A television in Mexico costs 3,200 Mexican pesos. If the dollar price of the Mexican peso is $0.11, then the U.S. dollar value of the same television is $352.

a. True

b. False

Productive activity in the underground economy

a. Results in an overstatement of actual income and production in the national accounting system.

b. Consists of unrecorded cash transactions.

c. Is fully estimated and included in the national income accounting system.

d. Poses no problem for the measurement of gross domestic product.

e. Does not affect GDP, but is included in the value-added computations.

Which of the following would be included in the Financial Account of the Balance of Payments?

a. Interest earned by a U.S. bank on a foreign loan.

b. U.S. humanitarian aid for victims of war in Bosnia.

c. Income received by a U.S. firm from a sale abroad.

d. A loan received by the U.S. government from abroad.

e. The purchase of a German car by an American in the U.S.

The GDP Gap is equal to Actual Real GDP – Potential Real GDP.

a. True b. False