978-1259723223 Test Bank TBChap027 Part 4

27–61

Year

Units of Output

Price Per Unit

1

3

$3

2

4

3

6

5

4

7

5

8

Assume an economy that makes only one product and that year 3 is the base year. Output

and price data for a five-year period are shown in the table. In determining real GDP, the

nominal GDP for

121.

Year

Units of Output

Price Per Unit

1

3

$3

2

4

3

6

5

4

7

5

8

Assume an economy that makes only one product and that year 3 is the base year. Output

and price data for a five-year period are shown in the table. For the years shown, the

growth of

122. If nominal GDP rises,

123. Real GDP is

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written consent of McGraw-Hill Education.

Diff icu lty :

02 Medium

Learning Objective: 27-05 Discuss the nature and function of a GDP price index and

describe the difference between nominal GDP and real GDP.

Test Bank: I

Topic:

Nominal GDP versus Real GDP

124. In comparing GDP data over a period of years, a difference between nominal and real

GDP may arise because

125. Only three goods are produced in an economy in the following amounts: A = 10, B =

30, C = 5. The current year per-unit prices of these three goods are A = $2, B = $3, and C

= $1. Nominal GDP in the current year is

126. (Advanced analysis) Only three goods are produced in an economy in the following

amounts: A = 10, B = 30, C = 5. The current year per-unit prices of these three goods are A

= $2, B = $3, and C = $1. If the per-unit prices of the three goods were each $1 in a base

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year used to construct a GDP price index, then the GDP price index in the current year is

127. (Advanced analysis) Only three goods are produced in an economy in the following

amounts: A = 10, B = 30, C = 5. The current year per-unit prices of these three goods are A

= $2, B = $3, and C = $1. If the per-unit prices of the three goods were each $1 in a base

year used to construct a GDP price index, then real GDP in the current year is

128.

Year

Units of Output

Price Per Unit

1

20

$4

2

25

4

3

30

6

Assume an economy that is producing only one product. Output and price data for a three-

year period are shown in the table. If year 2 is chosen as the base year, the price index for

year 1 is

129.

Year

Units of Output

Price Per Unit

1

20

$4

2

25

4

3

30

6

Assume an economy that is producing only one product. Output and price data for a three–

year period are shown in the table. The nominal GDP for year 3 is

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written consent of McGraw-Hill Education.

Type: Table

130.

Year

Units of Output

Price Per Unit

1

20

$4

2

25

4

3

30

6

Assume an economy that is producing only one product. Output and price data for a three–

year period are shown in the table. If year 2 is chosen as the base year, real GDP for year 1

is

131.

Year

Units of Output

Price Per Unit

1

20

$4

2

25

4

3

30

6

Assume an economy that is producing only one product. Output and price data for a three–

year period are shown in the table. If year 2 is chosen for the base year, in year 3 nominal

GDP and real GDP, respectively, are

132.

Year

Units of Output

Price Per Unit

1

20

$4

2

25

4

3

30

6

Assume an economy that is producing only one product. Output and price data for a three-

year period are shown in the table. If year 2 is chosen as the base year, in years 1 and 3 the

price index values are

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written consent of McGraw-Hill Education.

Type: Table

133.

Year

Nominal GDP

Price Index

1

$550

$140

2

560

135

3

576

120

4

586

117

5

604

108

The economy described in the table has experienced a

134.

Year

Nominal GDP

Price Index

1

$550

$140

2

560

135

3

576

120

4

586

117

5

604

108

In the economy described in the table,

135.

Year

Nominal GDP

Price Index

1

$550

$140

2

560

135

3

576

120

4

586

117

5

604

108

In the economy described in the table, real GDP for year 3 is

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written consent of McGraw-Hill Education.

Type: Table

136. Assume that in 2002 the nominal GDP was $350 billion and in 2003 it was $375

billion. On the basis of this information, we

137. If nominal GDP in some year is $280 and real GDP is $160, then the GDP price index

for that year is

138. If real disposable income fell during a particular year, we can conclude that

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written consent of McGraw-Hill Education.

AACSB: Knowledge Application

A c c e s s i b i l i t y :

Keyboard Navigation

Blooms: Understand

Diffi cult y:

02 Medium

Learning Objective: 27-05 Discuss the nature and function of a GDP price index and

describe the difference between nominal GDP and real GDP.

Test Bank: I

Topic:

Nominal GDP versus Real GDP

139.

Refer to the diagram. The base year used in determining the price indices for this economy

140.

Refer to the diagram. Which of the following statements is correct?

141. In an economy experiencing a persistently falling price level,

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written consent of McGraw-Hill Education.

Blooms: Understand

Diffi cult y:

02 Medium

Learning Objective: 27-05 Discuss the nature and function of a GDP price index and

describe the difference between nominal GDP and real GDP.

Test Bank: I

Topic:

Nominal GDP versus Real GDP

142. If real GDP rises and the GDP price index has increased,

143. In determining real GDP, economists adjust the nominal GDP by using the

144. The fact that nominal GDP has risen faster than real GDP

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written consent of McGraw-Hill Education.

C. suggests that the general price level has fallen.

D.

suggests that the general price level has risen.

145. Which of the following activities is excluded from GDP, causing GDP to understate a

nation’s well-being?

146. Which of the following activities is excluded from GDP, causing GDP to understate a

nation’s production?

147. A large underground economy results in an

148. The GDP tends to

149. GDP excludes

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written consent of McGraw-Hill Education.

Learning Objective: 27-06 List and explain some limitations of the GDP measure.

Test Bank: I

Topic:

Shortcomings of GDP

150. The growth of GDP may understate changes in the economy’s economic well-being

over time if the

151. Environmental pollution is accounted for in

152. Assume that the size of the underground economy increases both absolutely and

relatively over time. As a result,

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written consent of McGraw-Hill Education.

A c c e s s i b i l i t y :

Keyboard Navigation

Blooms: Remember

Di f fi c u lt y :

01 Easy

Learning Objective: 27-06 List and explain some limitations of the GDP measure.

Test Bank: I

Topic:

Shortcomings of GDP

153. Gross output (GO)

154. Gross output (GO) and GDP both measure

155. Gross output (GO) for an economy in a given year

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written consent of McGraw-Hill Education.

AACSB: Knowledge Application

A c c e s s i b i l i t y :

Keyboard Navigation

Blooms: Remember

Di f f i cu l t y :

01 Easy

Learning Objective: 27-06 List and explain some limitations of the GDP measure.

Test Bank: I

Topic:

Shortcomings of GDP

156. During the 2007–2009 recession,

157.

Answer this question on the basis of the given information for an economy in 2016.

Dollar value of resource extraction activity = $20 billion

Dollar value of production activity = $50 billion

Dollar value of distribution activity = $80 billion

Dollar value of final output = $110 billion

Gross output for this economy in 2016 equals

158.

Answer this question on the basis of the given information for an economy in 2016.

Dollar value of resource extraction activity = $20 billion

Dollar value of production activity = $50 billion

Dollar value of distribution activity = $80 billion

Dollar value of final output = $110 billion

Suppose that in 2017, the dollar value of distribution activity fell to $70 billion, but the

other values remained the same. Based on this, we could conclude that from 2016 to 2017,

159. (Consider This) When making a capital stock and reservoir analogy, the

160. (Consider This) When making a capital stock and reservoir analogy, the

161. (Consider This) Capital is a

162. (Last Word) The U.S. government agency responsible for compiling the national

income accounts is the

163. (Last Word) Which of the following is a source of data for the consumption