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5. Given the following data for an economy, compute the value of GDP.

Note: There may be more pieces of information than you need to answer this question. All numbers are in billions of dollars.

Consumption expenditures =1,000
Imports =625
Government purchases of goods and services =700
Construction of new homes and apartments= 500
Sales of existing homes and apartments =600
Exports=500
Government payments to retirees= 200
Household purchases of durable goods= 300
Beginning-of-year inventory=500
End-of-year inventory =600
Business fixed investment= 300

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Ritu Kharb
Ritu KharbLv5
28 Sep 2019

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Related questions

There are probably a thousand macroeconomic indicators, some measure the overall national economy, but some are more limited in scope. The three most often quoted and publicized are the Gross Domestic Production Index (GDP), the Consumer Price Inflation Index (CPI), and the Unemployment Index. Please complete the short answer questions regarding these three indicators:

A. Use the table below:

Table 6-1

 

Value (in billions)

Personal consumption expenditures

$1,000

Gross private domestic investment

$500

Net exports

$300

Imports

$180

Government purchases of goods and services

$280

Transfer Payments

$90

a. What is the value of GDP?

b. In each of the following cases indicate if GDP is affected,+ under what category, and what happens to GDP. Be sure to explain why or why it is not included.

  • You buy a used textbook from one of your classmates.
  • You buy a new umbrella.
  • Ella, a French tourist, has a haircut in a salon in San Francisco.
  • Oklahoma cleans up after a devastating tornado.
  • A pension payment to a retired military person.

B. Why do some people gain and other people lose from inflation and deflation?

C. Define the natural rate of unemployment. Identify three factors that may cause the natural rate to change over time.

D. What is structural unemployment? State the various reasons due to which it can arise in an economy.

1. Which of the following transactions would add to the value of the U.S. GDP?

A. A college student buys a used car.
B. A college student sells her used textbooks back to the bookstore.
C. A grocery store purchases new freezers made in the United States.

D. U.S. citizen buys a new television manufactured in Asia.

2. The growth rate of real GDP:
A. depends on which year is used as the base year.
B. depends on how quickly prices are rising.
C. is always equal to the rate of growth of nominal GDP. D. is always more than the rate of growth of nominal GDP.

3. Which statement is true about GDP?
A. GDP includes the values of all final and intermediate goods and services.
B. Only the products made by American workers are included in the calculation of the US GDP.

C. Sales of old houses and used cars are included in the calculation of GDP for the current year.

D. In the US, GDP is calculated both annually and quarterly.

4. Which statement is true about GDP growth?
A. The GDP deflator is a measure of economic growth.
B. If we want to compare GDP over time, we should always compare real GDP.
C. Most economists choose nominal GDP growth as a single indicator of economic performance.

D. The GDP deflator tells the quantity change of production.

5. Which of the following is a way to compute GDP?

A. add up the wages paid to all workers

B. add up the quantities of all final goods and services
C. add up the market value of all final goods and services

D. add up the rents paid by all tenants

6. A farmer produces oranges and sells them to Fresh Juice, which makes orange juice. The oranges produced by the farmer are called:
A. inventory goods
B. transitory goods

C. final goods
D. intermediate goods

7. Martin, a US citizen, travels to Mexico and buys a newly manufactured motorcycle there. His purchase is included in:

A. both Mexican GDP and US GDP.

B. Mexican GDP, but not in US GDP.

C. US GDP, but not in Mexican GDP.

D. neither Mexican GDP nor US GDP.

8. Which of the following is included in Singapore GDP?

A. The value of production by a Singaporean working in the US.
B. The value of production by an American working in Singapore.
C. The value of production by a Singaporean that crosses the order to work in Malaysia.

D. All of the above are correct.

9. In the equation Y = C + I + G + NX,
A. Y represents the economy's total expenditure.

B. C represents household on durable goods.
C. all of the variables are always positive numbers.

D. All of the above are correct.

10. Consumption consists of spending by households on goods and services, except

purchases of intangible services.

purchases of durable goods.

purchases of new houses.

spending on education.

11. Which of the following is included in government purchase?

A. unemployment benefits a state government pays

B. social security payments the US government makes
C. the services of a US government attorney valued at the cost of her salary

D. All of the above are correct.

12. Transfer payments are:

A. included in GDP because they represent income to individuals.
B. included in GDP because they eventually will be spent on consumption.
C. not included in GDP because they are not payments for currently produced goods or services.

D. not included in GDP because taxes will have to be raised to pay for them.

13. Net exports equal
A. exports plus imports

B. exports minus imports

C. imports minus exports

D.GDP minus imports

14. In the economy of TAMIU in 2015, exports were $200, GDP was $2000, government purchases were $200, imports were $270, and investment was $500. What was TAMIU's consumption in 2015?

A. $830

B. $1230

C. $1370

D. $1770

15. Nominal GDP will increase when

A. prices increase and output increases.
B. prices increase and output decreases.
C. prices decrease and output increases.

D. All of the above are correct.

16. Changes in real GDP reflect:

A. only changes in prices.

B. only changes in the amounts being produced.
C. both changes in prices and changes in the amounts being produced.

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

17. Which of the following is correct?
A. Nominal GDP is always less than real GDP.

B. Nominal GDP is always greater than real GDP.
C. Nominal GDP equals real GDP in the base year.
D. Nominal GDP equals real GDP in all years but the base year.

18. The GDP deflator is the ratio of:

A. real GDP to nominal GDP.

B. real GDP to the inflation rate.
C. real GDP to nominal GDP.
D. nominal GDP to the inflation rate.

19. In 2012 the nominal GDP was $18 billion and the GDP deflator was 120, what was real GDP?
A. $6.7 billion
B. $10 billion

C. $40 billion D. $100 billion

20. In the base year, the GDP deflator is always equal to A. -1
B. 0
C. 2

D. 1

21. GDP does not reflect:

A. the value of leisure.

B. the value of goods and services produced at home.

C. the quality of the environment.
D. All of the above are correct.

22. When economists talk about growth in the economy, they measure that growth as the:

A. absolute change in nominal GDP from one period to another.

B. percentage change in nominal GDP from one period to another.

C. absolute change in real GDP from one period to another.
D. percentage change in real GDP from one period to another.

23. The term economists use to describe a situation in which the economy’s overall price level is rising is:

A. economic growth

B. inflation
C. recession
D. business cycles

Use information from the Bureau of Economic Analysis (BEA) website, http://www.bea.gov/, answer question 24 and 25.

24. What is the real GDP growth rate in the 4th quarter of 2015 for the United States?

A. 1%
B. 2%
C. 3%

D. 4%

25. What is the value of real GDP in 1998 for the United States?

A. $11525.9 billion

B. $9089.2 billion

C. $11321.2 billion

D. $8889.7 billion

1. The multiplier helps explain

   

A. why a decrease in taxes causes real Gross Domestic Product (GDP) to fall by more than the amount of the decrease in taxes.
   

B. why a fall in investment cause real Gross Domestic Product (GDP) to rise by more than the amount of the decrease in investment.
   

C. why a rise in government expenditures causes real Gross Domestic Product (GDP) to rise by more than the amount of the increase in government spending.
   

D. why an increase in disposable income causes real Gross Domestic Product (GDP) to rise by less than the amount of the increase in disposable income.

 

2. If the marginal propensity to save (MPS) increases, the multiplier

   

A. decreases.
   

B. can either increase or decrease, depending on what happens to the marginal propensity to consume (MPC).
   

C. stays the same.
   

D. increases.

 

QUESTION 60

The investment function will shift when there is a change in

   

A. the opportunity cost of retained earnings.
   

B. firms' profit expectations.
   

C. the cost of borrowing.
   

D. the interest rate.

1.43 points

QUESTION 61

In the Keynesian model, whenever planned saving exceeds planned investment,

   

A. there will be unplanned inventory accumulation.
   

B. real GDP will not be influenced.
   

C. the interest rate will remain unchanged.
   

D. there will be unplanned inventory depletion.

 

1.43 points

QUESTION 62

In the Keynesian model, whenever planned saving is less than planned investment,

   

A. there will be unplanned inventory depletion.
   

B. the interest rate will remain unchanged.
   

C. there will be unplanned inventory accumulation.
   

D. real GDP will not be influenced.

 

1.43 points

QUESTION 63

Government purchases

   

A. are determined by the political process.
   

B. are determined by the public.
   

C. are influenced by interest rates.
   

D. are determined by suppliers.

 

1.43 points

QUESTION 64

If, at some level of output, total planned real expenditures are less than real Gross Domestic Product (GDP),

   

A. real GDP will either fall or remain unchanged, depending on the MPC.
   

B. real GDP will rise.
   

C. real GDP remains unchanged.
   

D. unplanned inventories will increase and real GDP will fall.

 

1.43 points

QUESTION 65

When the economy is operating at the equilibrium level of GDP, we know that

   

A. total planned real expenditures equal real GDP.
   

B. real net exports equal inventory changes.
   

C. planned real investment spending equals real net exports of zero.
   

D. total planned real consumption expenditures equal real GDP.

 

1.43 points

QUESTION 66

One divided by the marginal propensity to save (MPS) is the formula for

   

A. the inverse of the multiplier.
   

B. the multiplier.
   

C. one minus the multiplier.
   

D. autonomous consumption.

 

QUESTION 67

Thinking like an economist would, which is true of investment?

   

A. Investment represents spending on capital goods.
   

B. Investment is a stock concept.
   

C. Investment is putting money into stocks and bonds.
   

D. It is the portion of disposable income that is not used for consumption or saving.

 

QUESTION 68

Other things being equal, if input prices rise in a country, then there would be

   

A. cost-push inflation.
   

B. demand-pull inflation.
   

C. cost-pull deflation.
   

D. more production and a lower price level.

 

QUESTION 69

In the short run, if the price level rises, then the overall economy can temporarily produce beyond its nominal capacity. One reason for this is that

   

A. existing capital equipment can be used more intensively.
   

B. wage rates rise almost simultaneously with the price level.
   

C. the unemployment rate usually rises dramatically along with the price level.
   

D. workers can be switched from counted to uncounted production.

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