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Exam 23: Measuring a Nations Income

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Question 81

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The value of goods added to a firm's inventory in a certain year is treated as

A) consumption, since the goods will be sold to consumers in another period.
B) intermediate goods, and so is not included in that year's GDP.
C) investment, since GDP aims to measure the value of the economy's production that year.
D) spending on durable goods, since the goods could not be inventoried unless they were durable.

E) A) and D)
F) All of the above

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Question 82

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The government's purchases of goods but not its purchases of services are included in GDP.

A) True
B) False

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Question 83

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Table 23-6 The country of Batavia produces only chocolates and watches. Below is a table with recent information on Batavia production and prices. The base year is 2009. Prices and Quantities -Refer to Table 23-6. What was the inflation rate for 2010? Show your work.

Disposable personal income is

Table 23-2 The following table contains data for country Mindalion for the year 2019. ​ $\begin{array} { | l | l | } \hline \text { Household purchases of durable goods } & \$ 1,695 \\\hline \text { Household purchases of nondurable goods } & \$ 1,717 \\\hline \text { Household purchases of services } & \$ 400 \\\hline \text { Household purchases of new housing } & \$ 704 \\\hline \text { Purchases of capital equipment } & \$ 310 \\\hline \text { Inventory changes } & \$ 399 \\\hline \text { Purchases of new structures } & \$ 611 \\\hline \text { Depreciati on } & \$ 117 \\\hline \text { Salaries of government workers } & \$ 1,422 \\\hline \text { Government expenditures on public works } & \$ 589 \\\hline \text { Transfer payments } & \$ 777 \\\hline \text { Foreign purchases of domestically produced goods } & \$ 88 \\\hline \text { Domestic purchases of foreign goods } & \$ 140 \\\hline\end{array}$ -Refer to Table 23-2. What were country Mindalion's imports in 2019?

A farmer sells sugar to a candy producer for $150. If the producer uses this sugar to make candy that sells for $200, what is the total contribution to GDP from these transactions?

Nominal GDP is $12 trillion and real GDP is $15 trillion. What is the GDP deflator? Show your work.

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. Gross national product for Mindalion in 2019 is

In the GDP accounts production equals

Calculate the inflation rate for a country where the GDP deflator rises from 120 to 165.

In years of economic contraction, firms throughout the economy increase their production of goods and services, employment rises, and jobs are easy to find.

Suppose the government passes a law eliminating holidays and, as a result, the production of goods and services increases because people work more days per year (and thus enjoy less leisure per year) . Based on this scenario, which of the following statements is correct?

In the actual economy, households

If the value of an economy's imports exceeds the value of that economy's exports, then net exports is a negative number.

A farmer produces carrots and sells them to Fresh Juice, which makes carrot juice. The carrots produced by the farmer are called

Real GDP is a better gauge of economic well-being than is nominal GDP.

The basic tools of supply and demand are central to microeconomic analysis but are of little use to macroeconomics.

Between 1929 and 1933, NNP measured in current prices fell from $96 billion to $48 billion. Over the same period, the relevant price index fell from 100 to 75. a.What was the percentage decline in nominal NNP from 1929 to1933? b.What was the percentage decline in real NNP from 1929 to 1933? Show your work.

What are transfer payments, and how do they affect the calculation of GDP?

While GDP includes tangible goods such as books and bug spray, it excludes intangible services such as the services provided by teachers and exterminators.