CHAPTER 2B: MEASURING NATIONAL OUTPUT

Which of the following is NOT a characteristic of real GDP?

• Measured at current prices

• Measures all final products

• Usually calculated for one year

• Does not include the value of intermediate goods

Which indicator measures the monetary value of all final goods and services produced by a country's citizens during a specific period?

• National income

• Gross domestic product (GDP)

• Gross national product (GNP)

• Net national product (NNP)

Which of the following is NOT a characteristic of nominal GNP?

• Measured at current prices

• Measures only final products

• Measured at constant prices

• Does not allow for the inclusion of intermediate goods

Which of the following is NOT an indirect business tax?

• Value-added tax (VAT)

• Special consumption tax

• Corporate income tax

• None of the above

Country A’s nominal GNP in 2015 was $360 billion, and in 2018 it was $672 billion. The GDP deflator index in 2015 was 90, and the price index in 2018 was 120. By what percentage is the real GNP in 2018 higher than in 2015?

• No change

• Approximately 40% difference

• Approximately 70% difference

• Approximately 90% difference

Real GDP and nominal GDP of a given year are equal if?

• The current year’s inflation rate equals that of the previous year

• The price index of the current year equals that of the previous year

• The current year’s inflation rate equals that of the base year

• The year is chosen as the base year

What is the formula for calculating government savings?

• S public = T - G.

• S public = Y - C - T.

• S public = X - M.

• No correct answer.

What is the formula for calculating private sector savings?

• S private = T - G.

• S private = X - M.

• S private = Y - C - T.

• No correct answer.

Suppose the economy has three production units: A (wheat), B (flour), and C (bread). The value of goods produced by A is 500, of which A sells 450 as raw materials to B and stores 50 in inventory. The value of goods produced by B is 700, of which B sells 600 as raw materials to C and stores 100 in inventory. C produces bread and sells it to the final consumers for 900. What is the GDP of this economy?

• 2100

• 1050

• 1950

• None of the above

Real GDP is nominal GDP that has been?

• Added depreciation

• Adjusted for changes in the price level

• Deducted depreciation

• Deducted indirect taxes