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Exam 10: Measuring a Nations Income

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Question 171

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A transfer payment is

A) a payment for moving expenses a worker receives when he or she is transferred by an employer to a new location.
B) a payment that is automatically transferred from your bank account to pay a bill or some other obligation.
C) a form of government spending that is not made in exchange for a currently produced good or service.
D) the benefit that a person receives from an expenditure by government minus the taxes that were collected by government to fund that expenditure.

E) All of the above
F) A) and C)

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Question 172

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Suppose an economy's production consists only of corn and soybeans. In 2010, 20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel. In 2009, the price of corn was $2 per bushel and the price of soybeans was $1 per bushel. Using 2009 as the base year, it follows that, for 2010,

A) nominal GDP is $50, real GDP is $100, and the GDP deflator is 50.
B) nominal GDP is $50, real GDP is $100, and the GDP deflator is 200.
C) nominal GDP is $100, real GDP is $50, and the GDP deflator is 50.
D) nominal GDP is $100, real GDP is $50, and the GDP deflator is 200.

E) C) and D)
F) B) and D)

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Question 173

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If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125.

Periods during which real GDP rises are called recessions.

If an economy's GDP falls, then it must be the case that the economy's

Which of the following is an example of a durable good?

U.S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents?

Which of the following represents a transfer payment?

Consider two cars manufactured by Chevrolet in 2009. During 2009, Chevrolet sells one of the two cars to Sean for $24,000. Later in the same year, Sean sells the car to Kati for $19,000. The second automobile, with a market value of $30,000, is unsold at the end of 2010 and it remains in Chevrolet's inventory. The transactions just described contribute how much to GDP for 2009?

A U.S. publisher purchases new computers that were manufactured in the U.S. This purchase by itself makes

For monitoring fluctuations in the national economy, which measure of income is best?

Table 10-2 The table below contains data for the country of Crete for the year 2010. $\begin{array}{l|l}\hline \text { Total income } & \$ 5731 \\\hline \text { Household purchases of durable goods } & \$ 1108 \\\hline \text { Household purchases of nondurable goods } & \$ 702 \\\hline \text { Household purchases of non-education services } & \$ 203 \\\hline \text { Household purchases of education services } & \$ 302 \\\hline \text { Household purchases of new housing } & \$ 816 \\\hline \text { Purchases of capital equipment } & \$ 333 \\\hline \text { Inventory changes } & \$ 75 \\\hline \text { Purchases of new structures } & \$ 267 \\\hline \text { Depreciation } & \$ 401 \\\hline \text { Local government spending on goods and services } & \$ 236 \\\hline \text { State government spending on goods and services } & \$ 419 \\\hline \text { Federal government spending on goods and services } & \$ 1182 \\\hline \text { Transfer payments } & \$ 707 \\\hline \text { Foreign purchases of domestically produced goods } & \$ 217 \\\hline \text { Domestic purchases of foreign goods } & \$ 129\end{array}$ -Refer to Table 10-2. What was Crete's GDP in 2010?

Total income from the domestic production of final goods and services equals

Table 10-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009.Prices and Quantities $\begin{array} { c c c c c } \text { Year } & \text { Price of } & \text { Quantity af } & \text { Price af } & \text { Quantity af } \\& \text { Waffles } & \text { Waffles } & \text { Pancalkes } & \text { Pancalkes } \\\hline 2008 & \$ 2.00 & 100 & \$ 1.00 & 100 \\2009 & \$ 2.00 & 120 & \$ 2.00 & 150 \\2010 & \$ 2.00 & 150 & \$ 3.00 & 200 \\2011 & \$ 4.00 & 180 & \$ 3.00 & 220\end{array}$ -Refer to Table 10-6. In 2008, this country's nominal GDP was

A farmer sells $50,000 of apples to individuals who take them home to eat and $75,000 of apples to a company that uses them all to produce cider. How much of the farmer's sales will be included as apples in GDP?

If in some year nominal GDP was $20 billion and the GDP deflator was 50, what was real GDP ?

Sally purchases a classic 1964 car she saw for sale on someone's lawn. She then purchases some new parts and spends 120 hours refurbishing the car which she keeps. Which of the following is included in GDP?

Table 10-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2009.Prices and Quantities $\begin{array} { c c c c c } \text { Year } & \text { Price of } & \text { Quantity af } & \text { Price af } & \text { Quantity af } \\& \text { Waffles } & \text { Waffles } & \text { Pancalkes } & \text { Pancalkes } \\\hline 2008 & \$ 2.00 & 100 & \$ 1.00 & 100 \\2009 & \$ 2.00 & 120 & \$ 2.00 & 150 \\2010 & \$ 2.00 & 150 & \$ 3.00 & 200 \\2011 & \$ 4.00 & 180 & \$ 3.00 & 220\end{array}$ -Refer to Table 10-6. In 2009, this country's nominal GDP was

GDP is the market value of all final goods and services produced by a country's citizens in a given period of time.

An increase in nominal U.S. GDP necessarily implies that the United States is producing a larger output of goods and services.