2. If prices increased, we need to adjust nominal GDP values to give us a measure of GDP for various years in constant-dollar terms. We refer to that adjustment as:

3. The expenditures or output approach to GDP measures it by summing up:

4. One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold to a consumer in a grocery store for $2.00. Taking these three transactions into account, what is the effect on GDP?

5. Gross domestic product measures two things at once:

6. GDP in an economy is $11.050 billion. Consumer expenditures are $7,735 billion, government purchases are $1,989 billion, and gross investment is $1,410 billion. Next exports must be:

7. GDP measured using current prices is called:

8. The largest expenditure component of GDP is:

9. If Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself, then GDP…

10. Which of the following is not included in GDP?

11. The local Chevrolet dealership has an increase in inventory of 25 cars in 2006. In 2007, it sells all 25 cars. Which of the following statements is correct?

12. To compute GDP, we…

13. GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because…

14. (GDP figures are in billions of dollars.) What is the GDP price index in Year 1?

15. The total volume of business sales in our economy is several times larger than GDP:

16. Firm A produces something that Firm B uses as an input. The product of Firm B, in turn, is purchased and used as an input by Firm C, and so on down the line through Firm E, which produces the end product. The total value added by Firms A-E from the production of the end product described here is:

17. Spots, Inc. produces ink and sells it to Write on Target, which makes pens. The ink produced by Spots, Inc. is called…

18. Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has…

19. If the price of a DVD player is three times the price of a CD player, then a DVD player contributes…

20. If a state made a previously-illegal activity, such as gambling or prostitution, legal, then other things equal, GDP…

21. The consumption component of GDP includes spending on…

22. Transfer payments are…

23. What was real GDP in Year 2?

24. Which of the following is not an example of durable good?

25. Which of the following is not an example of nondurable good?

26. A good is produced by a firm in 2007, added to the firm’s inventory in 2007, and sold to a household in 2008. It follows that…

27. In year 1, nominal GDP for the United States was $2,250 billion and in year 2 it was

$2,508 billion. The GDP deflator was 72 in year 1 and 79 in year 2. Between year 1 and year 2, real GDP rose by:

28. Roughly, consumer spending (C) accounts for hoe much of GDP?