978-1259723223 Test Bank TBChap027 Part 9

subject Type Homework Help
subject Pages 9
subject Words 2562
subject Authors Campbell McConnell, Sean Flynn, Stanley Brue

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27-152
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Learning Objective: 27-06 List and explain some limitations of the GDP measure.
Test Bank: II
Topic:
Shortcomings of GDP
314. Which of the following government agencies estimates and compiles the U.S. GDP
accounts?
315. The U.S. Customs Service is a main source of data for
316. The U.S. Office of Personnel Management and the Census Bureau’s Survey of
Government Finance are two of the main sources of data for
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27-153
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Remember
Dif f i c u l t y:
01 Easy
Learning Objective: 27-06 List and explain some limitations of the GDP measure.
Test Bank: II
Topic:
Shortcomings of GDP
317. A statistic called Gross Output (GO) sums together the value of economic activity
taking place in each of the four stages of a productive economy, namely,
True / False Questions
318. U.S. gross domestic product (GDP) measures the market value of all goods and
services produced by Americans in one year.
319. A product that was produced in 2016 and not sold until 2017 is counted as part of
GDP in 2016.
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27-154
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Difficu lty :
02 Medium
Learning Objective: 27-01 Explain how gross domestic product (GDP) is defined and
measured.
Test Bank: II
Topic:
Assessing the Economys Performance
320. The value added in an industry includes the wages earned by workers in the industry.
321. Personal consumption expenditures include expenditures for new houses.
322. The value of a sale of a share of stock is considered to be an investment in national
income accounting.
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
summed to determine GDP.
Test Bank: II
Topic:
The Expenditures Approach
323. Gross private domestic investment can be divided into replacement investment and
net investment.
324. If gross investment is positive, it means that firm (or the economy) must be expanding.
325. Changes in business inventories are included as part of investment in the national
income accounts.
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326. In an economy, the value of inventories fell by $50 billion from Year 1 to Year 2. In
calculating total investment for Year 2, national income accountants would increase it by
$50 billion.
327. If the University of Missouri, a public school, builds a new laboratory, then it will be
counted as part of Ig in GDP.
328. Government purchases are the largest component of aggregate expenditures in the
United States.
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329. When U.S. households buy new imported European and Japanese cars, the total value
of the cars is counted as part of C in the GDP accounts.
330. Net exports are positive when exports are greater than imports.
331. In the expenditures approach, transfer payments such as unemployment compensation
are included in the G component of GDP.
332. In 2014, China’s GDP was bigger than that of the Unites States.
FA LSE
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333. National income (NI) is estimated as the sum of four categories of income (wages,
rent, interest, profits) plus taxes on production and imports.
334. Personal income (PI) is the income that households are free to spend or save as they
please.
335. Disposable income (DI) includes transfer payments like Social Security benefits and
unemployment benefits.
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27-159
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Difficu lty :
02 Medium
Learning Objective: 27-04 Describe the relationships among GDP, net domestic product,
national income, personal income, and disposable income.
Test Bank: II
Topic:
Other National Accounts
336. In an economy that is experiencing inflation and output growth, nominal GDP will
rise faster than real GDP.
337. If nominal GDP in one year is $5,000 billion and the price index is 135, then the real
GDP that year would be $3,704 billion.
338. To adjust nominal GDP for a given year in order to obtain real GDP, we multiply the
nominal GDP by the price index.
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27-160
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Difficu 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: II
Topic:
Nominal GDP versus Real GDP
339. The value of a price index in the base year is always 100.
340. Do-it-yourself activities of people are a big part of the "underground economy."
341. When businesses have to install antipollution equipment to clean up their wastes, they
are adding to GDP.
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342. GDP tends to understate economic welfare because it does not take into account
increases in leisure.
343. All activities included in GDP serve to enrich society.
344. Most activities in the so-called underground economy are illegal activities, such as
drugs or gambling.
345. The statistic called Gross Output (GO) is bigger than GDP, because GO sums up the
values in all stages of a productive economy, whereas GDP accounts only for the final
stage.
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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
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 lty:
01 Easy
Learning Objective: 27-06 List and explain some limitations of the GDP measure.
Test Bank: II
Topic:
Shortcomings of GDP

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