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Exam 10: Measuring a Nations Income

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Question 241

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If nominal GDP is $10 trillion and real GDP is $12 trillion, then the GDP deflator is

A) 83.33, and this indicates that the price level has decreased by 16.67 percent since the base year.
B) 83.33, and this indicates that the price level has increased by 83.33 percent since the base year.
C) 120, and this indicates that the price level has increased by 20 percent since the base year.
D) 120, and this indicates that the price level has increased by 120 percent since the base year.

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

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Question 242

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Household spending on education is included in

A) consumption, although it might be argued that it would fit better in investment.
B) investment, although it might be argued that it would fit better in consumption.
C) government spending, based on the fact that most higher-education students attend publicly-supported colleges and universities.
D) None of the above is correct; in general, household spending on services is not included in any component of GDP.

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

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Question 243

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Suppose there are only two firms in an economy: Cowhide, Inc. produces leather and sells it to Couches, Inc., which produces and sells leather furniture. With each $1,000 worth of leather that it buys from Cowhide, Inc., Couches, Inc. produces a couch and sells it for $2,600. Neither firm had any inventory at the beginning of 2015. During that year, Cowhide produced enough leather for 25 couches. Couches, Inc. bought 80% of that leather for $20,000 and promised to buy the remaining 20% for $5,000 in 2016. Couches, Inc. produced 20 couches during 2015 and sold each one during that year for $2,600. What was the economy's GDP for 2015?

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

Which of the following items is counted as part of government purchases?

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

National income differs from net national because

In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was $7500, imports were $200, and investment was $1000. What were Talikastan's government purchases in 2015?

Most goods whose purchases are included in the investment component of GDP are used to produce other goods in future periods.

If in some year real GDP was $25 billion and the GDP deflator was 68, what was nominal GDP?

The percentage change in the price level from one period to another is called

Periods during which real GDP rises are called recessions.

In the national income accounts, depreciation is called

If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300.

How does U.S. gross domestic product GDP) differ from U.S. gross national product GNP) ?

Gross domestic product measures

Table 23-1 The table below contains data for Chereaux for the year 2015. -Refer to Table 23-1. Net national product for Chereaux in 2015 is

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

Table 23-3 The table below contains data for the country of Crete for the year 2010. -Refer to Table 23-3. What were Crete's net exports in 2010?

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.