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104. Refer to the above data. If year 2 is the base year, then Real GDP in year 5 is:
105. Refer to the above data. If year 2 is the base year, then the percentage increase in real
GDP from year 2 to year 4 is:
106. Refer to the above data. If year 2 is the base year, then in determining real GDP for year
1:
Chapter 07 – Measuring Domestic Output and National Income
107. Refer to the above data. For the years shown, the growth of:
108. Consider the following data for a nation:
The country’s real GDP declined between years:
Chapter 07 – Measuring Domestic Output and National Income
109. Nominal GDP is less than real GDP in an economy in both year 1 and year 2. In year 3,
nominal GDP is equal to real GDP. In year 4, nominal GDP is slightly greater than real GDP.
In year 5, nominal GDP is significantly greater than real GDP. Which year is the base year
being used to calculate the price index for this economy?
110. Nominal GDP was $10,624 billion in year 1 and the GDP price index was 104. Nominal
GDP was $11,246 in year 2 and the GDP deflator that year was 106. What was real GDP in
years 1 and 2, respectively?
111. Nominal GDP differs from real GDP because:
Chapter 07 – Measuring Domestic Output and National Income
112. Refer to the graphs above. The year 2000 must be the:
113. Refer to the graphs above. They suggest that the GDP price index during the period
shown was generally:
Chapter 07 – Measuring Domestic Output and National Income
114. Refer to the graphs above. Which of the following statements is correct on the basis of
the information shown?
115. Nominal GDP has risen more rapidly than real GDP since World War II in the United
States, suggesting that:
116. If real GDP declines in a given year, nominal GDP:
Chapter 07 – Measuring Domestic Output and National Income
117. In year 1, nominal GDP for the United States was $2,250 billion and in year 2 it was
$2,508 billion. The GDP deflator was 72 in year 1 and 79 in year 2. Between year 1 and year
2, real GDP rose by:
118. One year nominal GDP was $286 billion and the price index was 88. Real GDP that year
was:
119. If real GDP in a year was $3,668 billion and the price index was 112, then nominal GDP
in that year was approximately:
Chapter 07 – Measuring Domestic Output and National Income
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120. Over a year, a nation’s GDP at current prices rose by 15 percent while the price index
increased from 100 to 110. GDP at constant prices rose by about:
121. Over a period of time, a nation’s GDP increases by 8 percent in constant-price terms, and
by 6 percent in current-price terms. Other things being equal, the price level must have
changed by about:
Data, using year 1 as the base year. All dollars are in billions.
Chapter 07 – Measuring Domestic Output and National Income
122. Refer to the above data. Real GDP in year 4 was approximately:
123. Refer to the above data. Real GDP increased from year 3 to year 4 by approximately:
124. GDP understates the amount of economic production in the United States because it
excludes:
Chapter 07 – Measuring Domestic Output and National Income
125. The value of transactions in the underground economy is estimated to be about what
percentage of GDP in the United States?
126. GDP tends to overstate economic well-being because it takes into account:
127. GDP does not include which of the following activities?
Chapter 07 – Measuring Domestic Output and National Income
128. GDP tends to overstate economic well-being because it takes into account:
129. GDP excludes most nonmarket transactions. Therefore, GDP tends to:
130. GDP accounts for which of the following items?
Chapter 07 – Measuring Domestic Output and National Income
131. GDP tends to underestimate the productive activity in the economy because it excludes
the value of output from:
132. Gordon James is a person who sells narcotics “on the street.” This type of illegal
activity:
133. The service a homeowner performs when she mows her yard is not included in GDP
because:
Chapter 07 – Measuring Domestic Output and National Income
134. The “underground economy” is mostly made up of:
135. The gross domestic product is not a good measure of the standard of living in a nation
because it:
136. Which of the following government agencies compiles the National Income and Product
Accounts?
Chapter 07 – Measuring Domestic Output and National Income
137. The U.S. Customs Service is a main source of data for:
138. U.S. gross domestic product (GDP) measures the market value of all goods and services
produced by Americans in one year.
139. A product that was produced in 2010 and not sold until 2011 is counted as part of GDP
in 2010.
Chapter 07 – Measuring Domestic Output and National Income
140. The value added in an industry includes the wages earned by workers in the industry.
141. Personal consumption expenditures include expenditures for new houses.
142. The value of a sale of a share of stock is considered to be an investment in national
income accounting.
143. Gross private domestic investment can be divided into replacement investment and net
investment.
Chapter 07 – Measuring Domestic Output and National Income
144. If gross investment is positive, it means that firm (or the economy) must be expanding.
145. Changes in business inventories are included as part of investment in the national income
accounts.
146. 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.
147. If the University of Missouri builds a new laboratory, it will be counted as part of Ig in
GDP.
Chapter 07 – Measuring Domestic Output and National Income
148. Government purchases are the largest component of aggregate expenditures in the United
States.
149. When U.S. households buy new European and Japanese cars, the total value of the cars is
part of C in U.S. GDP.
150. Net exports are positive when exports are greater than imports.
151. In the expenditures approach, transfer payments such as unemployment compensation
are included in the G component of GDP.
Chapter 07 – Measuring Domestic Output and National Income
152. Personal income (PI) is the income that households are free to spend or save as they
please.
153. Disposable income includes transfer payments like Social Security benefits and
unemployment benefits.
154. If an economy is experiencing inflation and output growth, nominal GDP will rise faster
than real GDP.
155. 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.
Chapter 07 – Measuring Domestic Output and National Income
156. To adjust nominal GDP for a given year to obtain real GDP, we multiply the nominal
GDP by the price index.
157. The value of a price index in the base year is always 100.
158. Do–it-yourself activities of people are a big part of the “underground economy”.
159. When businesses have to install anti-pollution equipment to clean up their wastes, they
are adding to GDP.
Chapter 07 – Measuring Domestic Output and National Income
160. GDP tends to understate economic welfare because it does not take into account
increases in leisure.
161. All activities included in GDP serve to enrich society.
162. Most activities in the so-called underground economy are illegal activities involving
drugs or gambling, for example.