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Exam 5: The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

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Question 61

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30 percent of the electric bulbs produced in a factory in Xenonia during a year were found to be defective.Which of the following is likely to hold true in this scenario if everything else remains unchanged?

A) Xenonia's GDP will reflect the value lost due to the defect.
B) Xenonia's GDP will be underestimated.
C) Xenonia's GDP will be overestimated.
D) Xenonia's trade surplus will increase.

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

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Question 62

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A ________ occurs when a country's exports exceed its imports.

A) trade deficit
B) trade surplus
C) budget surplus
D) fiscal deficit

E) A) and D)
F) C) and D)

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Question 63

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An Indian student paid $16,000 for a course at a university in the United States.This transaction led to a(n) ________.

Which of the following is an example of capital income?

Mr.Smith earned a salary of $5,000 in 1980,while his son earned a salary of $8,000 in 2010.If the price index was 100 for 1980 and 198 for 2010,whose salary was worth more? Explain your answer.

The following table contains prices and quantities for the three goods produced in the country of Linfieldia. -Refer to the table above.Assuming 2015 is the base year,what is the GDP deflator for 2014?

Scenario: Infi Corp. is a leading manufacturer of smart phones. Every year, customers spend $31 billion on smart phones manufactured by Infi Corp. A leading retailer generates $10 billion worth of total sales, while the remaining is generated directly from consumers. The retailer pays 70 percent of its revenue to Infi Corp., and Infi Corp. pays $19 billion to its suppliers. -Refer to the scenario above.Infi Corp.adds a value of ________ to the production process.

A Bozeman,Montana,household receives a Social Security check for $800,which it uses to purchase a $599 television made in Korea by a Korean firm,as well as pay a local mechanic $191 to fix the family car.The household spends the remaining $10 on ice cream from Town and Country.As a result,U.S.GDP ________.

Which of the following will be included in the calculation of GDP using the income-based method?

Country X exports 10 million tons of wheat to Country Y.Which of the following will happen in this case?

Which of the following is true of the expenditure-based method of national accounting?

What is the relationship between the GDP of a country and its GNP?

Suppose that instead of Greg not mowing his lawn,he pays a lawn care business $20.00.He had to buy $5 in gas and took 1 hour of his time when he did it himself.By how much would GDP change?

Scenario: John and Sue are married and live in the United States. John is a Canadian citizen and stays home with their two children, Micah and Madison; his caretaking is valued at $20,000 per child. He also programs video games from home in the evenings for a Japanese-based online poker site for $50,000 per year. Sue works as a high-powered lawyer for Berkshire Hathaway at their London branch for the U.S. dollar equivalent of $1,00,000 per year. -Refer to the above scenario.How much does John contribute to Japanese GDP?

How are inventories included in the calculation of the expenditure measure of GDP?

For the United States from 1929 to 2015,what has been the general relationship between the saving rate and the investment rate?

Scenario: A country produces only one good. It produced 5,000 units of the good during Year 1 and 6,000 units of the good in Year 2. The price of each unit of the good in Year 1 was $280 and it was $320 in Year 2. Suppose Year 1 is taken as the base year for the calculation of GDP. -Refer to the scenario above.The real GDP of the country in Year 2 was ________.

The following table contains prices and quantities for the three goods produced in the country of Linfieldia. -Refer to the table above.Assuming that 2015 is the base year,what is nominal GDP for 2014?

The following table contains prices and quantities for the three goods produced in the country of Linfieldia. -Refer to the table above.Assuming that the base year basket of goods is 40 notebooks,1 thesis,and 200 doughnuts,what is the Consumer Price Index for 2016?

Rebecca,a U.S.citizen,imported a watch from Switzerland.This transaction led to a(n) ________.