Chapter 11 Measuring a Nation's Production and Income

13) Recall the application. Why is the value of Wal-Mart's 2008 sales NOT an accurate measurement of its actual sales impact on the U.S. economy?

A) The sales figure did not account for chain-weighted inflation measurements.

B) The sales figure includes the value of purchases from other firms.

C) The sales figure did not take into account the recession of 2008.

D) The sales figure was in nominal, not real, dollars.

14) Recall the application. By using a value-added approach to measure Wal-Mart's sales impact on the economy, we are

A) using a chain-weighted index.

B) avoiding double-counting.

C) including GDP as a measure of welfare.

D) excluding the net foreign sector.

15) Recall the application. What was the approximate value of Wal-Mart's value added in 2008?

A) $88 billion

B) $ 286 billion

C) $ 374 billion

D) $ 661 billion

16) In the expanded circular flow diagram, the government supplies

A) goods and services to the product market.

B) factors of production to the factor market.

C) goods and services to households.

D) factors of production to firms.

17) In the expanded circular flow diagram, the rest of the world interacts directly with

A) households.

B) firms.

C) product markets.

D) factor markets.

18) National income is the income that individuals and firms earn from their production.

19) Personal disposable income is pre-tax income that flows directly to households.

20) Compensation of employees is the largest component of national income.

21) Explain the difference between U.S. GDP and U.S. GNP.

11.4 A Closer Examination of Nominal and Real GDP

1) If real GDP was 100 in 2011 and 104.4 in 2012, the growth rate of real GDP between 2011 and 2012 was

A) 2.2%.

B) 4.4%.

C) 100%.

D) 102.2%.