Which of the following statements is true?
A. Real GDP equals nominal GDP divided by the GDP deflator, and then times 100.
B. The inclusion of intermediate goods and services in GDP calculations would over-estimate a nation's production level.
C. Disposable personal income equals personal income plus personal taxes.
D. Only A and B.
E. Only B and C.
Which of the following statements is true?
A. Real GDP equals nominal GDP divided by the GDP deflator, and then times 100.
B. The inclusion of intermediate goods and services in GDP calculations would over-estimate a nation's production level.
C. Disposable personal income equals personal income plus personal taxes.
D. Only A and B.
E. Only B and C.
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Real versus nominal GDP
Consider a simple economy that produces two goods: apples and oranges. The following table shows the prices and quantities for the goods over a three-year period.
Year |
Apples
|
Oranges
|
||
---|---|---|---|---|
Price | Quantity | Price | Quantity | |
(Dollars per apple) | (Number of apples) | (Dollars per orange) | (Number of oranges) | |
2010 | 1 | 120 | 1 | 195 |
2011 | 2 | 130 | 4 | 195 |
2012 | 4 | 130 | 4 | 145 |
A. Use the information from the previous table to fill in the following table.
Year | Nominal GDP | Real GDP | GDP Deflator |
---|---|---|---|
(Dollars) | (Base year 2010, Dollars) | ||
2010 | |||
2011 | |||
2012 |
B. From 2011 to 2012, change in nominal GDP is __________, and real GDP is ________.
C. The inflation rate in 2012 was ____________.
D. Why is real GDP a more accurate measure of an economy's production than nominal GDP?
a. Real GDP does not include the value of intermediate goods and services, but nominal GDP does.
b. Real GDP includes the value of exports, but nominal GDP does not.
c. Real GDP is not influenced by price changes, but nominal GDP is.
Real GDP per capita is calculated as the total
A. | real GDP in a given year. | |
B. | real GDP divided by the nominal GDP. | |
C. | real GDP divided by the population. | |
D. | nominal GDP divided by the population |
Table: Small Town GDP
Town | Real GDP (U.S. Dollar) | Population |
A | 4,859,307 | 250 |
B | 10,000,050 | 175 |
C | 6,000,000 | 320 |
D | 3,549,289 | 90 |
(Table: Small Town GDP) Which of the four towns in this table has the highest standard of living?
A. | Town A | |
B. | Town B | |
C. | Town C | |
D. | Town D |
(Table: GDP Table)
Table: GDP Table
Product | Price | Quantity |
Shovels | $20 | 50 |
Books | 50 | 100 |
Tomatoes | 1 | 500 |
Pizzas | 10 | 120 |
Suppose an economy produces only the four goods listed in this table. All of the country's tomatoes are used in the production of pizzas and all of its shovels are purchased by foreign firms that produce landscaping services only in their country. What is the value of GDP in this country?
A. | $6,200 | |
B. | $7,700 | |
C. | $6,700 | |
D. | $7,200 |
Which of the following services does NOT count towards GDP?
A. | You paint your own two-story garage. | |
B. | A doctor treats a patient in a hospital. | |
C. | Your real estate agent sells your house for you. | |
D. | An economics professor educates her students in a classroom. |