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Exam 7: Measuring Domestic Output and National Income

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Question 31

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The service a homeowner performs when she mows her yard is not included in GDP because:

A) This is a nonmarket transaction
B) This is a nonproduction activity
C) This is a noninvestment transaction
D) Multiple counting would be involved

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Question 32

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If prices increased, we need to adjust nominal GDP values to give us a measure of GDP for various years in constant-dollar terms. We refer to that adjustment as:

A) Inflating GDP
B) Deflating GDP
C) Compounding GDP
D) Indexing GDP

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Question 33

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Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Refer to the above data. In year 4, nominal GDP would be:

(The following national income data for an economy are in billions of dollars.) Refer to the above data. The net private domestic investment in this economy is equal to:

(The following national income data are in billions of dollars.) Refer to the above data. This nation's exports are:

(The following national income data are in billions of dollars.) Refer to the above data. Net domestic product equals:

Personal income (PI) is the income that households are free to spend or save as they please.

Which of the following is not included in personal consumption expenditures?

GDP tends to understate economic welfare because it does not take into account increases in leisure.

All of the following are examples of intermediate goods, except:

Nominal GDP is less than real GDP in an economy in both year 1 and year 2. In year 3, nominal GDP is equal to real GDP. In year 4, nominal GDP is slightly greater than real GDP. In year 5, nominal GDP is significantly greater than real GDP. Which year is the base year being used to calculate the price index for this economy?

The total volume of business sales in our economy is several times larger than GDP because:

Net exports is a positive number when:

Refer to the graph above. They suggest that the GDP price index during the period shown was generally:

The gross domestic product is not a good measure of the standard of living in a nation because it:

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,050) ; personal consumption expenditures ($4,800) ; imports ($370) ; exports ($240) ; gross private domestic investment ($1,130) . Personal consumption expenditures are approximately what percentage of this economy?

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the total expenditure for the same market basket of goods was $5,500 billion. What was the GDP price index for the economy in year 2?

(The following national income data are in billions of dollars.) Refer to the above data. Personal income in this economy is:

Answer the question based on the following data, using year 1 as the base year. All dollars are in billions. Refer to the above data. Real GDP in year 4 was approximately:

The largest expenditure component of GDP is: