Question 1

GDP per person tells us the income and expenditure of the

Accepted Answer

GDP per person, or per capita GDP, divides the gross domestic product by the population, providing an average economic output or income per person, which represents the average person in the economy.

Question 2

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 is calculated by adjusting nominal GDP for inflation and dividing it by population. Since prices have doubled, the inflation rate is 100%, which means that nominal GDP must be divided by 2 to get real GDP. Therefore, the real GDP per person increased by 50% (3/2), which is less than double the initial amount. So, the correct choice is B because real GDP per person increased, but it less than doubled.

Question 3

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 the overall economic activity in a country, it does not necessarily reflect the well-being of individuals. GDP per person, also known as GDP per capita, provides a more accurate representation of the average economic output per person in a country. This takes into account factors such as population growth and distribution, and provides a better indication of the standard of living and economic well-being of individuals.

Question 4

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?
$\begin{array} { | l | l | l | l | } 
\hline \text { Country } & \text { GDP (Constant US\$) } & \text { GDP(Current US\$) } & \text { Population } \
\hline \text { Ghana } & 7,690 & 16,653 & 23.35 \
\hline \text { Kenya } & 17,569 & 30,354 & 38.76 \
\hline \text { Tanzania } & 15,394 & 20,490 & 41.276 \
\hline
\end{array}$

Accepted Answer

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

Question 5

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 both real GDP growth and inflation. Therefore, we need to adjust for inflation using the GDP deflator to find real GDP growth. Real GDP growth = Nominal GDP growth - Inflation. In this case, real GDP growth = 12% - 6% = 6%. Since population grew by 4%, real GDP per person grew by approximately 2%. Therefore, real GDP per person grew, but by less than 12 percent.

Question 6

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? 
$$\begin{array} { | l | l | l | l | } 
\hline \text { Country } & \text { GDP (Constant US\$) } & \text { GDP(Current US\$) } & \text { Population } \
\hline \text { Germany } & 2,091,573 & 3,649,493 & 82.11 \
\hline \text { Japan } & 5,166,281 & 4,910,839 & 127.70 \
\hline \text { U.S. } & 11,513,872 & 14,093,309 & 304.06 \
\hline
\end{array}$$

Accepted Answer

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

Question 7

Which of the following statements about recessions is true?

Accepted Answer

While there are commonly used definitions for recessions, such as two consecutive quarters of falling real GDP, there is no official, universally accepted definition. Additionally, recessions do not occur at regular intervals or last standard amounts of time. Finally, recessions are typically associated with high unemployment and low income, not the opposite as stated in option D.

Question 8

A recession is always associated with

Accepted Answer

A recession is defined as two consecutive quarters of declining real GDP, which means that the economy is producing less goods and services than it was in the previous periods. A recession is not necessarily associated with the end of a war or rising inflation, but rather a slowdown in economic growth.

Question 9

Much of macroeconomics attempts to explain

Accepted Answer

Macroeconomics is concerned with the study of the entire economy and aims to explain long-run growth patterns and short-run fluctuations in the overall level of economic activities, as measured by changes in real GDP. Options A, C and D are related to microeconomic issues such as changes in the prices and quantities of individual goods and services, or changes in specific government spending policies.

Question 10

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

Real GDP per person is a better indicator of standard of living than nominal GDP per person, as it accounts for changes in the price level. Country B had a lower GDP deflator, which means that their goods and services were relatively cheaper compared to Country A's. Therefore, Country B's higher real GDP per person indicates they had a higher standard of living.

Question 11

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 12

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? 
$\begin{array} { | l | l | l | l | } 
\hline \text { Country } & \text { GDP (Constant US\$) } & \text { GDP(Current US\$) } & \text { Population } \
\hline \text { Argentina } & \$ 394,595 & \$ 328,465 & 39.88 \
\hline \text { Bolivia } & \$ 11,373 & \$ 16,674 & 9.69 \
\hline \text { Peru } & \$ 84,241 & \$ 129,109 & 28.84 \
\hline
\end{array}$

Accepted Answer

GDP per person is found by dividing GDP by population. Using the information given, we can calculate GDP per person for each country:

Argentina: \$328,465 million / 39.88 million people = \$8,235 per person
Bolivia: \$16,674 million / 9.69 million people = \$1,721 per person
Peru: \$129,109 million / 28.84 million people = \$4,478 per person

Therefore, the correct ordering from highest to lowest GDP per person is Argentina, Peru, Bolivia, making option B the correct answer.

Question 13

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

This is because GDP is a measure of goods and services produced within a given period, regardless of whether leisure time is included or not. Therefore, if production increases due to the elimination of holidays, it would lead to an increase in GDP. The fact that leisure time is reduced would not be considered in the calculation of GDP.

Question 14

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 value of goods and services produced in an economy, regardless of any negative externalities such as pollution. Therefore, if environmental regulations were eliminated and production increased, GDP would increase. However, this increase in GDP does not reflect the negative impact on environmental quality.

Question 15

Which of the following statements regarding GDP is correct?

Accepted Answer

GDP only includes market activities and does not account for any harm done to the environment, making it an incomplete measure of economic well-being. Choices B and C are incorrect because GDP only considers market-based activities and does not provide detailed information on income distribution. Choice D is incorrect because GDP is not a perfect measure of economic well-being as it does not account for factors such as income inequality, non-market activities, and environmental concerns.

Question 16

GDP does not reflect

Accepted Answer

GDP only measures the overall economic activity and does not take into account the value of non-market activities like leisure or domestic work. It also does not account for quality of life factors like the environment. Therefore, all of the above options are correct.

Question 17

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

Accepted Answer

GDP does not take into account the value of non-market activities such as volunteer work, which can contribute significantly to well-being. Additionally, GDP does not address the issue of income inequality, which can have negative effects on overall well-being. Finally, GDP also neglects to consider environmental factors such as air and water quality, which can impact health and quality of life.

Question 18

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 19

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

Accepted Answer

The answer of GDP is not a perfect measure of...

Question 20

International data on GDP and socioeconomic variables

Accepted Answer

International data generally shows a strong correlation between a nation's GDP and the standard of living enjoyed by its citizens. This correlation is not perfect, as there are other factors that can affect quality of life, but overall it is clear that economic growth and prosperity are closely tied to citizen well-being. Option A is incorrect as there is indeed evidence for a strong relationship. Option B is incorrect as it is not supported by evidence. Option D is incorrect as there are significant differences in living standards between nations, and GDP is one important factor that helps to explain these disparities.

Quiz 10: Measuring a Nations Income

GDP per person tells us the income and expenditure of the

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 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

Which of the following statements about recessions is true?

A recession is always associated with

Much of macroeconomics attempts to explain

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?

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?

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?

Which of the following statements regarding GDP is correct?

GDP does not reflect

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

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

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

International data on GDP and socioeconomic variables