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Ch 12: Gross Domestic Product and Growth

Matching
 
 
Identifying Key Terms
Match each term with the correct statement below.
a.
aggregate supply
f.
national income accounting
b.
aggregate demand
g.
recession
c.
depreciation
h.
stagflation
d.
gross domestic product
i.
technological progress
e.
gross national product
j.
trough
 

 1. 

a system that collects macroeconomic statistics on production, income, investment, and savings
 

 2. 

the dollar value of all final goods and services produced within a country’s borders in a given year
 

 3. 

the total amount of goods and services in the economy available at all possible price levels
 

 4. 

the loss of the value of capital equipment that results from normal wear and tear
 

 5. 

a decline in GDP combined with a rise in the price level
 

 6. 

a prolonged economic contraction
 

 7. 

the lowest point in an economic contraction, when real GDP stops falling
 

 8. 

an increase in efficiency gained by producing more output without using more inputs
 

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 9. 

Products that would be used in calculating GDP include
a.
toys manufactured in China at a factory owned by a U.S. company.
b.
cars manufactured in Tennessee at a factory owned by a Japanese automobile company.
c.
plastic manufactured in a factory in Kentucky and sold to toy manufacturers around the world to make plastic toys.
d.
cotton cloth manufactured in India and sold to clothes makers in the United States.
 

 10. 

An example of a durable good would be
a.
a used car.
c.
a box of cereal.
b.
a paperback book.
d.
a pack of baseball cards.
 

 11. 

Compared with the expenditure approach to calculating GDP, the income approach is
a.
more practical.
b.
more accurate.
c.
preferred by the average consumer.
d.
connected more strongly to stock market performance.
 

 12. 

GNP minus the cost of depreciation of capital equipment is
a.
real GDP.
c.
national income.
b.
nominal GDP.
d.
net national product.
 

 13. 

The main economic variables that affect business cycles include all of the following EXCEPT
a.
interest rates.
c.
personal savings levels.
b.
external events.
d.
business investment levels.
 

 14. 

An accurate statement about the Great Depression would be that
a.
it was a recession that became a depression because of World War II.
b.
it was set off because of a sharp and unexpected rise in interest rates.
c.
it was the most severe economic downturn in the history of industrial capitalism.
d.
its effects and duration would have been even worse if it weren’t for a strong economy in Japan and Europe at the time.
 

 15. 

The agency that maintains the National Income and Product Accounts (NIPA) is
a.
the U.S. Department of the Treasury.
c.
the U.S. Department of Defense.
b.
the U.S. Department of the Interior.
d.
the U.S. Department of Commerce.
 

 16. 

An example of capital deepening would be
a.
permitting two workers to share one job.
b.
paying for an employee to take college courses.
c.
laying off employees when a factory is modernized.
d.
moving a manufacturing plant overseas where labor costs are lower.
 

 17. 

All of the following actions promote capital deepening EXCEPT
a.
raising taxes to pay for building roads.
b.
saving less and spending more of one’s disposable income.
c.
borrowing money from foreign nations to invest in building infrastructure in this country.
d.
a low population growth rate at the same time that capital stock expands.
 

 18. 

All of the following measures help to promote technological progress EXCEPT
a.
increased wages for researchers.
b.
issuing a patent to a company that invents a new product.
c.
training programs for workers.
d.
reducing the scale of the market for a new product.
 

Short Answer
 
 
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 19. 

In what year was the real GDP per capita the highest?
 

 20. 

Between which years did the greatest increase occur in real GDP per capita?
 

 21. 

During which years was the economic growth rate approximately zero?
 

 22. 

Which 8-year span saw the greatest overall period of economic growth?
 

Essay
 
 
Critical Thinking
 

 23. 

Synthesizing Information Explain why final goods and services are included in the calculation of GDP and intermediate goods are not.
 

 24. 

Analyzing Information Describe the four phases of the typical business cycle.
 



 
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