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Exam 6: GDP and the Measurement of Progress

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Question 51

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Use the following to answer questions: Table: Economic Data $\begin{array} { l c } \hline \text { Component of GDP } & \text { Amount } \\\hline \text { Consumption } & \$ 875.5 \\\text { Investment } & 415.5 \\\text { Wages and salaries } & 794.8 \\\text { Rent } & 300.2 \\\text { Profit } & 391 \\\text { Government Purchases } & 380 \\\text { Interest } & 345 \\\text { Exports } & 520 \\\text { Imports } & 360 \\\hline\end{array}$ -(Table: Economic Data) Based on the data in the table, what is the GDP for this economy, based on the national spending approach?

A) $1,831
B) $2,120.5
C) $2,191
D) $2,551

E) A) and D)
F) None of the above

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Question 52

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The measure of GDP that has been adjusted for changes in prices is called:

A) annual GDP
B) nominal GDP
C) real GDP.
D) aggregate GDP

E) B) and D)
F) None of the above

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Question 53

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A decline in nominal GDP is the single best indicator of a recession.

The national spending approach to calculating GDP states that GDP is equal to:

If a country's nominal GDP increases by 5% between two years while its GDP deflator increases by 4%, the country's real GDP:

Increases in _____ are considered the best measure of increases in living standards because they measure only increases in production.

If nominal GDP in 2007 is $5.43 (in trillions) and in 2008 the level of nominal GDP rises to $6.11 (in trillions) , what is the growth rate of nominal GDP?

Use the following to answer questions: Table: Components of GDP $\begin{array} { l r } \hline \text { Private investment } & \$ 1,640 \text { billion } \\\text { Government spending } & 2,872 \text { billion } \\\text { Profits } & 1,565 \text { billion } \\\text { Consumption spending } & 9,913 \text { billion } \\\text { Wages } & 3,574 \text { billion } \\\text { Exports } & 1,520 \text { billion } \\\text { Imports } & 1,890 \text { billion } \\\hline\end{array}$ -(Table: Components of GDP) Use the data in this table to calculate GDP.

A real variable is one that:

None of the spending components of GDP (based on the national spending approach) can be negative values.

If pressed to choose a single indicator of changing living standards, most economists would probably choose nominal GDP growth per capita.

According to the national spending approach, education is classified as a consumption expenditure when splitting GDP.

GNP is the market value of all final goods and services produced:

Use the following to answer questions: Table: iPhones $\begin{array} { l c c } \hline \text { Year } & \text { Quantity produced } & \text { Price } \\\hline 2000 & 100 & \$ 100 \\2010 & 90 & 110 \\\hline\end{array}$ -(Table: iPhones) This table shows data for a country producing only iPhones. Its real GDP in 2010 (in 2000 dollars) is:

GDP:

To avoid double accounting, the value of:

The purchase of a new home is considered an investment expenditure.

Why are transfer payments not counted as part of GDP?

Use the following to answer questions: Table: Three-Good Economy I $\begin{array} { l c c c c } \hline \text { Product } & \text { Quantity (2008) } & \text { Price (2008) } & \text { Quantity (2009) } & \text { Price (2009) } \\\hline \text { Computers } & 25 & \$ 800.00 & 30 & \$ 1,000.00 \\\text { Pizzas } & 90 & 9.00 & 100 & 10.00 \\\text { Burgers } & 180 & 1.80 & 200 & 2.00 \\\hline\end{array}$ -(Table: Three-Good Economy I) Suppose an economy produces only the three final goods shown in the table. The table gives information on the quantities produced and the prices of goods sold in 2008 and 2009. If prices in 2008 are used to calculate real GDP, what is the growth rate of real GDP in 2009?

Between 1993 and 2003, Guatemala experienced real GDP growth of about 3.6% a year. Over that same period, population grew at 2.8% a year, so real GDP per capita in Guatemala grew at: