have

Accepted Answer

Countries with low GDP per person tend to have fewer resources to invest in healthcare and infrastructure, which can result in higher rates of infant mortality. Low GDP can also limit access to preventative healthcare measures and proper nutrition, leading to higher rates of infant mortality. While safe drinking water may be an issue in some low GDP countries, overall these countries may struggle to provide basic healthcare and resources for newborns. The low GDP can also limit access to proper nutrition, leading to higher rates of child malnutrition and low birth weight.

Question 20

GDP per person tells us the income and expenditure of the

Accepted Answer

GDP per person, also known as per capita GDP, measures the average income and expenditure of individuals in the economy. It is calculated by dividing the total GDP of an economy by the population. Therefore, it represents the average person in the economy.

Quiz 23: Measuring a Nations Income

International data on GDP and socioeconomic variables

Suppose that twenty-five years ago a country had nominal GDP of $1,000,a GDP deflator of 200,and a population of 100.Today it has nominal GDP of $3,000,a GDP deflator of 400,and population of 150.What happened to the real GDP per person?

Which of the following statements regarding GDP is correct?

International studies of the relationship between GDP per person and quality of life measures such as life expectancy and literacy rates show that larger GDP per person is associated with

The information for 2008 in millions in the table below was reported by the World Bank.On the basis of this information,which list below contains the correct ordering of real GDP per person from highest to lowest?

GDP is used as the basic measure of a society's economic well-being.A better measure of the economic well-being of individuals in society is

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.It follows that

Suppose the government passes a law eliminating holidays and,as a result,the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year) .Based on this scenario,which of the following statements is correct?

Suppose the government eliminates all environmental regulations and,as a result,the production of goods and services increases,but there is considerably more pollution.Based on this scenario,which of the following statements is correct?

Last year country A had a nominal GDP of $600 billion,a GDP deflator of 150 and a population of 40 million.Country B had a nominal GDP of $720 billion,a GDP deflator of 120 and a population of 50 million.From these numbers which country is likely to have had the higher standard of living?

Otherwise legal transactions that go unreported or unrecorded are called

Suppose that over the last twenty-five years a country's nominal GDP grew to three times its former size.In the meantime,population grew by 40 percent and prices rose by 100 percent.What happened to real GDP per person?

GDP is not a perfect measure of well-being;for example,

GDP is not a perfect measure of well-being;for example,

GDP does not reflect

Countries with low GDP per person tend to have

GDP per person tells us the income and expenditure of the