GDP: A Measure of Total production and Income

GDP: A Measure of Total production and Income 5 CLICKER QUESTIONS

Checkpoint 5.1 Checkpoint 5.2 Appendix Checkpoint Question 1 Question 5 Question A1 Question 6 Question 2 Question A2 Question 7 Question 3 Question A3 Checkpoint 5.3 Question 4 Question 8 Question 9 Question 10

CHECKPOINT 5.1 Question 1 Which of the following goods is not a final good? • Flour used by the baker to make cup cakes. • Bread eaten by a family for lunch. • Pencils used by a 6th grader in class. • Nike shoes used by a basketball player. • A computer used by Intel to design new computer chips.

CHECKPOINT 5.1 Question 2 Investment includes ________. • the purchase of a stock or bond • an increase in financial capital • what consumers do with their savings • the purchase of new capital goods by firms • spending on capital goods by governments

CHECKPOINT 5.1 Question 3 GDP is equal to the ____ value of ____ goods and services produced within a country in a given period of time. • production; all • market; all final • wholesale; all intermediate • retail; all • market; all

CHECKPOINT 5.1 Question 4 In 2010, one firm increases its production by $9 million and its sales increases by $8 million. With other things remaining the same, in 2010 ________. • GDP increases by $8 million and inventory investment decreases by $1 million • GDP increases by $9 million and inventory investment increases by $1 million • inventory investment decreases by $1 million • GDP increases by $8 million and investment increases by $1 million • GDP increases by $17 million

CHECKPOINT 5.2 Question 5 Using the expenditure approach, GDP is the sum of _____. • wages, interest, rent, and profit • all industry production • the value of all final and intermediate goods and services. • consumption expenditure, investment, government expenditure on goods and services, and net exports • consumption expenditure, investment, government expenditure, and the change in financial assets

CHECKPOINT 5.2 Question 6 The income approach to measuring GDP does not include ______. • wages paid workers • rent received by landlords • interest earned by savers • Income taxes paid by persons • profit made by firms

CHECKPOINT 5.2 Question 7 The difference between nominal GDP and real GDP is ___. • the indirect taxes used in their calculations • the prices used in their calculations • that nominal GDP includes the depreciation of capital and real GDP does not • that nominal GDP includes net exports and real GDP does not • that real GDP includes the depreciation of capital and nominal GDP does not

CHECKPOINT 5.3 Question 8 Real GDP ____ potential GDP when the economy ____ of the business cycle. • is less than; is at the peak • exceeds; is in a recession and near to the trough • is less than; begins an expansion phase • exceeds; leaves the trough and an expansion phase starts • equals; is in the expansion phase

CHECKPOINT 5.3 Question 9 You hire some friends to help you move to a new house. You pay them $200 and buy them dinner at Pizza Hut. • The $200 should be counted as part of GDP but not the dinner • If your friends do not declare the $200 as taxable income, it becomes part of the underground economy. • The dinner is counted as part of GDP but the $200 should not be. • The $200 paid to friends should not be counted in GDP. • Both the $200 and the dinner should be counted in GDP because they are part of household production.

CHECKPOINT 5.3 Question 10 The value of leisure time is ________. • included in GDP and, in recent years, has become an increasing large part of GDP • personal and has no economic value • excluded from GDP • directly included in GDP but, in recent years, has become a decreasing large part of GDP • directly included in GDP and, in recent years, has not changed much as a fraction of GDP

APPENDIX CHECKPOINT Question A1 Real GDP measures the value of goods and services produced in a given year valued using ________. • base year prices • prices of that same year • no prices • future prices • government approved prices

APPENDIX CHECKPOINT Question A2 In a country, using prices of 2010, GDP in 2010 was $100 and GDP in 2011 was $110. Using prices of 2011, GDP in 2010 was $200 and GDP in 2011 was $210. The country’s BEA will report that real GDP grew by ______in 2011 . • 10 percent • 5 percent • 15 percent • 7.5 percent • more than 20 percent

APPENDIX CHECKPOINT Question A3 In the base year 2009, real GDP was $10 trillion. Using 2009 prices, GDP in 2010 grew by 10 percent; using 2011 prices, GDP in 2010 grew by 8 percent. To link to the base year, the BEA will use ____ percent as the growth in real GDP in 2010 and report real GDP in 2010 as _______. • 10; $11 trillion • 8; $11 trillion • 2; $10.2 trillion • 18; $11.8 trillion • 9; $10.9 trillion

GDP: A Measure of Total production and Income