Homework 3 Each multiple choice question has just ONE answer.      GDP is: ○ A. the sum of all currency and coins in circulation. ○ B. the value of all final goods and services produced by a government. ○ C. the value of all final good and services produced anywhere in the world by a nation's firms. ○ D. the value of all final goods and services produced domestically. The demand measure of GDP accounting adds together: ○ A. wages and salaries, rent, interest, and profit. ○ B. consumption, investment, government purchases, and trade balance. ○ C. consumption, government purchases, wages and salaries, and trade balance. ○ D. consumption, interest, government purchases, and trade balance. Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion, investment equals $200 billion, and government spending equals $260 billion, then: ○ A. exports exceed imports by $50 billion. ○ ○ B. imports exceed exports by $50 billion. C. imports exceed exports by $150 billion. ○ D. exports exceed imports by $150 billion. In order to avoid double counting, statisticians just count the __________________. ○ A. final inventories ○ B. final goods and services ○ C. intermediate goods and services ○ D. durable goods and nondurable goods _________ is calculated by taking _________ and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year. ○ A. GNP; NNP ○ ○ B. NNP; GNP C. GDP; NNP ○ D. NNP; GDP The difference between nominal GDP and real GDP is: ○ A. nominal GDP measures actual productivity ○ B. nominal GDP adjusts for inflation ○ ○ C. real GDP adjusts for inflation D. real GDP excludes imports and exports        ○ India has a GDP of 23,000 billion Indian rupees, and a population of 1.1 billion. The exchange rate is 50 rupees per U.S. dollar. Calculate the GDP per capita of India as measured in U.S. dollars. ○ A. $20.90 ○ B. $20,909 ○ ○ C. $418 D. $4.18 _______________, which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country. ○ A. Trade balance ○ B. Inflation ○ C. Education ○ D. Economic growth For most high-income countries of the world, GDP _________________ over time. ○ A. has proven to be stable ○ B. has risen gradually ○ ○ C. has declined slightly D. has sharply risen _____________________ is a term which refers to the widespread use of power-driven machinery and the economic and social changes that resulted in the first half of the 1800s. ○ A. GDP per capita ○ B. The Industrial Revolution ○ C. The living standard ○ D. Investment and inventions The value of what is produced per worker, or per hour worked, is called ____________. ○ A. economic growth ○ B. human capital ○ ○ C. productivity D. GDP per capita A nation can achieve higher economic growth if: ○ A. it devotes more resources to research and development. ○ B. the productivity of labor declines ○ C. taxes are imposed on investment in capital. ○ D. more resources are allocated to consumption goods. A nation's prosperity is sometimes measured in terms of ___________. ○ A. GNP ○ B. GDP    C. GDP per capita ○ D. economic output Which of the government policies below is most unlikely to encourage per capita economic growth? ○ A. high taxes on companies that spend a lot on capital formation ○ ○ B. the use of tax revenues for investment and capital formation C. special subsidies for capital-intensive forms of production ○ D. promotion of education and training programs for workers Since the late 1950s, economists have performed “growth accounting” studies in the United States. These have determined that ________________ is typically the most important contributor to U.S. economic growth. ○ A. human capital ○ B. physical capital ○ ○ C. technology D. a market orientation What is an aggregate production function? ○ One danger for the statisticians who calculate GDP is to avoid the mistake of double counting. Define "double counting" and describe why it may be dangerous. What is capital deepening? What do economists mean when they refer to improvements in technology?        ○ Explain the difference between property rights and contractual rights. Why do they matter to economic growth?