Self-Check Questions

1. Country A has export sales of $20 billion, government purchases of $1,000 billion, business investment is $50 billion, imports are $40 billion, and consumption spending is $2,000 billion. What is the dollar value of GDP?

2. Which of the following are included in GDP, and which are not?

• The cost of hospital stays
• The rise in life expectancy over time
• Child care provided by a licensed day care center
• Child care provided by a grandmother
• A used car sale
• A new car sale
• The greater variety of cheese available in supermarkets
• The iron that goes into the steel that goes into a refrigerator bought by a consumer.

3. Using data from Table 19.5 how much of the nominal GDP growth from 1980 to 1990 was real GDP and how much was inflation?

4. Without looking at Table 19.7, return to Figure 19.10. If we define a recession as a significant decline in national output, can you identify any post-1960 recessions in addition to the 2008-2009 recession? (This requires a judgment call.)

5. According to Table 19.7, how often have recessions occurred since the end of World War II (1945)?

6. According to Table 19.7, how long has the average recession lasted since the end of World War II?

7. According to Table 19.7, how long has the average expansion lasted since the end of World War II?

8. Is it possible for GDP to rise while at the same time per capita GDP is falling? Is it possible for GDP to fall while per capita GDP is rising?

9. The Central African Republic has a GDP of 1,107,689 million CFA francs and a population of 4.862 million. The exchange rate is 284.681CFA francs per dollar. Calculate the GDP per capita of Central African Republic.

10.Explain briefly whether each of the following would cause GDP to overstate or understate the degree of change in the broad standard of living.

• The environment becomes dirtier
• The crime rate declines
• A greater variety of goods become available to consumers
• Infant mortality declines

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