Chapter 21 Questions

True/ False Questions

1. The market value of all the goods and services produced within a country in a given time period are included in GDP.

2. The market value of all the goods and services produced within a country in a given time period are included in GDP.

Multiple Choices
1. Gross domestic product is the total ____ produced within a country in a given time period. A market value of all final and intermediate goods and services ! market value of all final and intermediate goods and services plus investment and depreciation " amount of final and intermediate goods and services D market value of all final goods and services 2. #hich of the following is $%T part of the e&penditure approach to measuring GDP' A ! " D Gross private domestic investment $et e&ports of goods and services $et interest Personal consumption e&penditures

(. "onsumption e&penditure is the payment )y households for consumption of A ! " D goods )ut not services. services )ut not goods. goods and services. services and for saving.

*. $et e&ports of goods and services e+ual the A ! " D e&ports of goods and services divided )y the imports of goods and services. e&ports of goods and services plus the imports of goods and services. e&ports of goods and services minus the imports of goods and services. imports of goods and services minus the e&ports of goods and services.

"onsumption 6&penditure Government 6&penditure $et ta&es 7nvestment "orporate Profits 7mport 6&port

.2// )illion .1/ )illion .,/ )illion .,/ )illion .(/ )illion .2/ )illion .1/ )illion

,. -ow much is net e&ports' a. .2/ )illion ). .1/ )illion c. ./ d.0.1/ )illion 1. -ow much is GDP' a. .**/ )illion ). .((/ )illion c. .(// )illion d. .22/ )illion 2. #hich of the following is $%T a component of the incomes approach to GDP' a. $et e&ports ). #ages and salaries c. "orporate profits d. Proprietors3 income 4. The approach to GDP that sums compensation of employees5 rental income5 corporate profits5 net interest5 proprietors3 income5 depreciation5 and indirect ta&es and su)tracts su)sidies is the A opportunity cost approach. ! e&penditure approach. " added cost approach. D income approach.

8. A ! " D

#hich of the following is $%T included in real GDP' Production of services5 such as the services of doctors. Production of goods that last more than one year5 such as television sets. Production of goods that do not last more than one year5 such as gasoline. Production in the home.

1/. #hich of the following is $%T a reason that real GDP is a poor measure of a nation3s economic welfare' a. 9eal GDP omits :leaves out measures of political freedom. ). 9eal GDP does not take into account the value of people3s leisure time. c. 9eal GDP does not include the underground economy. d. 9eal GDP overvalues household production

Short Answers
"onsumption 6&penditure Government 6&penditure $et ta&es 7nvestment "orporate Profits 7mport 6&port .*// )illion .12/ )illion .1// )illion .4/ )illion .,/ )illion .,/ )illion .1/ )illion

11. "alculate GDP5 using the ta)le.

2008 Ta)les "hairs 2009 Ta)les "hairs

Quantity ,/ 2/

Price 1/ 1,

1// 2,

2/ 1,

12. ;sing the ta)le a)ove5 calculate $ominal GDP.

1(. ;sing the ta)le a)ove5 calculate 9eal GDP.