Macroeconomics Spring 2011 - H2 - Chapter 5 Homework (Due 3/29/2011)
1. A nation's GDP can be calculated as:
A. The sum of value added and intermediate goods.
B. The total value added at all stages of production.
C. NI plus depreciation.
D. PI plus depreciation.
2. Suppose iPhones cost consumers $200 and USB cables cost consumers $25. What contribution does the
production of 2000 iPhones and 1200 USB cables make to GDP?
3. The GDP per capita is the most practical way to:
A. Measure how much income households receive.
B. Measure how much output can be consumed on a sustainable basis.
C. Make international comparisons of the standard of living.
D. Analyze the growth rate of the economy through time.
4. Suppose you volunteer to help clean up your neighborhood and the only payment you receive is the sense of
goodwill that develops with your neighbors. Your efforts cause the GDP of the economy to:
A. Remain unchanged.
B. Fall by the opportunity cost of the time you spend doing volunteer work.
C. Rise by the opportunity cost of the time spent by all of the people in the neighborhood on the volunteer
D. Rise by the value of increased cleanliness of the neighborhood.
5. A computer manufacturer sells laptops to retail stores for $450 each. If the manufacturer pays $200 for the
components in each laptop and $75 in wages, the value added to each computer by manufacturing is:
6. Real GDP is the:
A. Value of output produced including the nonmarket activities that are not counted in nominal GDP.
B. Value of final output produced in a given period measured in constant prices.
C. Value of final output produced in a given period measured in current prices.
D. Intangible quality of goods and services produced in the economy.
7. If nominal GDP was $11,500 billion in 2003 and the price level in 2003 was 111.6, then real GDP would
have been approximately:
A. $9,795 billion.
B. $10,305 billion.
C. $10,485 billion.
D. $9,750 billion.
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8. A nation's production possibilities curve should, ceteris paribus, shift:
A. Inward if gross investment exceeds depreciation.
B. Inward if net investment is zero.
C. Outward if net investment is positive.
D. Outward if gross investment is positive.
9. The components of GDP are:
A. C + I + X - (G + M).
B. C + I + G + (X - M).
C. C + I - G + (X - M).
D. C + I + G - (X + M).
10. Transfer payments are part of personal income but not national income because:
A. They are a payment for which no goods or services are exchanged.
B. Personal income is an earnings concept.
C. National income is a receipts concept.
D. They represent a payment to factors of production.
11. On the basis of Table 5.1, gross domestic product is:
A. $6,980 billion.
B. $7,635 billion.
C. $6,810 billion.
D. $7,720 billion.
12. Explain the difference between intermediate goods and final goods and give an example of each.
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