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Article Summary

For only the second time in the previous 10 quarters, China's GDP grew at a faster rate than from the same period a year earlier. From July through September 2013, China's GDP increased 7.8 percent, but a decline in exports, growing inflation, and slowing growth in factory production all suggest that growth will be slowing down. China has recently been attempting to restructure its economy by moving toward increasing consumption and relying less on exports and investments as a means to achieving more sustainable economic growth. In the first nine months of 2013, 46 percent of growth was due to consumption, 56 percent was due to investment, and exports accounted for negative 1.7 percent.

 

Source: Aileen Wang and Kevin Yao, "China's third-quarter GDP growth fastest this year, but outlook dim," Reuters, October 18, 2013.

 

69) Refer to the Article Summary. The decline in export growth will hurt China's GDP because

A) a decrease in exports will decrease net exports, assuming no change in imports.

B) a decline in export growth indicates an increase in import growth.

C) exports are added to imports when calculating GDP.

D) exports are subtracted from imports when calculating GDP.

 

 

70) Refer to the Article Summary. In China, ________ is (are) the main driver of economic growth, while in the United States, ________ is the main driver of economic growth.

A) consumption; investment

B) net exports; government purchases

C) investment; consumption

D) consumption; net exports

 

 

71) In a small economy, gross investment in 2013 is $1,500, consumption spending is $6,000, net investment is $200, government spending is $1,500, exports are $2,000 and imports are $1,000. What is GDP for this economy in 2013?

A) $10,700

B) $10,300

C) $10,200

D) $10,000

 

72) In a small economy, consumption spending in 2013 is $6,000, government spending is $1,200, gross investment is $1,500, exports are $2,000, and imports are $1,000. What is gross domestic product in 2013?

A) $9,700

B) $9,800

C) $10,800

D) $11,700

 

 

73) Consumption spending is $4.5 billion, gross private domestic investment is $3 billion, and government expenditures are $2 billion. If GDP is $14 billion, which of the following could be true regarding exports and imports in the economy?

A) Exports are $4.5 billion, and imports are $2 billion.

B) Exports are $6 billion, and imports are $8.5 billion.

C) Exports are $9 billion, and imports are $6 billion.

D) Exports are $15 billion, and imports are $10.5 billion.

 

 

Table 19-6

 

Product

Quantity

Price per Unit

Coke

       10,000

            $2

iPhones

         2,000

          150

Backpacks

         4,000

            25

Hershey bars

         8,000

              1

 

74) Refer to Table 19-6.  Consider the table of production and price statistics for a small economy in 2013. If the economy only produces the four goods listed below, what is GDP for 2013?

A) $428,000

B) $267,000

C) $24,000

D) $1,424

 

75) Which of the following would increase gross private domestic investment in an economy?

A) an increase in the shares of Apple stock households own

B) an increase in the number of workers Apple hires

C) an increase in the level of Apple's inventory

D) an increase in the number of highway construction projects the government is funding

 

 

76) Which of the following equations correctly measures GDP in an economy?

A) GDP = C + I + G + X

B) GDP = C + net I + G + NX

C) GDP = C + I + G + NX

D) GDP = C + G + I - taxes

 

 

77) Between 2013 and 2014, if an economy's exports rise by $8 billion and its imports fall by $8 billion, by how much will GDP change between the two years, all else equal?

A) Net exports will increase GDP by $8 billion.

B) The increase in exports is offset by the decrease in imports, so there is no change in net exports and no effect on GDP.

C) Net exports will increase GDP by $16 billion.

D) Net exports will decrease GDP by $8 billion.

 

 

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