The GDP deflator is a measure of the

average level of prices of final goods in the economy.

GNP, of the United States is the market value of all final goods and services

produced by citizens of the United States anywhere.

Legalizing all forms of illegal activities

increases the GDP, decrease illegal activities

Real GDP is GDP in a given year

valued in the prices of the base year.

Which of the following is not an example of a transfer payment?

unemployment insurance payments

If prices in the economy rise, then

the purchasing power of a dollar declines.

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Gross Domestic Product

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Chapter 8 from Hubbard & O'Brien Macroeconomic

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Questions 20

Answers

1
The purchase by a household in China of a DVD produced in the United States is included in U.S.
consumption
exports
investment
imports
2
Cotten farm sales raw cotton, the Textile Mill weaves into fabric, increase cost, known as
Investment
Underground Economy
GDP
Value Added
3
The GDP deflator is a measure of the
average level of prices of final goods in the economy.
total production of the economy unadjusted for inflation.
total production of the economy adjusted for inflation.
average level of prices of intermediate goods economy.
4
During a business cycle expansion, total production ________ and total employment ________.
Decrease; Increase
Increase; Increase
Increase; Decrease
Decrease; Decrease
5
Which of the following would increase disposable personal income?
a decrease in transfer payments received
a decrease in personal income
All of these would increase disposable income.
a decrease in taxes paid
6
GNP, of the United States is the market value of all final goods and services
produced within the United States.
consumed by citizens of the United States anywhere.
consumed within the United States.
produced by citizens of the United States anywhere.
7
Legalizing all forms of illegal activities
reduces the GDP, increase illegal activities.
reduces the GDP, decrease illegal activities
increases the GDP, decrease illegal activities
increase the GDP, increase illegal activities
8
To calculate GDP by the expenditure method, one must add
C+I+GS+NX
C+I+GS+E
labor, natural resources, entrepreneurship, and capital.
wages, rents, interest, and profits
9
What is the largest component of spending in the United States?
Exports
Consumption
Net Exports
Government Spending
10
Which of the following is not directly counted in GDP?
consumer goods
government purchases
investment expenditures
intermediate goods
11
Which component of GDP has a negative value?
Consumption
Government Spending
Investment
Net Exports
12
Which of the following is not a durable good?
Refrigerator
Automobile
Furniture
Milk
13
Real GDP is GDP in a given year
valued in the prices of that year.
adjusted only for anticipated inflation.
valued in the prices of the base year.
adjusted only for unanticipated inflation.
14
Which of the following is an intermediate good at Subway?
Baked Lays
6" Chicken Bacon Ranch on Wheat
Fountain Drink
Frozen bread dough
15
A measurement of the average prices of goods and services in the economy is known as.
Gross National Product
GDP deflator
National Income
Price Level
16
Which of the following goods is directly counted in GDP at Subway?
Whole Tomatoes
Plastic Bags
300 small cups
12" Chicken Teriyaki on White
17
Which of the following is not an example of a transfer payment?
unemployment insurance payments
social security payments to retirees
social security payments to disabled persons
health insurance payments to an army private
18
If prices in the economy rise, then
the purchasing power of a dollar rises.
the purchasing power of a dollar stays constant.
the purchasing power of a dollar declines.
the purchasing power of a dollar cannot be determined.
19
GDP understates the total production of final goods and services because of the omission of
inflation.
exports.
the underground economy.
intermediate goods.
20
In 2012, Consumption accounted for _____ of the GDP.
68.6%
59.9%
15.2%
-3.4%

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