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Exam 23: Measuring a Nations Income

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Question 71

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A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store. As a result, U.S. GDP

A) increases by $40.
B) increases by $220.
C) increases by $280.
D) increases by $1500.

E) A) and B)
F) A) and C)

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Question 72

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Table 23-1 The following table contains data for Mindalion for the year 2019. ​ $\begin{array} { | l | l | } \hline \text { GDP } & \$ 700 \\\hline \text { Income earned by citizens abroad } & \$ 13 \\\hline \text { Income foreigners earn here } & \$ 12 \\\hline \text { Losses from depreciation } & \$ 5 \\\hline \text { Indirect business taxes } & \$ 10 \\\hline \text { Statistical discrepancy } & \$ 0 \\\hline \text { Retained earnings } & \$ 8 \\\hline \text { Corporate income taxes } & \$ 12 \\\hline \text { Social insurance contributions } & \$ 30 \\\hline \text { Interest paid to households by government } & \$ 8 \\\hline \text { Transfer payments to households from government } & \$ 55 \\\hline \text { Personal taxes } & \$ 60 \\\hline \text { Nontax payments to government } & \$ 11 \\\hline\end{array}$ -Refer to Table 23-1. Net national product for Mindalion in 2019 is

A) $696.
B) $700.
C) $701.
D) $699.

E) C) and D)
F) None of the above

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Question 73

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GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Figure 23-2 ​ -Refer to Figure 23-2. List the locations associated with the flow of inputs and outputs.

U.S. GDP and U.S. GNP are related as follows:

Foreign countries buy $1.2 trillion of U.S. goods and services. U.S. residents purchase $1.8 trillion of foreign goods and services. What is net exports?

Other things equal, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with lower levels of real GDP per person.

When economists talk about growth in the economy, they measure that growth as the

Define gross domestic product.

U.S. GDP was almost $12 trillion in 2015.

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 real and nominal GDP for the year 2012.

If the GDP deflator in 2009 was 160 and the GDP deflator in 2010 was 180, then the inflation rate in 2010 was 12.5%.

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

During a presidential campaign, the incumbent argues that he should be reelected because nominal GDP grew by 12 percent during his 4-year term in office. You know that population grew by 4 percent over the period and that the GDP deflator increased by 6 percent during the past 4 years. You should conclude that real GDP per person

For the purpose of calculating GDP, investment is spending on

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 government purchases in 2019?

Changes in inventory are included in the investment component of GDP.

Government purchases include spending on goods and services by

If nominal GDP is $12,000 and the GDP deflator is 80, then real GDP is $15,000.

If consumption is $4000, exports are $300, government purchases are $1000, imports are $400, and investment is $800, then GDP is $5700.