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b.
-$200.
c.
$600.
d.
-$1,400.
e.
$1,400
105. Refer to Exhibit 7-3. GDP is equal to
a.
$13,050.
b.
$11,550.
c.
$8,600.
d.
$11,450.
e.
$14,000.
Exhibit 7-4
Economic Data for Country A
Year/Quarter
Real GDP
2012/Quarter 1
$450 billion
2012/Quarter 2
$430 billion
2012/Quarter 3
$425 billion
2012/Quarter 4
$439 billion
106. Refer to Exhibit 7-4. Did Country A experience a recession (based on the standard definition) in 2012?
a.
Yes, because Real GDP declined during two consecutive quarters in 2012
b.
No, because Real GDP did not decline during three consecutive quarters in 2012.
c.
Yes, because Real GDP was lower at the end of the year than it was at the beginning of the year.
d.
This information cannot be determined because the determination of a recession is based upon GDP not Real
GDP.
NOTES:
New
Exhibit 7-5
Economic Data for Country Z
Year
GDP
Real GDP
1
$400 billion
$378 billion
2
$429 billion
$398 billion
3
$440 billion
$386 billion
4
$467 billion
$395 billion
107. Refer to Exhibit 7-5. What was Country Z’s economic growth rate between year 1 and year 2?
a.
7.3%
b.
8.3%
c.
5.3%
d.
6.8%
108. Refer to Exhibit 7-5. What was Country Z’s economic growth rate between year 2 and year 3?
a.
-3.0%
b.
2.6%
c.
14.0%
d.
-2.2%
109. Refer to Exhibit 7-5. What was Country Z’s economic growth rate between year 3 and year 4?
a.
6.1%
b.
2.3%
c.
3.0%
d.
18.2%
110. Refer to Exhibit 7-5. During year 3, Country Z experienced economic _____________ and _________________.
a.
decline; deflation (falling price level)
b.
growth; inflation (rising price level)
c.
growth; deflation (falling price level)
d.
decline; inflation (rising price level)
111. Disposable income equals national income minus personal taxes.
a.
True
b.
False
112. An example of income earned but not received is corporate dividends.
a.
True
b.
False
113. Net domestic product (NDP) is the total value of new goods available in the economy after worn out capital goods
have been replaced.
a.
True
b.
False
114. Corporate profits can be broken into three categories: dividends, undistributed profits, and corporate profits taxes.
a.
True
b.
False
115. Net interest is the interest paid out by US households and government minus the interest income they received.
a.
True
b.
False
116. Countries with a large GDP must also have a large per-capita GDP.
a.
True
b.
False
117. Net exports must always be a positive amount.
a.
True
b.
False
118. GDP includes some nonmarket goods.
a.
True
b.
False
119. A transfer payment is a payment to a person that is made in return for goods and services supplied.
a.
True
b.
False
120. Some economists argue that GDP overstates overall economic welfare because it does not include the impact of bads
such as pollution.
a.
True
b.
False
121. Corporate profits is the largest category of national income.
a.
True
b.
False
122. The GDP of country A may be higher than that of country B because the workers in country A work more hours per
week than workers in country B.
a.
True
b.
False
123. Sales tax is an example of an indirect business tax.
a.
True
b.
False
124. Compensation of employees is the largest component of GDP when using the expenditure approach to calculate
GDP.
a.
True
b.
False
125. If the GDP in one year is greater than it was in the previous year, then economic growth must have occurred.
a.
True
b.
False
126. If a business firm in Country A produces a good but does not sell it in that same year, that good will not be counted
in Country A’s GDP.
a.
True
b.
False
127. List and explain the two different approaches used to measure GDP.
128. Draw an appropriate diagram to represent the business cycle and label each of the five phases. Provide a brief
description of each phase.
129. With respect to the business cycle, describe the difference between the expansion phase and the recovery phase.
130. Explain why GDP figures do not necessarily measure happiness or well-being.
131. Given that GDP is a measure of what is produced in a country, explain how the expenditure approach can measure
GDP. How are items produced, but not yet sold, accounted for in the expenditure approach?
132. List and describe four of the six categories of economic exchanges that are omitted from GDP calculations. Explain
why these transactions are not included in GDP and give an example of each to help support your answer.
133. Describe the three different reasons that investment can rise. Explain how one of these three changes could be
undesireable in terms of promoting the economic health and strength of the economy.
134. In 1950, the country with the highest per-capita GDP was
a.
Switzerland.
b.
New Zealand.
c.
the United States.
d.
Venezuela.
e.
the Netherlands.
135. The research of economists Stevenson and Wolfers tends to support the Easterlin paradox.
a.
True
b.
False
136. Nominal GDP in the United States was higher in 2012 than in 1950, but Real GDP was higher in 1950 than in 2012.
a.
True
b.
False
137. Which of the following statements is false?
a.
Real GDP in the United States was approximately seven times greater in 2012 than in 1950.
b.
The U.S. population was approximately twice as large in 2012 than in 1950.
c.
Nominal GDP in the United States was approximately seven times greater in 2012 than in 1950.
d.
Real GDP is GDP adjusted for price changes.
