Question 1

Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP,but the value of intermediate goods produced and not sold is included directly as part of GDP.

Accepted Answer

The answer of Explain why it is the case that...

Question 2

Identify the immediate effect of each of the following events on U.S.GDP and its components.
a.James receives a Social Security check.
b.John buys an Italian sports car.
c.Henry buys domestically produced tools for his construction company.

Accepted Answer

The answer of Identify the immediate effect of each of...

Question 3

You find that your paycheck for the year is higher this year than last.Does that mean that your real income has increased? Explain carefully.

Accepted Answer

The answer of You find that your paycheck for the...

Question 4

Even though GDP is not the only thing that affects the quality of life,it is a useful measure because it measures a nation's ability to purchase the inputs that can be used to produce things such as good health and quality education.

Accepted Answer

While GDP is not a complete reflection of a nation's overall quality of life, it is still a useful measure as it provides an indication of a country's economic potential and ability to access resources needed to improve quality of life, such as healthcare and education.

Question 5

In 2004,the level of U.S.real GDP was close to four times its 1965 level.

Accepted Answer

According to data provided by the Bureau of Economic Analysis, the level of U.S. real GDP in 2004 was approximately four times its 1965 level.

Question 6

Between 1929 and 1933,NNP measured in current prices fell from $96 billion to $48 billion.Over the same period,the relevant price index fell from 100 to 75.
a.What was the percentage decline in nominal NNP from 1929 to1933?
b.What was the percentage decline in real NNP from 1929 to 1933? Show your work.

Accepted Answer

The answer of Between 1929 and 1933,NNP measured in current...

Question 7

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

Accepted Answer

An increase in nominal GDP can result from higher prices (inflation) rather than an actual increase in the quantity of goods and services produced.

Question 8

GDP is defined as the market value of all final goods and services produced within a country in a given period of time.In spite of this definition,some production is left out of GDP.Explain why some final goods and services are not included.

Accepted Answer

The answer of GDP is defined as the market value...

Question 9

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

Accepted Answer

The GDP deflator is calculated as (Nominal GDP / Real GDP) x 100.

Using the given values, we have:

GDP Deflator = (10,000/8,000) x 100 = 125

Therefore, the statement is true.

Question 10

GDP does not make adjustments for leisure time and environmental quality.

Accepted Answer

GDP only measures economic activity and does not take into account non-monetary factors such as leisure time and environmental quality.

Question 11

If GDP is higher in one country than in another,we can be sure that the standard of living is higher in the country with the higher GDP.

Accepted Answer

GDP is a measure of the total value of goods and services produced in a country, which does not directly reflect the quality of life of the people in that country. Other factors such as income distribution, education, healthcare, and social welfare programs also affect the standard of living. Therefore, a higher GDP does not necessarily mean a higher standard of living.

Question 12

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?

Accepted Answer

The answer of U.S.real GDP is substantially higher today than...

Question 13

If someone in the United States buys a surfboard produced in Australia,that purchase is included in both the consumption component of U.S.GDP and the import component of U.S.GDP.

Accepted Answer

This is true because the purchase of the surfboard is considered a part of the consumption component of U.S. GDP, as it represents a final good or service purchased by U.S. consumers. Additionally, because the surfboard was produced in Australia and imported into the U.S., it is also counted as a part of the import component of U.S. GDP.

Question 14

Changes in inventory are included in the investment component of GDP.

Accepted Answer

Changes in inventory reflect businesses' increased investment in goods and are therefore included in the investment component of GDP.

Question 15

Since it is counted as investment,why doesn't the purchase of earthmoving equipment from China by a U.S.corporation increase U.S.GDP?

Accepted Answer

The answer of Since it is counted as investment,why doesn't...

Quiz 23: Measuring a Nations Income