Chapter 10 - Measuring a Nation's Income

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

**a. final goods and services b. intermediate goods c. manufactured goods d. normal goods and services e. inferior goods and services

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

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 e. none of the answer choices

GDP would include which of the following?

a. Intermediate sales b. Illegal drug sales c. The value of taking a day off from work d. An individual cooking a meal at home **e. A councilor's services

How is your purchase of a $80,000 Tesla automobile that was produced entirely in China recorded in the U.S. GDP accounts?

a. Investment increases by $80,000 and net exports increase by $80,000. **b. Consumption increases by $80,000 and net exports decrease by $80,000. c. Net exports decrease by $80,000. d. Net exports increase by $80,000. e. There is no impact because this transaction does not involve domestic production.

U.S. GDP would exclude which of the following?

a. Realtor services purchased by a home buyer **b. Cotton purchased by Levi Jeans c. The purchase of a new Honda produced in Tennessee d. A new snowplow purchased by the state of Minnesota e. Landscaping services purchased by a homeowner

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 e. all of the answer choices should be counted in 2022 GDP

If your grandparents buy a new retirement home in the United States, U.S. GDP accounts record the transaction as _______.

a. consumption **b. investment c. government purchases d. net exports e. none of the answer choices are correct

Gross domestic product can be measured as the sum of _______.

a. consumption, transfer payments, wages, and profits b. final goods and services, intermediate goods, transfer payments, and rent c. net national product, gross national product, and disposable personal income d. investment, wages, profits, and intermediate production **e. consumption, investment, government purchases, and net exports

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

a. domestic; foreign **b. base year; current year c. intermediate; final d. current year; base year e. current; constant

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

a. machine consumption **b. depreciation c. net national product d. manufacturing investment e. intermediate production

An example of a transfer payment is _______.

a. profit b. rent c. military purchases d. wages **e. unemployment benefits

If U.S. GDP exceeds U.S. GNP, then _______.

a. real GDP exceeds nominal GDP b. real GNP exceeds nominal GNP c. intermediate production exceeds final production d. U.S. Nationals are producing more in foreign countries than foreigners are producing in the United States **e. foreigners are producing more in the United States than U.S. Nationals are producing in foreign countries

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