Measuring A Nation's Income-B

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

• True

• False

If the GDP deflator in 2006 was 160 and the GDP deflator in 2007 was 180, then the inflation rate in 2007 was 12.5%.

• True

• False

Spots, Inc. produces ink and sells it to Write on Target, which makes pens. The ink produced by Spots, Inc. is called

• an inventory good.

• a transitory good

• a preliminary good.

• an intermediate good

Which of the following domestically produced items is not included in GDP?

• a bottle of shampoo

• a hairdryer

• a haircut

• All of the above are included in GDP.

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

• in both German GDP and U.S. GDP.

• in German GDP, but it is not included in U.S. GDP.

• in U.S. GDP, but it is not included in German GDP.

• in neither German GDP nor U.S. GDP.

In the economy of Wrexington in 2008, consumption was $5000, exports were $100, government purchases were $900, imports were $200, and investment was $1000. What was Wrexington’s GDP in 2008?

• $6700

• $6800

• $7000

• $7200

Changes in nominal GDP reflect

• only changes in prices.

• only changes in the amounts being produced.

• both changes in prices and changes in the amounts being produced.

• neither changes in prices nor changes in the amounts being produced.