Chapter 23 - 24

Which of the following is included in GDP?

• The sale of stocks and bonds

• The sale of used goods

• The sale of services such as visits to a doctor

• All of above are correct

To compute GDP we

• Simply sum the number of final goods and services

• Sum the cost of producing final goods and services

• Use weights determined by a survey regarding how much people value

  different sorts of goods and services to compute GDP as a weighted

  average.

• Sum the market value of final goods and services

The simple circular-flow diagram illustrates that

• Production generates income so that income and production are the same

• The economy’s income exceeds its production

• The production of an economy exceeds its income

• None of the above are correct.

The local Chevrolet dealership has an increase in inventory of 25 cars in

2003. In 2004, it sells all 25 cars.

• The value of increased inventory will be counted as part of GDP in 2003,

  but the value of the cars sold in 2004 will not cause 2004 GDP to

  increase.

• The value of increased inventory will not affect GDP in 2003, but will be

  included in 2004 GDP.

• The value of increased inventory will be counted as part of GDP in 2003

  and the value of the cars sold in 2004 will increase 2004 GDP.

• None of the above are correct.

In the U.S real GDP is reported each quarter.

• These numbers are adjusted to make them measure at annual and

  seasonally adjusted rates.

• These numbers are adjusted to make them measure at annual rates, but no

  adjustment for seasonal variations are made.

• These numbers are at quarterly rates that have been seasonally adjusted.

• These numbers are at quarterly rates and have not been seasonally

  adjusted.

Flour is

• Always counted as an intermediate good

• Counted as an intermediate good if it is used by a company to make bread

• Counted as a final good if it is used by a consumer who bakes bread for

  his own consumption

• Both b and c are correct.

U.S GNP is calculated from U.S GDP by

• Including income earned by foreigners in the U.S and excluding income

  earned by U.S citizens abroad.

• Including income earned by U.S citizens abroad and excluding income

  earned by foreigners in the U.S

• Including income earned by foreigners in the U.S

• Excluding income earned by U.S citizens abroad.

Greg, a U.S citizen, works only in Canada. The value added to

production from his employment is

• Included in both U.S GDP and U.S GNP

• Included in only U.S GDP

• Included in only U.S GNP

• Not included in either U.S GDP or U.S GNP

If in a given year an economy has consumption of $3000, investment of

$2000, government purchases of $1500, tax of $1200, transfer payments of $400, depreciation of $300, export of $500 and import of $600. Then GDP

will equal?

• $6400

• $7000

• $8900

• $9500

A firm produces consumer goods and adds some to inventory in the

third quarter of 2018. In the fourth quarter the firm sells the goods at a

retail outlet which leave their inventory diminished. As a result of these

actions, what component(s) of 2019 real GDP change in the fourth quarter?

• Only investment and it decreases

• Only consumption and it increases

• Investment decreases and consumption increases

• None of the above is correct.