Measuring a Nation's Income Quiz

GDP is defined as the

• value of all goods and services produced within a country in a given period of time.

• value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

• value of all final goods and services produced within a country in a given period of time.

• value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

Which of the following is a way to compute GDP?

• add up the wages paid to all workers

• add up the quantities of all final goods and services

• add up the market values of all final goods and services

• add up the difference between the market values of all final goods and services and then subtract the costs of producing those goods and services

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

• values of goods and services based on surveys of consumers.

• market prices.

• quantities purchased by a typical urban household.

• profits from producing goods and services.

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

• market prices.

• statistical estimates of the value of goods and services to consumers.

• prices based on the assumption that producers make no profits.

• the maximum amount consumers would be willing to pay.

In computing GDP, market prices are used to value final goods and services because

• market prices do not change much over time, so it is easy to make comparisons between years.

• market prices reflect the values of goods and services.

• market prices reflect the quantity sold.

• None of the above is correct; market prices are not used in computing GDP.

If the price of a Blu-Ray Disc player is three times the price of an MP3 player, then a Blue-Ray Disc player contributes

• more than three times as much to GDP as does a MP3 player.

• less than three times as much to GDP as does a MP3 player.

• exactly three times as much to GDP as does a MP3 player.

• None of the above is necessarily correct.

Suppose that an economy produces 40,000 units of good A which sells at $4 a unit and 20,000 units of good B which sells at $5 per unit. Production of good A contributes

• 2 times as much to GDP as the production of good B.

• 8/5 times as much to GDP as the production of good B.

• 5/4 times as much to GDP as the production of good B.

• 4/5 times as much to GDP as production of good B.

Suppose that an economy produces 30,000 units of good A which sells at $3 a unit and 60,000 units of good B which sells at $2 per unit. Production of good A contributes

• 1/2 times as much to GDP as the production of good B.

• 3/2 times as much to GDP as the production of good B.

• 3/4 times as much to GDP as the production of good B.

• 4/3 times as much to GDP as production of good B.

Which of the following is included in GDP?

• the market value of rental housing services, but not the market value of owner-occupied housing services.

• the market value of owner-occupied housing services, but not the market value of rental housing services

• both the market value of rental housing services and the market value of owner-occupied housing services

• neither the market value of owner-occupied housing services nor the market value of rental housing services.

The value of the housing services provided by the economy's owner-occupied houses is

• included in GDP, and the estimated rental values of the houses are used to place a value on these housing services.

• included in GDP, and the actual mortgage payments made on the houses are used to estimate the value of these rental services.

• excluded from GDP since these services are not sold in any market.

• excluded from GDP since the value of these housing services cannot be estimated with any degree of precision.