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Exam 23: Measuring a Nations Income

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Question 51

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A country reported nominal GDP of $35 billion in 2016 and $55 billion in 2015. It also reported a GDP deflator of 105 in 2016 and 115 in 2015. Between 2015 and 2016,

A) real output and the price level both fell.
B) real output fell and the price level rose.
C) real output rose and the price level fell.
D) real output and the price level both rose.

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

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Question 52

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Calculate GDP for an economy with exports of $5 trillion, investment of $1.5 trillion, consumption spending of $11 trillion, imports of $6 trillion, and government purchases of $3 trillion.

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Question 53

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GDP excludes most of two types of production. List one.

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 nominal GDP, real GDP, and the GDP deflator for 2009? Show your work.

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 net exports in 2019?

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

GDP can measure either the total income of everyone in the economy or the total expenditure on the economy's output of goods and services, but GDP cannot measure both at the same time.

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 was country Mindalion's investment in 2019?

Consumption is $5.5 trillion, investment is $1 trillion, government expenditures are $1.5 trillion, transfer payments are $.5 trillion, exports are $.75 trillion and imports are $1.25 trillion. What is GDP?

Net exports equal

In 2010 a country had nominal GDP of 6 trillion euro and real GDP of 5 trillion euro. In 2011 it had nominal GDP of 6.5 trillion euro and real GDP of 5.2 trillion euro. What was its inflation rate in 2011? Show your work.

If someone in the United States buys a surfboard produced in Australia, then that purchase is included in both the consumption component of U.S. GDP and the net exports component of U.S. GDP.

The advantage of real GDP as a measure is the fact that it only increases. ​

The GDP deflator is the ratio of

Figure 23-1 -Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?

The GDP deflator can be used to take inflation out of nominal GDP.

The government purchases component of GDP includes salaries paid to soldiers but not Social Security benefits paid to the elderly.

Expenditures by households on education are included in the investment component of GDP.

Table 23-7 A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year. $\begin{array} { | l | l | l | l | l | } \hline \text { Year } & \begin{array} { l } \text { Price of Ice } \\\text { Cream }\end{array} & \begin{array} { l } \text { Quantity of Ice } \\\text { Cream }\end{array} & \text { Price of Cake } & \begin{array} { l } \text { Quantity of } \\\text { Cake }\end{array} \\\hline 2011 & \$ 2.00 & 200 & \$ 10 & 40 \\\hline 2012 & \$ 2.30 & 250 & \$ 14 & 50 \\\hline 2013 & \$ 2.75 & 280 & \$ 18 & 80 \\\hline\end{array}$ -Refer to Table 23-7. Calculate the GDP deflator for 2012 and 2013.

​GDP and GNP are identical when