Chapter 19: GDP and Business Cycles

What type of GDP is calculated with the current year's prices?

• Nominal GDP
• Real GDP
• GDP per capita

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 

GDP is calculated by

• adding up the cost of goods used in producing the item
• subtracting all costs from total revenue
• adding consumption + investment +government spending+ (exports sold - imports bought)

How does investment in capital goods by companies help a country increase its GDP?

• The GDP of a country goes down when companies make more money
• Companies that invest in capital goods are able to provide a better place for their workers to work
• Highly trained workers help the company be more profitable by finding ways to help the company work better.
• When a company invests in capital, it can produce more goods at a better price and increase the profit that it makes.

Which is an example of investment in human capital?

• trucks
• factories
• education
• highways

Dover Downs will sell millions of dollars of NASCAR merchandise on race weekend.  Will this be included in GDP?

• Yes - Investment 
• Yes - Consumer Spending
• No - used items
• No - intermediate goods

Mark always changes his own oil.  Is this effort counted in GDP?

• No - Black Market
• No - Non-market Activity
• No - Unreported Income
• No - Purely financial transaction 

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

• Yes - Government spending
• Yes - Consumer Spending
• No - Intermediate Goods
• No - Purely financial Transaction