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Exam 5: Measuring a Nations Income

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Question 201

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Which government entity computes U.S. GDP every three months?

A) the Council of Economic Advisers
B) the Department of Commerce
C) the Department of Treasury
D) the Federal Reserve

E) A) and D)
F) C) and D)

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Question 202

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To encourage formation of small businesses, the government could provide subsidies; these subsidies

A) would be included in GDP because they are part of government purchases.
B) would be included in GDP because they are part of investment expenditures.
C) would not be included in GDP because they are transfer payments.
D) would not be included in GDP because the government raises taxes to pay for them.

E) A) and C)
F) A) and B)

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Question 203

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When economists refer to intangible items, they are referring to such things as

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

Retained earnings is income that

If in some year nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?

The government purchases component of GDP includes salaries paid to soldiers but not Social Security benefits paid to the elderly.

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

Table 5-4 The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2008. Prices and Quantities -Refer to Table 5-4. This country's inflation rate from 2010 to 2011 was

In a simple circular-flow diagram, firms use the money they get from a sale to

If Brazil buys $100 million of tractors from the U.S., then U.S. net exports will decrease.

In a simple circular-flow diagram, total income and total expenditure are

Expenditures on a nation's domestic production

Which of the following examples of household spending is categorized as investment rather than consumption?

Table 5-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009. Prices and Quantities -Refer to Table 5-6. This country's inflation rate from 2008 to 2009 was

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

Table 5-4 The table below reports nominal and real GDP for the U.S. from 1929 to 1932. -Refer to Table 5-3. What is the GDP deflator and the inflation rate for 1932?

Changes in the GDP deflator reflect only changes in the prices of goods and services.

Darin grows and sells marijuana to Jennifer. Thomas is an organic farmer who sells broccoli to Jennifer. Marijuana is an illegal good and broccoli is a legal good. Assume that if Jennifer marries either, they give her what they use to sell her. Which of the following statements is consistent with the way GDP is computed?

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.