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Exam 23: Measuring a Nations Income

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Question 21

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A recession has traditionally been defined as a period during which

A) nominal GDP declines for two consecutive quarters.
B) nominal GDP declines for four consecutive quarters.
C) real GDP declines for two consecutive quarters.
D) real GDP declines for four consecutive quarters.

E) A) and B)
F) B) and C)

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Question 22

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The overall effect of accounting for purchases of foreign goods in GDP reduces GDP.

A) True
B) False

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Question 23

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Jane and Ben purchase avocados at a grocery store, but Ben also grows avocados in his backyard. Regarding these two practices, which of the following statements is correct?

A transfer payment is a payment made by

The U.S. buys $500 billion of goods and $250 billion of services from foreign countries. Foreign countries buy $250 billion of goods and $300 billion of services from the U.S. What is net exports?

Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP, but the value of intermediate goods produced and not sold is included directly as part of GDP.

Table 23-3 The following table reports nominal and real GDP for the U.S. from 1929 to 1932. ​ $\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Nominal GDP } \\\text { (Billions of dollars) }\end{array} & \begin{array} { c } \text { Real GDP } \\\text { (Billions of dollars) }\end{array} \\\hline 1929 & 103.6 & 977 \\\hline 1930 & 91.2 & 892.8 \\\hline 1931 & 76.5 & 834.9 \\\hline 1932 & 58.7 & 725.8 \\\hline\end{array}$ -Refer to Table 23-3. What was the growth rate of real GDP for 1930?

Identify the immediate effect of each of the following events on U.S. GDP and its components. a.James receives a Social Security check. b.John buys an Italian sports car. c.Henry buys domestically produced tools for his construction company.

Table 23-1 The following table contains data for Mindalion for the year 2019. ​ $\begin{array} { | l | l | } \hline \text { GDP } & \$ 700 \\\hline \text { Income earned by citizens abroad } & \$ 13 \\\hline \text { Income foreigners earn here } & \$ 12 \\\hline \text { Losses from depreciation } & \$ 5 \\\hline \text { Indirect business taxes } & \$ 10 \\\hline \text { Statistical discrepancy } & \$ 0 \\\hline \text { Retained earnings } & \$ 8 \\\hline \text { Corporate income taxes } & \$ 12 \\\hline \text { Social insurance contributions } & \$ 30 \\\hline \text { Interest paid to households by government } & \$ 8 \\\hline \text { Transfer payments to households from government } & \$ 55 \\\hline \text { Personal taxes } & \$ 60 \\\hline \text { Nontax payments to government } & \$ 11 \\\hline\end{array}$ -Refer to Table 23-1. Disposable personal income for Mindalion in 2019 is

In 2011 a country had a real GDP of $13.89 trillion and GDP deflator of 110. In 2012 it had a nominal GDP of $17.8 trillion and real GDP of 14.24 trillion. What is the rate of inflation in 2012?

GDP excludes the value of intermediate goods because their value is included in the value of final goods.

Which of the following statistics is usually regarded as the best single measure of a society's economic well-being?

Changes in the GDP deflator reflect only changes in the prices of goods and services.

Figure 23-1 -Refer to Figure 23-1. Which of the following correctly identifies the flow of dollars?

If in some year nominal GDP was $40 billion and the GDP deflator was 70, what was real GDP?

Which of the following is included in GDP?

In 2015, government purchases were the largest component of U.S. GDP.

Calculate GDP for a country with investment of $2 trillion, government purchases of $3 trillion, capital depreciation of $1.5 trillion, consumption of $10 trillion, exports of $3.4 trillion, and imports of $3.9 trillion.

A consumer buys toys made in China. The value of the toys is included only in the net exports component of GDP.

Social Security payments are