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Exam 11: Measuring a Nations Production and Income

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Question 51

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If the economy grew at 7 percent from 2015 to 2016 and real GDP was 400 in 2015, what was real GDP in 2016?

A) 393
B) 400
C) 407
D) 428

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Question 52

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GDP measures underestimate the value of output produced by an economy because they include services not transferred through markets.

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Question 53

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The largest component of GDP is

Use the following information to answer the next several questions: Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures. In 2015, the economy produced 70 flashlights and 40 fishing lures, and the prices of flashlights and fishing lures were $5 and $12, respectively. In 2016, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $7 and $15, respectively. -Based on the information in Scenario 1, nominal GDP in 2016 in this economy was

A firm's value added can be measured as the value of its

As a component of GDP, consumption expenditures refers to purchases by consumers of currently produced goods and services.

"Recession" refers to a period when real GDP in the economy

The period of time in which the level of output moves from a trough to a peak is called a

In the expanded circular flow diagram, the government supplies

Define GDP.

Why is GDP only an imperfect valid measure of the value of output produced by an economy?

Explain the supply and demand of products, factors of production, and the payments for the products and factors of production as described in the circular flow diagram.

Which of the following is an example of a consumption expenditure?

Recall the Application about the link between happiness and GDP to answer the following question(s) . Comparing changes in happiness to changes in per capita income over the last 30 years, economists at Dartmouth College and Warwick University have measured levels of happiness in the United States and United Kingdom based on income levels, ethnicity, age, and gender. -According to the Application

A nation's net exports consist of

Use the following information to answer the next several questions: Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures. In 2015, the economy produced 70 flashlights and 40 fishing lures, and the prices of flashlights and fishing lures were $5 and $12, respectively. In 2016, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $7 and $15, respectively. -Based on the information in Scenario 1, nominal GDP in 2015 in this economy was

How many broad categories are used by economists to define the GDP?

Depreciation is the term used when plants, equipment and housing deteriorate and wear out, thus losing their original values.

GDP ignores all of the following EXCEPT

Recall the Application about the size of Wal-Mart to answer the following question(s) . During 2014, Wal-Mart's sales were approximately $473 billion, or roughly 2.7 percent of U.S. GDP, and its cost of sales was $358 billion. -According to this Application, why is the value of Wal-Mart's 2014 sales NOT an accurate measurement of its actual sales impact on the U.S. economy?