Macro Chapter 4 Quiz

b. $65,000

A dairy buys $50,000 worth of milk and spend $5,000 on cartons and utilities. It sells the cartons of milk to a grocery store for $60,000 that then sells all of the cartons to consumers for $65,000. How much do these actions add to GDP? a. $55,000 b. $65,000 c. $120,000 d. None of the above are correct.

c. $1200

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP? a. $500 b. $1700 c. $1200 d. $700

a. $17,000

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP? a. $17,000 b. $8,000 c. $15,000 d. $13,000

b. measuring them is so difficult.

GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because a. the quality of these items is not high enough to contribute value to GDP. b. measuring them is so difficult. c. the government wants to discourage the production and consumption of these items. d. these items are not reported on income tax forms.

d. included in U.S. GDP, but it is not included in U.S. GNP.

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is a. included in neither U.S. GDP nor U.S. GNP. b. included in U.S. GNP, but it is not included in U.S. GDP. c. included in both U.S. GDP and U.S. GNP. d. included in U.S. GDP, but it is not included in U.S. GNP.

a. increased measured GDP by the value added by the restaurant's preparation and serving of the meals.

Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has a. increased measured GDP by the value added by the restaurant's preparation and serving of the meals. b. reduced measured GDP. c. not affected measured GDP. d. increased measured GDP by the value of the restaurant meals.

c. When she babysits for someone else, but not when she babysits for her sister.

Rachel babysits for her sister for no pay. When she babysits for someone else she charges $8 an hour. When is Rachel's babysitting included in GDP? a. When she babysits for her sister and when she babysits for someone else. b. When she babysits for her sister, but not when she babysits for someone else. c. When she babysits for someone else, but not when she babysits for her sister. d. Neither when she babysits for her sister nor for someone else.

d. constant prices.

Real GDP is the yearly production of final goods and services valued at a. the ratio of current prices to constant prices. b. expected future prices. c. current prices. d. constant prices.

a. GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services.

Suppose an apartment complex converts to a condominium, so that the former renters are now owners of their housing units. Suppose further that a current estimate of the value of the condominium owners' housing services is the same as the rent they previously paid. What happens to GDP as a result of this conversion? a. GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of owner occupied housing services. b. GDP necessarily increases. c. GDP necessarily decreases. d. GDP is unaffected because neither the rent nor the estimate of the value owner-occupied housing services is included in GDP.

c. $260.

The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013 . Refer to Table 23-6. In 2010, this country's nominal GDP was: a. $620. b. $440. c. $260. d. $760.

c.$620.

The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013 . Refer to Table 23-6. In 2010, this country's real GDP was: a. $260. b. $630. c. $620. d. $400.

d. 57.9.

The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013 . Refer to Table 23-6. In 2011, this country's GDP deflator was: a. 169.2. b. 137.5. c. 100.0. d. 57.9.

d. What is the impact of foreign competition on the U.S. auto industry?

Which of the following is not a question addressed by macroeconomists? a. Why do production and employment expand in some years and contract in others? b. Why is average income high in some nations but low in others? c. What, if anything, can the government do to promote growth in incomes, low inflation, and stable employment? d. What is the impact of foreign competition on the U.S. auto industry?

d. All of the above transactions add to U.S. GDP for 2015.

Which of the following transactions adds to U.S. GDP for 2015? a. In 2015, Frank's Feta manufactures 2000 pounds of cheese that will eventually be sold to grocery stores. The 2000 pounds of cheese remains in Frank's inventory at the end of 2015. b. An Irish marketing consultant works in Richmond during the summer of 2015 and earns $45,000 during that time. c. When Len and Mika were both single, they lived in separate apartments and each paid $700 in rent. Len and Mika got married in 2015 and they bought a previously unoccupied house that, according to reliable estimates, could be rented for $1,500 per month. d. All of the above transactions add to U.S. GDP for 2015.