Self Practice Quiz 4

Depreciation is: a. what is left over from total new private investment after use for a year. b. the total amount of private investment purchases, whether new or previously-existing. c. the total amount of new private investment purchases. d. the wear and tear on private investment.

d

If Betty's Bakery purchases 30 cents worth of ingredients and spends 35 cents on wages per croissant to produce a 99 cent croissant, then Betty's Bakery's contribution to GDP is ________ per croissant. a. 30 cents b. 34 cents c. 35 cents d. 69 cents

d

If an economy produced 100 pounds of almonds at $3 per pound and 50 pounds of cashews at $7 per pound in 2008, its real gross domestic product (GDP) was: a. 150 pounds of nuts. b. $300. c. $350. d. $650.

d

Transfer payments are excluded from government purchases in GDP accounting because: a. they are difficult to measure. b. they are a reward to individuals who have been productive their entire lives. c. they are already included as part of investment. d. nothing is being produced in return for the payment.

d

If in the third quarter of 2008 total investment spending was $3,162 billion and depreciation was $2,044 billion, then net investment was equal to: a. $1,118 billion. b. $2,044 billion. c. $3,162 billion. d. $5,206 billion.

a

We measure gross domestic product by multiplying the quantities of goods by their prices because it allows us to: a. express the values of products in a common unit of measurement. b. correct for inflation. c. directly compare the output of one economy to that of another. d. calculate the total number of units of goods produced in an economy

a

As depicted in the circular flow diagram, firms: a. demand the goods and services that households supply in product markets. b. supply the goods and services that households demand in product markets. c. demand the resources that households supply in product markets. d. supply the resources that households demand in factor markets.

b

The largest component of GDP is: a. government spending. b. consumption expenditures. c. private investment expenditures. d. net exports.

b

Going to the dentist would be counted in GDP as: a. crowns and fillings. b. insurance utilization. c. a service. d. a measure of welfare.

c

Which of the following should be included in U.S. GDP? a. a plasma TV manufactured in Indonesia and sold in the United States b. a plasma TV manufactured in Indonesia by a U.S. firm and sold in the United States c. a plasma TV manufactured in the United States and sold in Indonesia d. a used plasma TV manufactured in the United States and sold in Indonesia

c