AP Macro: GDP and Business Cycle

High levels of GDP per capita indicate...

• Higher levels of happiness 
• Higher standard of living
• Equal levels of wealth 
• Self-sufficient communities

Expectant parents buy supplies for the nursery.  Would this be included in GDP? 

• Yes - Consumer Spending
• Yes - Investment 
• No - Intermediate goods
• No - Non-market activity

The trade in exotic animals being illegally sold as pets is a multi-billion-dollar-a-year industry.  Is this included in GDP?

• Yes - Consumer spending
• Yes - Government Spending
• No - Underground Economy 
• No - Non-market activity 

In a circular flow diagram,

i) the value of production = income

ii) the value of production = expenditure

iii) expenditure = income

• only i is true statement.

• i and ii are true statements.

• only iii is a true statement.

• i and iii are true statements.

• i, ii, and iii are true statements.

Each individual on food stamps in Florida can receive up to $194 a month. Is this included in government spending?

• Yes - Government spending

• Yes - Consumer Spending

• No - Intermediate Goods

• No - transfer payment

Last year in Linsdellia, consumption expenditure was $20 billion, interest, rent, and profit were $2.5 billion, government expenditure on goods and services was $7 billion, net exports was $5 billion, and investment was $2 billion. Hence total expenditure was

• $24.5 billion.

• undetermined without information about imports.

• $34 billion.

• $34.5 billion.

• $36.5 billion.

If nominal GDP increases, this means:

• We must be producing more goods and services.

• We must be experiencing inflation.

• Either there has been inflation or we are producing more.

• The value of the currency has fallen.

Which of these is NOT correct. Real GDP

• Shows the amount you are producing after removing the effects of inflation.

• Is meaningless because of the effects of inflation.

• Will be lower than nominal GDP, if there is inflation.

• Will be higher than nominal GDP, if there is deflation

Output per person, calculated as real GDP divided by the total population.   

• GDP/Capita
• GDP
• Productivity  
• Investment 

The total dollar value of all final goods and services produced within the country’s border in a given year after price level changes are taken out of the data.

• Nominal GDP

• GDP/capita

• Gross GDP

• Real GDP