macro_tif1_ch07

3realgdpversusnominalgdp 1 nominal

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Unformatted text preview: ta is calculated by dividing the value of real GDP for a country by the country's adult population. Answer: True F Diff : 1 Type: TF Page Ref: To pic : 644/224 G S Conceptual Objective: LO2: Discuss whether GDP is a good measure AACSB Coding: of wellbeing Reflective Thinking Special Feature: None 21. The nd economy the informal sector can be a significant drag on the economies of developing countries. undergrou Why are firms in the informal sector often less efficient than firms in the formal sector? Answer: Entrepreneurs of the firms in the informal sector limit their investments in capital equipment because they are afraid that the firms will someday be shut down. The workers in the firms, Diff: 2 consequ ently, have less capital equipme nt to work with. Type: SA Page Ref: To pic : 642-3/222-3 S S Conceptual Objective: LO2: Discuss whether GDP is a good measure AACSB Coding: of wellbeing Reflective Thinking Special Feature: None 22. Over the the ratio of household production to gross domestic product in the United States increased or decreased? last 50 Consider the effect of the increased number of women working outside the home, and the effect of years, has advances in technology in household production such as microwaves, coffee makers, power tools, etc. Answer: "Household production'" refers to goods and services people produce for themselves. It is not clear whether the ratio of household production to gross domestic product has increased or decreased. More women working outside the home has decreased the ratio of household production to GDP, but the technological Diff: 3 advance s at home have allowed people to produce more househo ld producti on in less time. Type: SA Page Ref: To pic : 644/222 S S Analytical Objective: LO2: Discuss whether GDP is a good measure AACSB Coding: of wellbeing Analytic Skills Special Feature: None 7.3 Real GDP versus Nominal GDP 1. Nominal GDP is GDP in a given year A) valued in the prices of that year. B) adjusted for inflation. C) adjusted for anticipated inflation. D) valued in the prices of the base year. Answer: A Diff: 1 Type: MC Page Ref: To pic : 646/226 R S Definition Objective: LO3: Discuss the difference between real GDP and nominal AACSB Coding: GDP Reflective Thinking Special Feature: None 2. Real GDP is GDP in a given year A) adjusted for anticipated inflation. B) valued in the prices of that year. C) adjusted for unanticipated inflation. D) valued in the prices of the base year. Answer: D Diff: 1 Type: MC Page Ref: To pic : 646/226 R S Definition Objective: LO3: Discuss the difference between real GDP and nominal AACSB Coding: GDP Reflective Thinking Special Feature: None Table 7-8 Year 2000 2006 Price of Butter Price of Guns (Dollars) Guns Produced (Dollars) Butter Produced 80 $5 40 $4 90 $6 60 $10 Consider the data above for a fictional economy that produces only two products: guns and butter. 3. Refer to Table 7-8. Real GDP for this fictional economy for 2006 using 2000 as the base year equals A) $560. B) $880. C) $1,140. D) $690. Answer: D Diff: 2 Type: MC Page Ref:...
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