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Exam 12: Gdp: Measuring Total Production and Income

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Question 1

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Transfer payments are subtracted from national income to get to personal income.

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Question 2

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Which of the following is likely to increase measured GDP?

A) A greater number of women decide to stay at home and provide day care for their children under age 5.
B) Marijuana becomes legal to grow and sell.
C) Tax rates increase and more people attempt to underreport their income for tax purposes.
D) More people decide to do their own lawn maintenance and give up using a professional service.

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Table 12-32 $\begin{array} { | l | c | } \hline & \text { Billions of Dollars } \\\hline \text { National income } & \$ 11,200 \\\hline \text { Retained earnings } & 560 \\\hline \text { Depreciation } & 700 \\\hline \text { Interest on government bonds } & 300 \\\hline \text { Transfer payments } & 2,200 \\\hline \text { Personal taxes } & 1,400 \\\hline\end{array}$ -Refer to Table 12-32.The table above represents hypothetical data from the National Income Accounts for 2013.Use the data to calculate personal income and disposable income.

Which component of consumption spending is the greatest in a typical economy?

Which of the following could cause nominal GDP to decrease,but real GDP to increase?

Which of the following is a true statement about real and nominal GDP?

Which of the following statements is true?

The purchase by a foreign government of an airplane produced in the United States is included in U.S.

Government spending ________ is included in gross domestic product.

An example of a final good would be

National income is derived from gross domestic product by

The best measure of the income households actually have available to spend is

Caroline is an artist.She purchases canvas,paints,brushes,and accessories for $75.She sells one of her original paintings to an art gallery for $1,500,which,in turn,sells it to an art lover for $4,500.How much value does the gallery add?

Developing countries with large informal sectors tend to have firms that invest less in capital equipment.

Table 12-3 $\begin{array} { | l | r } \hline \text { Consumption expenditures } & \$ 800 \\\hline \text { Investment expenditures } & 200 \\\hline \text { Government purchases } & 300 \\\hline \text { Exports } & 100 \\\hline \text { Imports } & 200 \\\hline \text { Wages } & 800 \\\hline\end{array}$ -Refer to Table 12-3.Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals

To examine how the total production of an economy has changed over time,it would be better to examine

Government spending on transfer payments is included in government purchases when calculating GDP because it results in the production of new goods and services.

Table 12-18 $\begin{array} { | l | c | r | r | r | } \hline & { \mathbf { 2 0 0 8 } } & & { \mathbf { 2 0 1 3 } } & \\\hline \text { Product } & \text { Quantity } & \text { Price } & \text { Quantity } & \text { Price } \\\hline \text { Camera } & 100 & \$ 10 & 120 & \$ 12 \\\hline \text { Legal services } & 50 & 15 & 45 & 20 \\\hline \text { Books } & 200 & 40 & 210 & 45 \\\hline\end{array}$ A very simple economy produces three goods: cameras, legal services, and books.The quantities produced and their corresponding prices for 2008 and 2013 are shown in the table above. -Refer to Table 12-18.What is the GDP deflator in 2008 if 2013 is the base year?

Investment,as defined by economists,would include the purchase of a

Real GDP will increase