Macro HW 3

GDP is the

• national income minus all private transfer payments.

• monetary value of all final goods and services produced within the borders of a nation in a particular year.

• • 
    

    monetary value of all economic resources used in producing a year's output.

• monetary value of all goods and services, final and intermediate, produced in a specific year.

Suppose the total monetary value of all final goods and services produced in a particular country in a year is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that

• • 
    

    GDP that year is $450 billion.

• NDP is $450 billion.

• GDP that year is $500 billion.

• inventories fell by $50 billion.

National income accountants can avoid multiple counting by

• including transfer payments in their calculations.

• only counting final goods.

• counting both intermediate and final goods.

• only counting intermediate goods.

Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for $700. Donita sells the dresses for $1,200 to teens planning to go to the prom. The total contribution to GDP of this series of transactions is

• $1,200.

• $500.

• $2,300.

• $1,100.

Which of the following transactions would be included in GDP?

• Mary buys a used book for $5 at a garage sale.

• Nick buys $5,000 worth of stock in Microsoft.

• Olivia receives a tax refund of $500.

• Henry buys a newly constructed house.

Assume an economy makes only one product and that Year 3 is the base Year. Output and price data for a five-year period are shown in the table. The nominal GDP for Year 4 is

• $49.

• $55.

• $40.

• $35.

Assume an economy that only one product and that Year 3 is the base Year. Output and price data for a five-year period are shown in the table. Real GDP for Year 5 is

• 
  

  $160

• $49.

• $40.

• $64.

In determining real GDP, economists adjust nominal GDP by using the

• national productivity index.

• wholesale (producers) price index.

• GDP price index.

• consumer price index.

Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?

• the services of used-car dealers

• the child-care services provided by stay-at-home parents

• the construction of new houses

• government expenditures on military equipment

Nominal GDP differs from real GDP because

• nominal GDP is based on constant prices.

• real GDP is based on current prices.

• real GDP results from adjusting for changes in the price level.

• nominal GDP results from adjusting for changes in the price level.