ECON 201 - Chapter 10 QUIZ

In the economy of Talikastan in 2015, consumption was $3000, exports were $1200, GDP was $6300, government purchases were $1300, and investment was $1500. What were Talikastan's imports in 2015?

$700

Gross domestic product measures

A. income and expenditures.

For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Rosa gets a new refrigerator made in the United States.

C

For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Nick buys a bottle of Italian wine.

C & M

Graincorp, a U.S. agricultural company, produces corn syrup at a plant in Iowa on September 25, 2015. It sells the corn syrup to Crunchy's for use in the production of cereal that will be made in the United States in 2015. (Note: Focus exclusively on whether production of the corn syrup increases GDP directly, and ignore the effect of production of the cereal on GDP.)

Excluded

Roadway Motors, a U.S. automobile company, produces a convertible at a plant in Germany on March 27, 2015. Roadway Motors imports the convertible into the United States on May 18, 2015.

Excluded

You chop down a cherry tree on your property in California and make a dining room table in 2015. A similar table sells for $800 in a local furniture store.

Excluded

For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.

G

For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Nick's employer upgrades all of its computer systems using U.S.-made parts.

I

Fastlane, a Japanese automobile company, produces a sedan at a plant in Indiana on December 9, 2015. A family buys the sedan on December 24.

Included

Zippycar, a U.S. automobile company, produces a convertible at a manufacturing plant in Minneapolis on January 14, 2015. It sells the car at a dealership in San Diego on February 12, 2015.

Included

Identify whether each of the following events in this scenario occurs in the resource market (the market for factors of production) or the product market (the market for goods and services). Nick spends $200 to purchase a necklace from Classy's Jewelry Store.

Product Market

Identify whether each of the following events in this scenario occurs in the resource market (the market for factors of production) or the product market (the market for goods and services). Rosa spends $8 to buy a box of aspirin.

Product Market

Identify whether each of the following events in this scenario occurs in the resource market (the market for factors of production) or the product market (the market for goods and services). Rosa earns $600 per week working for Classy's Jewelry Store.

Resource Market

Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all that apply.

The $200 Nick spends to purchase a necklace from Classy's Jewelry Store. Rosa's labor.

Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply.

The value of baby-sitting services, when the babysitter is paid in cash and the transaction isn't reported to the government The quality of goods available to consumers The costs of overfishing and other overly intensive uses of resources

True or False: For the economy as a whole, expenditures must equal income.

True

For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Rosa's father in Sweden orders a bottle of Vermont maple syrup from the producer's website.

X

Based on this model, households earn income when ____ purchase ____ in resource markets.

firms resources

The gross domestic product (GDP) of the United States is defined as the ___ all ____ ______ in a given period of time.

market value of final goods and services produced by resources within the United States