ECON 201 - Test 2 - Ch. 6-9

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national income

The total amount of income earned by U.S. resource suppliers in a year, plus taxes on production and imports, is measured by:
gross domestic product.
national income.
personal income.
disposable income.

False

T/F: The rule of 70 is used to find how long it will take an economy to grow by 70 percent.

disposable income

In a typical year, which of the following measures of aggregate output and income is likely to be the smallest?
gross domestic product
national income
disposable income
personal income

understate economic welfare because it does not take into account increases in leisure.

The GDP tends to:
overstate economic welfare because it does not include certain nonmarket activities such as the productive work of housewives.
understate economic welfare because it includes expenditures undertaken to offset or correct pollution.
understate economic welfare because it does not take into account increases in leisure.
overstate economic welfare because it does not reflect improvements in product quality.

rise by about 1 percent

Suppose that a person's nominal income rises by 5 percent and the price level rises from 125 to 130. The person's real income will:
fall by about 1 percent.
remain constant.
rise by about 4 percent.
rise by about 1 percent.

promote economic growth by helping to direct household saving to businesses that want to invest.

Banks and other financial institutions:
are the primary investors in equipment, factories, and other capital goods.
lack relevance in the modern economy because they focus primarily on financial assets and generally do not engage in real investment activity.
promote economic growth by helping to direct household saving to businesses that want to invest.
often hinder economic activity by creating barriers between household savers and firms wanting to invest in capital goods.

transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and undistributed corporate profits

If personal income exceeds national income in a particular year, we can conclude that:
transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and taxes on production and imports.
the sum of Social Security contributions, corporate income taxes, and undistributed corporate profits exceeded transfer payments.
consumption of fixed capital and taxes on production and imports exceeded personal taxes.
transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and undistributed corporate profits.

income received by households less personal taxes

Which of the following best defines disposable income?
income received by households less personal taxes
the before-tax income received by households
all income earned by resource suppliers for their current contributions to production
the market value of the annual output net of consumption of fixed capital

labor productivity must be $0.5

Suppose total output (real GDP) is $10,000 and worker-hours are 20,000. We can conclude that:
real GDP per capita must be $200,000.
the price-level index must be less than 100.
labor productivity must be $0.5.
nominal GDP must be between $10,000 and $20,000.

inflation premium is zero

If both the real interest rate and the nominal interest rate are 3 percent, then the:
inflation premium is zero.
real GDP must exceed the nominal GDP.
nominal GDP must exceed real GDP.
inflation premium also is 3 percent.

changes in nominal GDP understate changes in real GDP.

In an economy experiencing a persistently falling price level:
potential GDP will necessarily exceed actual GDP.
changes in nominal GDP may either overstate or understate changes in real GDP.
changes in nominal GDP understate changes in real GDP.
changes in nominal GDP overstate changes in real GDP.

conclude that its average annual rate of growth is about 4 percent.

If the economy's real GDP doubles in 18 years, we can:
not say anything about the average annual rate of growth.
conclude that its average annual rate of growth is about 5.5 percent.
conclude that its average annual rate of growth is about 2 percent.
conclude that its average annual rate of growth is about 4 percent.

tend to exceed those in leader countries because followers can cheaply adopt the new technologies that leaders developed at relatively high costs.

Economic growth rates in follower countries:
tend to be lower than in leader countries because labor forces in follower countries are too small.
tend to exceed those in leader countries because followers can cheaply adopt the new technologies that leaders developed at relatively high costs.
will never bring real GDP per capita up to the same levels as in leader countries, even if follower growth rates are greater than those in leader countries.
typically average about 2 percent per year.

innovations in computers and communications, together with global capitalism, are greatly boosting U.S. productivity and the economy's potential economic growth rate.

Economists who believe that the recent rise in the average rate of productivity growth will be long lasting say that:
the United States is entering an era of high structural unemployment due to rapid technological change.
technological advance creates its own supply, which in turn creates its own demand.
innovations in computers and communications, together with global capitalism, are greatly boosting U.S. productivity and the economy's potential economic growth rate.
technological change will require more central planning and government regulation.

the purchase of a new house

101 Which of the following do national income accountants consider to be investment?
the purchase of an automobile for private, non-business use
the purchase of a new house
the purchase of corporate bonds
the purchase of gold coins

the price level may change over time

In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because:
of changes in trade deficits and surpluses.
the length of the workweek has declined historically.
the price level may change over time.
depreciation may be greater or smaller than gross investment.

both the level and distribution of income

Inflation affects:
both the level and the distribution of income.
neither the level nor the distribution of income.
the distribution, but not the level, of income.
the level, but not the distribution, of income.

that rate of unemployment occurring when the economy is at its potential output.

The natural rate of unemployment is:
higher than the full-employment rate of unemployment.
lower than the full-employment rate of unemployment.
that rate of unemployment occurring when the economy is at its potential output.
found by dividing total unemployment by the size of the labor force.

True

T/F: Economic growth can be shown as a movement from a point on one production possibility curve to a point on a curve located farther from the origin.

While these systems are credited with reducing business cycle severity prior to the recession of 2007-2009, some economists believe that they contributed to the suddenness and severity of the 2007-2009 recession

Which of the following statements is true about computerized inventory tracking systems and the severity of recessions?
While these systems are credited with reducing business cycle severity prior to the recession of 2007-2009, some economists believe that they contributed to the suddenness and severity of the 2007-2009 recession.
These systems are credited with reducing business cycle severity prior to the recession of 2007-2009, and for greatly reducing the severity of the 2007-2009 recession.
These systems are generally held responsible for magnifying recessions over the past 25 years by rapidly signaling to firms the need to cut production.
These systems are generally thought to change the timing of recessions, but not to affect the overall severity of declines in output and employment.

productive but is excluded from GDP because no market transaction occurs.

Tom Atoe grows fruits and vegetables for home consumption. This activity is:
excluded from GDP in order to avoid double counting.
excluded from GDP because an intermediate good is involved.
productive but is excluded from GDP because no market transaction occurs.
included in GDP because it reflects production.

business cycles.

1 Recurring upswings and downswings in an economy's real GDP over time are called:
recessions.
business cycles.
output yo-yos.
total product oscillations.

the long-term expansion or contraction of business activity that occurs over 50 or 100 years.

2 As it relates to economic growth, the term long-run trend refers to:
the long-run increase in the relative importance of durable goods in the U.S. economy.
incorrect→ the long-term expansion or contraction of business activity that occurs over 50 or 100 years.
fluctuations in business activity that average 40 months in duration.
fluctuations in business activity that occur around Christmas, Easter, and other major holidays.

capital goods and durable consumer goods

4 The industries or sectors of the economy in which business cycle fluctuations tend to affect output most are:
military goods and capital goods.
services and nondurable consumer goods.
clothing and education.
capital goods and durable consumer goods.

cyclical unemployment is about 2 percent

10 Answer the below question on the basis of the following information about the hypothetical economy of Scoob. All figures are in millions.

Unemployed: 7
Total Population: 145
Employed: 95
Discouraged workers: 3

If the natural rate of unemployment in Scoob is 5 percent, then:
structural unemployment is about 3 percent.
frictional unemployment is about 2 percent.
cyclical unemployment is about 2 percent.
hidden unemployment is about 5 percent.

about 4-5 percent of the labor force is unemployed.

11 The United States' economy is considered to be at full employment when:
about 4-5 percent of the total population is unemployed.
90 percent of the labor force is employed.
about 4-5 percent of the labor force is unemployed.
100 percent of the labor force is employed.

be in the labor force

14 According to the Bureau of Labor Statistics, to be officially unemployed a person must:
be in the labor force.
be 21 years of age or older.
have lost a job.
be waiting to be called back from a layoff.

employed workers and persons who are officially unemployed.

16 The labor force includes:
employed workers and persons who are officially unemployed.
employed workers, but excludes persons who are officially unemployed.
full-time workers, but excludes part-time workers.
permanent employees, but excludes temporary employees.

teenagers is much higher than that of adults

17 The unemployment rate of:
women greatly exceeds that of men.
whites is roughly equal to that of African-Americans.
managerial and professional workers exceeds that of construction and extraction workers.
teenagers is much higher than that of adults.

6 percent

22 Assuming the total population is 100 million, the civilian labor force is 50 million, and 47 million workers are employed, the unemployment rate is:
3 percent.
6 percent.
7 percent.
53 percent.

The unemployment rates of men and women workers are roughly the same.

28 Which of the following is correct?
The unemployment rates of men and women workers are roughly the same.
Unemployment rates for African-American and white workers are approximately the same.
Teenagers experience approximately the same unemployment rates as do adults.
Laborers are less vulnerable to unemployment than are professional workers.

may involve a locational mismatch between unemployed workers and job openings.

30 Structural unemployment:
is also known as frictional unemployment.
is the main component of cyclical unemployment.
is said to occur when people are waiting to be called back to previous jobs.
may involve a locational mismatch between unemployed workers and job openings.

employed

31 Dr. Homer Simpson, an economics professor, decided to take a year off from teaching to run a commercial fishing boat in Alaska. That year, Professor Simpson would be officially counted as:
structurally unemployed.
frictionally unemployed.
not in the labor force.
employed.

Bureau of Labor Statistics

34 The government agency responsible for collecting and reporting unemployment data is the:
Bureau of Labor Statistics.
Bureau of Unemployment.
Bureau of Economic Analysis.
Bureau of Economic Research.

$320 billion.

44 If actual GDP is $340 billion and there is a positive GDP gap of $20 billion, potential GDP is:
$360 billion.
$660 billion.
$320 billion.
$20 billion.

the economy had moved from a point inside its production possibilities curve to a point on or near the curve.

51 If the unemployment rate in the above economy fell to 6 percent, we could conclude that:
only structural unemployment remained.
the economy's production possibilities curve shifted outward.
the economy had moved from a point inside its production possibilities curve to a point on or near the curve.
nominal GDP would rise but real GDP would fall.

dividing the annual rate of inflation into "70."

56 As applied to the price level, the "rule of 70" indicates that the number of years required for the price level to double can be found by:
dividing "70" into the annual rate of inflation.
dividing the annual rate of inflation into "70."
subtracting the annual change in nominal incomes from "70."
multiplying the annual rate of inflation by "70."

8-9 years

58 If Fred's annual real income rises by 8 percent each year, his annual real income will double in about:
8-9 years.
10-11 years.
5-6 years.
19-20 years.

6 years

59 If the rate of inflation is 12 percent per year, the price level will double in about:
4 years.
6 years.
10 years.
12 years.

neither significantly higher nor significantly lower.

60 Compared to other industrial nations, inflation rates in the United States are:
significantly higher.
significantly lower.
significantly higher than those in Europe, and significantly lower than those in Japan.
neither significantly higher nor significantly lower.

is self limiting

62 Unlike demand-pull inflation, cost-push inflation:
is self-limiting.
drives up the price level.
increases nominal income.
increases real income.

moves the economy inward from its production possibilities curve.

63 Cost-push inflation:
is caused by excessive total spending.
shifts the nation's production possibilities curve leftward.
moves the economy inward from its production possibilities curve.
is a mixed blessing because it has positive effects on real output and employment.

Demand-pull inflation

65 Which of the following would most likely occur during the expansionary phase of the business cycle?
Demand-pull inflation
Cost-push inflation
Structural inflation
Frictional inflation

real income approximates percentage change in nominal income minus percentage change in price level.

66 Which of the following formulas is correct? Percentage change in:
price level approximates percentage change in real income minus percentage change in nominal income.
real income approximates percentage change in nominal income minus percentage change in price level.
nominal income approximates percentage change in price level minus percentage change in real income.
real income approximates percentage change in price level minus percentage change in nominal income.

taxation through inflation

80 The feudal practice of clipping coins illustrates the idea of:
taxation through inflation.
good money driving out bad money.
the derived demand for resources.
cost-push inflation.

follow the long-run course of the economy to determine whether it has grown or stagnated.

81 The National Income and Product Accounts (NIPA) help economists and policymakers to:
determine which firms are likely to succeed or fail.
follow the long-run course of the economy to determine whether it has grown or stagnated.
measure what is occurring in each specific labor market.
accomplish all of these.

the difference between the value of a firm's output and the value of the inputs it has purchased from others.

93 Value added refers to:
any increase in GDP that has been adjusted for adverse environmental effects.
the excess of gross investment over net investment.
the difference between the value of a firm's output and the value of the inputs it has purchased from others.
the portion of any increase in GDP that is caused by inflation as opposed to an increase in real output.

$30

94 Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is:
$110.
$30.
$40.
$70.

net investment is negative.

97 If depreciation (consumption of fixed capital) exceeds gross domestic investment, we can conclude that:
nominal GDP is rising but real GDP is declining.
net investment is negative.
the economy is importing more than it exports.
the economy's production capacity is expanding.

automobiles for personal use, but not houses

99 In national income accounting, consumption expenditures include purchases of:
both new and used consumer goods.
automobiles for personal use, but not houses.
consumer durable and nondurable goods, but not services.
consumer nondurable goods and services, but not consumer durable goods.

government consumption goods and public capital goods

103 Government purchases include government spending on:
government consumption goods and public capital goods.
government consumption goods only.
public capital goods only.
government consumption goods, public capital goods, and transfer payments.

excluded when calculating GDP because they do not reflect current production.

104 Transfer payments are:
excluded when calculating GDP because they only reflect inflation.
excluded when calculating GDP because they do not reflect current production.
included when calculating GDP because they are a category of investment spending.
included when calculating GDP because they increase the spending of recipients.

subtracted from exports when calculating GDP because imports do not constitute production in the United States.

105 The value of U.S. imports is:
added to exports when calculating GDP because imports reflect spending by Americans.
subtracted from exports when calculating GDP because imports do not constitute spending by Americans.
subtracted from exports when calculating GDP because imports do not constitute production in the United States.
added when calculating GDP because imports do not constitute production in the United States.

the total of all sources of private income plus government revenue from taxes on production and imports.

127 National income measures:
nominal GDP after it has been inflated or deflated for changes in the value of the dollar.
the after-tax income of resource suppliers.
the total of all sources of private income plus government revenue from taxes on production and imports.
the amount of wage, rent, interest, and profits income actually received by households.

nominal GDP overstates increases in real output

138 For the years shown, the growth of:
real GDP has exceeded the growth of nominal GDP.
nominal GDP accurately reflects changes in real output.
nominal GDP overstates increases in real output.
nominal GDP understates increases in real output.

$115.

142 Answer the below question on the basis of the following information: Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per unit prices of these three goods are A = $2, B = $3, and C = $1.

Nominal GDP in the current year is:
$110.
$115.
$45.
$90.

Rising Real GDP

145

the child-care services provided by stay-at-home parents

153 Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?
the services of used-car dealers
the child-care services provided by stay-at-home parents
the construction of new houses
government expenditures on military equipment

inflow from the river is gross investment.

158 When making a capital stock and reservoir analogy, the:
outflow below the dam is the stock of capital.
inflow from the river is gross investment.
level of water in the reservoir is depreciation.
level of water in the reservoir is net investment.

303 in year 3 in Zorn

166

$42,300

173 Real Per Capita GDP in the United States in 2009 was approximately:
$12,900
$39,800
$42,300
$13 trillion

Africa

176 Which of the following economic regions has experienced the least growth in real GDP per capita since 1820?
Africa
Asia excluding Japan
Latin America
Western Europe

Unrestricted trade between nations

181 Which of the following institutional arrangements is most likely to promote growth?
Patents and copyrights that expire quickly and are loosely enforced.
Strong government control over resource allocation decisions.
Unrestricted trade between nations.
All of these.

total output/worker-hours

189 Labor productivity is defined as:
total output/worker-hours.
nominal GDP minus real GDP.
the ratio of real capital to worker-hours.
the annual increase in nominal GDP per worker.

increased the average productivity of labor.

201 The historical reallocation of labor from agriculture to manufacturing in the United States has:
been inflationary.
had no effect on the average productivity of labor.
increased the average productivity of labor.
reduced the average productivity of labor.

23 years

208 If the growth trend of labor productivity is 3 percent per year, the number of years that it will take for the standard of living to double will be about:
15 years.
17 years.
20 years.
23 years.

microchip.

212 The fundamental invention underpinning the recent rise in the average rate of productivity growth is the:
microchip.
fuel cell.
Internet.
personal computer.

Economists who support economic growth say that it is the most practical route to the higher standards of living that the vast majority of people desire.

216 Which of the following is a true statement?
Economists who support economic growth say that it is the most practical route to the higher standards of living that the vast majority of people desire.
Most economists believe that the recent rise in the average rate of productivity growth implies an end to the business cycle.
Most economists believe that increases in real GDP actually produce decreases in overall economic well-being because of spillover costs.
Mainstream economists disagree as to whether the rate of productivity growth was higher between 1995 and 2009 or between 1973 and 1995.

$1 billion

219 According to the Consider This box on patents and innovation, the cost for U.S. and European drug companies to research, patent, and safety-test a new drug is about:
$100 million.
$750 million.
$1 billion.
$10 billion.

True

226 T/F: Modern economic growth since the 1820s has widened wealth and income disparities between richer and poorer nations.

False

228 T/F: Strong property rights inhibit economic growth by strictly regulating economic behavior.

True

230 T/F: A competitive market system promotes growth by providing producers with market signals on which to base investment and production decisions.

False

240 T/F: Proponents of economic growth claim that growth leads to greater equality of income in an economy.

Firms may be reluctant to change prices for fear of setting off a price war or losing customers to rivals.

242 Which of the following best explains why prices tend to be inflexible even when demand changes?
Government regulations limit the number of times a firm can change prices in a year.
In most industries the profit-maximizing price does not change even when demand changes.
Production costs do not tend to change when a firm varies its level of output.
Firms may be reluctant to change prices for fear of setting off a price war or losing customers to rivals.

short-run fluctuations in output and employment.

243 The business cycle depicts:
fluctuations in the general price level.
the phases a business goes through from when it first opens to when it finally closes.
the evolution of technology over time.
short-run fluctuations in output and employment.

when there are widespread macroeconomic and monetary disturbances in the economy.

245 Prices are particularly sticky:
when there are widespread macroeconomic and monetary disturbances in the economy.
in the long run.
when markets are highly competitive.
when the economy is at full employment and positive demand shocks are occurring.

capital

3 In which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output?
military goods
capital goods
textile products
agricultural commodities

an unexpected change in the level of total spending.

7 Most economists agree that the immediate cause of most business cycle variation is:
an unexpected change in the productivity of workers.
an unexpected change in the level of total spending.
the invention of new products.
the growth and subsequent bursting of financial bubbles.

fully employed and therefore the official unemployment rate may understate the level of unemployment.

21 Part-time workers are counted as:
unemployed and therefore the official unemployment rate may overstate the level of unemployment.
unemployed and therefore the official unemployment rate may understate the level of unemployment.
fully employed and therefore the official unemployment rate may overstate the level of unemployment.
fully employed and therefore the official unemployment rate may understate the level of unemployment.

frictionally

24 Assume that Kyle is temporarily unemployed because he has voluntarily quit his job with company A and will begin a better job next week with company B. Kyle will be considered as:
cyclically unemployed.
frictionally unemployed.
structurally unemployed.
employed.

actual and potential

40 The GDP gap measures the difference between:
NDP and GDP.
NI and PI.
actual GDP and potential GDP.
nominal GDP and real GDP.

8

47 Assume the natural rate of unemployment in the U.S. economy is 5 percent and the actual rate of unemployment is 9 percent. According to Okun's law, the negative GDP gap as a percent of potential GDP is:
4 percent.
8 percent.
10 percent.
2 percent.

24

50 The amount of output being forgone by the above economy is:
$12 billion.
$15 billion.
$18 billion.
$24 billion.

Nominal income falls by 2 percent, and the price level falls by 10 percent.

71 Under which of the following circumstances would we observe the greatest increase in real income?
Nominal income falls by 2 percent, and the price level falls by 10 percent.
Nominal income rises by 8 percent, and the price level rises by 4 percent.
Nominal income rises by 12 percent, and the price level rises by 15 percent.
Nominal income falls by 4 percent, and the price level rises by 6 percent.

a firm's output less the value of the inputs bought from others

90 The value added of a firm is the market value of:
a firm's output plus the value of the inputs bought from others.
a firm's output less the value of the inputs bought from others.
the firm's output.
the firm's inputs bought from others.

190

102 Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion. GDP in year 2 is:
$180 billion.
$190 billion.
$200 billion.
$210 billion.

national

125 The total amount of income earned by U.S. resource suppliers in a year, plus taxes on production and imports, is measured by:
gross domestic product.
national income.
personal income.
disposable income.

real GDP may either rise or fall.

139 If nominal GDP rises:
real GDP may either rise or fall.
we can be certain that the price level has risen.
real GDP must fall.
real GDP must also rise.

price level may change over time

141 In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because:
of changes in trade deficits and surpluses.
the length of the workweek has declined historically.
the price level may change over time.
depreciation may be greater or smaller than gross investment.

stock, whereas gross investment and depreciation are flows.

159 Capital is a:
flow, whereas gross investment and depreciation are stocks.
flow, as are gross investment and depreciation.
stock, as are gross investment and depreciation.
stock, whereas gross investment and depreciation are flows.

calculate the number of years required for real GDP to double

167 Given the annual rate of economic growth, the "rule of 70" allows one to:
determine the accompanying rate of inflation.
calculate the size of the GDP gap.
calculate the number of years required for real GDP to double.
determine the growth rate of per capita GDP.

dividing 70 by the annual growth rate

168 The number of years required for real GDP to double can be found by:
dividing the annual growth rate by .07.
multiplying the annual growth rate by 70.
dividing 70 by the annual growth rate.
adding 14 to annual growth rate.

multiplier effect

211 All of the following are sources of increasing returns and economies of scale except:
network effects.
the multiplier effect.
learning-by-doing.
simultaneous consumption.

direct relationship between

217 Proponents of economic growth make all of the following arguments except:
Growth is the basic means of improving living standards.
It is easier to reduce poverty when the economy is growing than when it is not.
There is a direct relationship between a growing real GDP and rising pollution.
Growth provides an economic environment favorable to education and self-fulfillment.

percentage of married women in the workforce

222 Rising wages for women in the United States have increased:
the proportion of women working part time compared to working full time.
labor costs and thus shifted the nation's production possibilities curve inward.
average family size in the United States.
the percentage of married women in the workforce.

True

233 T/F: Economic growth can be shown as a movement from a point on one production possibility curve to a point on a curve located farther from the origin.

False

237 T/F: Because of the recent rise in the average rate of productivity growth, the business cycle is dead.

construction

5 During a severe recession, we would expect output to fall the most in:
the healthcare industry.
the clothing industry.
agriculture.
the construction industry.

decline

26 Suppose there are 5 million unemployed workers seeking jobs. After a period of time, 1 million of them become discouraged over their job prospects and cease to look for work. As a result of this, all else equal, the official unemployment rate would:
decline.
increase.
increase in the short run but eventually decline.
be unchanged.

the economy achieves its potential output.

35 At the economy's natural rate of unemployment:
the economy achieves its potential output.
there is only a relatively small amount of cyclical unemployment.
only frictional unemployment exists.
only structural unemployment exists.

1.6

54 The consumer price index was 177.1 in 2001 and 179.9 in 2002. Therefore, the rate of inflation in 2002 was about:
2.8 percent.
3.4 percent.
1.6 percent.
4.1 percent.

last year's price index from this year's price index and dividing the difference by last year's price index.

55 The annual rate of inflation can be found by subtracting:
the real income from the nominal income.
last year's price index from this year's price index.
this year's price index from last year's price index and dividing the difference by this year's price index.
last year's price index from this year's price index and dividing the difference by last year's price index.

neg supply shock

64 Cost-push inflation may be caused by:
a decline in per unit production costs.
a decrease in wage rates.
a negative supply shock.
an increase in resource availability.

Nominal income rises by 2 percent, and the price level remains unchanged.

70 in which of the following cases would real income rise?
Nominal income rises by 8 percent, and the price level rises by 10 percent.
Nominal income rises by 2 percent, and the price level remains unchanged.
Nominal income falls by 4 percent, and the price level falls by 2 percent.
Real income will rise in all of these cases.

monetary value of all final goods and services produced within the borders of a nation in a particular year.

83 GDP is the:
national income minus all non-income charges against output.
monetary value of all final goods and services produced within the borders of a nation in a particular year.
monetary value of all economic resources used in producing a year's output.
monetary value of all goods and services, final and intermediate, produced in a specific year.

summing corporate income taxes, dividends, and undistributed corporate profits.

Corporate profits are found by:
summing corporate income taxes, dividends, and undistributed corporate profits.
adding corporate income taxes and dividends, and subtracting undistributed corporate profits.
subtracting corporate income taxes from the sum of dividends and undistributed corporate profits.
summing dividends, undistributed corporate profits, and proprietors' income.

nominal GDP must have increased.

If real GDP rises and the GDP price index has increased:
the percentage increase in nominal GDP must have been less than the percentage increase in the price level.
nominal GDP may have either increased or decreased.
nominal GDP must have increased.
nominal GDP must have fallen.

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