45. If consumption is $7000, exports are $600, government purchases are $2000, government transfers are $900, imports
are $800, and investment is $1000, then GDP is $9,800.
a.
True
b.
False
46. If exports are $500, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then
consumption is $6200.
a.
True
b.
False
47. If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200,
then exports are $300.
a.
True
b.
False
48. U.S. GDP was almost $12 trillion in 2015.
a.
True
b.
False
49. In 2015, government purchases were the largest component of U.S. GDP.
a.
True
b.
False
50. The output of goods and services produced in the United States has grown on average 3 percent per year since 1965.
a.
True
b.
False
51. If total spending rises from one year to the next, then the economy must be producing a larger output of goods and
services.
a.
True
b.
False
52. An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and
services.
a.
True
b.
False
53. Nominal GDP uses constant base-year prices to place a value on the economy’s production of goods and services,
while real GDP uses current prices to place a value on the economy’s production of goods and services.
a.
True
b.
False
54. Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the
economy’s overall production of goods and services changes over time.
a.
True
b.
False
55. The term real GDP refers to a country’s actual GDP as opposed to its estimated GDP.
a.
True
b.
False
56. Changes in real GDP reflect only changes in the amounts being produced.
a.
True
b.
False
57. If real GDP and the GDP deflator both rise, then it must be that nominal GDP rose.
a.
True
b.
False
58. Real GDP is a better gauge of economic well-being than is nominal GDP.
a.
True
b.
False
59. Changes in the GDP deflator reflect only changes in the prices of goods and services.
a.
True
b.
False
60. If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.
a.
True
b.
False
61. If nominal GDP is $12,000 and the GDP deflator is 80, then real GDP is $15,000.
a.
True
b.
False
62. Economists use the term inflation to describe a situation in which the economy’s overall production level is rising.
a.
True
b.
False
63. The GDP deflator can be used to take inflation out of nominal GDP.
a.
True
b.
False
64. If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.
a.
True
b.
False
65. If the GDP deflator in 2009 was 150 and the GDP deflator in 2010 was 175, then the inflation rate in 2010 was 25%.
a.
True
b.
False
66. In 2015, the level of U.S. real GDP was more than four times its 1965 level.
a.
True
b.
False
67. Periods during which real GDP rises are called recessions.
a.
True
b.
False
68. Recessions are associated with lower incomes, rising unemployment, and falling profits.
a.
True
b.
False
69. If real GDP is higher in one country than in another, then we can be sure that the standard of living is higher in the
country with the higher real GDP.
a.
True
b.
False
70. Real GDP per person tells us the income and expenditure of the average person in the economy.
a.
True
b.
False
71. GDP does not directly measure those things that make life worthwhile, but it does measure our ability to obtain many
of the inputs into a worthwhile life.
a.
True
b.
False
72. GDP is a good measure of economic well-being for all purposes.
a.
True
b.
False
73. GDP does not make adjustments for leisure time, environmental quality, or volunteer work.
a.
True
b.
False
74. GDP is adjusted to reflect changes in the quality of the environment such as changes in air and water quality.
a.
True
b.
False
75. Typically in countries with lower levels of real GDP person, a smaller percentage of the population is literate.
a.
True
b.
False
76. Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher
than in countries with lower levels of real GDP per person.
a.
True
b.
False
77. GDP can be measured in terms of expenditures but not income, since income is subject to taxation.
a.
True
b.
False
78. GDP is a useful measure since it provides a single measure of the value of the entire variety of goods and services
produced by an economy.
a.
True
b.
False
79. GDP excludes the purchases of sliced bread by a sandwich shop, because the bread is an intermediate good in this
case.
a.
True
b.
False
80. When you purchase a run-down 1965 Ford Mustang to restore and resell, the purchase of the vehicle and all
restoration expenditures are included in current GDP.
a.
True
b.
False
81. Purchases by American tourists in other countries increase GDP for both the country in which the purchase was made
and for the U.S., since a U.S. citizen carried out the expenditure.
a.
True
b.
False
82. When the U.S. government purchases capital equipment, such as a computer, these expenditures are part of investment
in GDP.
a.
True
b.
False
83. Since transfer payments by government are not associated with the production of goods and services, they are not
included in GDP.
a.
True
b.
False
84. Consumption expenditures were previously the largest component of GDP, but with the growth of government and
government expenditures, this is no longer true.
a.
True
b.
False
85. The advantage of real GDP as a measure is the fact that it only increases.
a.
True
b.
False
86. When real GDP increases, this implies that the production of goods and services has risen.
a.
True
b.
False