econ chap 10

An example of a transfer payment is _______.

• a. wages

• b. profit

  
  

• c. rent

  
  

• d. unemployment benefits

  
  

• e. military purchases

  
  

The value of plant and equipment worn out in the process of manufacturing goods and services is measured by _______.

• a. intermediate production

• b. depreciation

  
  

• c. machine consumption

• 
  d. net national product

• e. manufacturing investment

Answer explanation

Depreciation is the gradual loss of value of an asset over time due to use, aging, or obsolescence.
It represents how assets wear out and helps businesses spread the cost of long-term items over their useful lives (cost of sth/expected lasting year).

Which of the following would be excluded from 2022 GDP? The sale of _______.

• a. a 2022 Honda made in Tennessee

  
  

• b. a haircut

  
  

• c. a realtor's services

  
  

• d. a home built in 2021 and first sold in 2022

  
  

Gross domestic product can be measured as the sum of _______

• a. investment, wages, profits, and intermediate production

• b. consumption, investment, government purchases, and net exports

  
  

• c. final goods and services, intermediate goods, transfer payments, and rent

  
  

• d. consumption, transfer payments, wages, and profits

  
  

• e. net national product, gross national product, and disposable personal income

  
  

U.S. gross domestic product (in contrast to gross national product) measures the production and income of _______.

• a. Americans and their factories no matter where they are located in the world

  
  

• b. people and factories located within the borders of the United States

  
  

• c. the domestic service sector only

  
  

• d. the domestic manufacturing sector only

Gross domestic product is the sum of the market value of the _______.

• a. normal goods and services

• b. intermediate goods

• c. final goods and services

  
  

• d. inferior goods and services

  
  

• e. manufactured goods

  
  

If nominal GDP in 2022 exceeds nominal GDP in 2021, then the production of output must have _______.

• a. risen

  
  

• b. fallen

  
  

• c. stayed the same

• d. risen or fallen because there is not enough information to determine what happened to real output

Answer explanation

A rise in nominal GDP does not necessarily mean production (real GDP) increased — prices might have gone up instead.

If a clothing manufacturer buys cloth for $100 and thread for $50 and uses them to produce and sell $500 worth of clothing to consumers, the value of the final goods and services to be counted in GDP is _______.

• a. $50

• b. $100

• c. $350

  
  

• d. $500

  
  

• e. $650

  
  

GDP would include which of the following?

• a. An individual cooking a meal at home
  

• b. Illegal drug sales

  
  

• c. The value of taking a day off from work

  
  

• 
  d. A councilor's services

  
  

• e. Intermediate sales

  
  

Real GDP is measured in ______ prices, while nominal GDP is measured in ______ prices.

• a. current year; base year

  
  

• b. domestic; foreign

  
  

• c. intermediate; final

  
  

• d. current; constant

  
  

• 
  e. base year; current year