Disposable personal income equals personal income
minus personal tax payments.
During a business cycle expansion, total production ________ and total employment ________.
Gross domestic product is calculated by summing up
Correct the total market value of final goods and services produced in the economy during a period of time.
Gross domestic product understates the total production of final goods and services because of the omission of
Correct household production.
If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is
In 2015, Ford Motor Company’s sales were rising. These events were caused by
an economic expansion.
In 2015, the U.S. auto industry experienced rising sales. The automobile industry was experiencing the effects of
the business cycle.
Nominal GDP is another term for
Real GDP is GDP in a given year
valued in the prices of the base year.
Recent estimates put the size of the underground economy in the United States at ________ of measured GDP.
The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is
5% higher in year 2 than in year 1.
The U.S. work week has declined from 60 hours in 1890 to 40 hours today. The impact of the decline in working hours
decreases U.S. GDP and increases the well-being of a typical working person in the U.S.
The drawback to calculating real GDP using base-year prices is that
relative prices change over time and these are not reflected in base-year prices, and this distorts GDP.
The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector
do not pay taxes to the government.
The output of Mexican citizens who work in Texas would be included in the
gross national product of Mexico.
The output of U.S. citizens who work in Canada would be included in the
gross domestic product of Canada.
The size of the underground economy would tend to decrease if the government of a country
decreased government regulations on businesses.
The value of what a U.S.-owned McDonald’s produces in South Korea is included in the U.S. ________ and the South Korean ________.
Which of the following accurately describes an effect of hurricane Katrina on GDP?
GDP would increase reflecting the costs of cleanup.
Which of the following could cause nominal GDP to decrease, but real GDP to increase?
The price level falls and the quantity of final goods and services produced rises.
Which of the following goods is directly counted in GDP?
a 12-inch Subway sandwich purchased by a student
Which of the following is likely to increase measured GDP?
Marijuana becomes legal to grow and sell.
Which of the following statements about the underground economy is true?
Correct Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run.
Which of the following would be directly counted in GDP in 2016?
kitchen cabinets purchased from Home Depot in 2016 to be installed in a house built in 1997
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