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Exam 2: The Data of Macroeconomics

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Question 31

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Nominal GDP is measured in ____ dollars ____ time.

A) current; at a point in
B) constant; at a point in
C) current; per unit of
D) constant; per unit of

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Question 32

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An increase in the price of goods bought by firms and the government will show up in:

A) the CPI but not in the GDP deflator.
B) the GDP deflator but not in the CPI.
C) both the CPI and the GDP deflator.
D) neither the CPI nor the GDP deflator.

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Question 33

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Assume two countries have the same nominal GDP (measured in the same currency using the same accounting rules). Explain at least three reasons why you cannot assume that citizens in each country enjoy approximately the same level of economic well-being.

There are a number of statistics computed to measure the price level, such as the GDP deflator and the CPI. The choice of which of these measures to use depends in many cases on the specific question in which you are interested. For each of the following situations, state whether the CPI or GDP deflator is a more appropriate measure to use and explain why the statistic is preferred. a. You are interested in looking at the impact of higher prices of imported oil in the overall cost of living. b. The government is interested in whether increases in defense spending are affecting the price level. c. An economic consulting firm is investigating the impact on the aggregate price level of more computers and electronic technology used in production.

Which of the following is a flow variable?

GDP is the market value of all goods and services produced within an economy in a given period of time.

Since GDP includes only the additions to income, not transfers of assets, are not included in the computation of GDP.

Assume that total output consists of 4 apples and 6 oranges and that apples cost $1 each and oranges cost $0.50 each. In this case, the value of GDP is:

In 2009, the approximate percentage of GDP in the United States that was spent on consumption was approximately:

Economic statistics are not perfect. Explain at least one way in which each of the following statistics as currently calculated in the United States fails to completely or accurately measure the corresponding economic concept (in parentheses): a. real GDP per person (economic well-being); b. CPI (cost of living); c. unemployment rate (involuntary unemployment).

In principle, the GDP accounts should-but do not-have an imputation for:

In 2009, GDP per person in the United States was approximately:

There are a number of measures of aggregate economic activity, such as GDP, GNP, national income, personal income, and disposable personal income. Each of these measures can be a good indicator depending on the issue under consideration. For each of the following issues, give your reasons for selecting one of the measures just mentioned as the best indicator to use in studying the issue: a. the proportion of income households save; b. the relative share of earnings going to labor versus capital; c. the total output of new final goods and services.

$\begin{array} { l l l } & 2009 & 2010 \\\text { Nominal GDP } ( \$ \text { billions } ) & \$ 14,700 & \$ 15,200 \\\text { Real GDP } ( \$ \text { billions } 2000 \text { chain weighted) } & \$ 12,100 & \$ 11,900\end{array}$ Based on the data in the table above, explain what happened to output and prices in the economy between 2009 and 2010.

All of the following transactions that took place in 2009 would be included in GDP for 2009 except the purchase of a:

In the national income accounts, consumption expenditures include all of the following except household purchases of:

Real GDP is measured in dollars time.

The labor force equals the:

Nominal GDP means the value of goods and services is measured in prices.

Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the value added by the automobile company is: