Econ 2301 Ch 23 Graded Assignment

According to the circular-flow diagram GDP

A. Can be computed as the total income paid by firms or as expenditures on final goods and services.

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

B. U.S. investment and GDP increase, but German GDP is unaffected.

In the economy of Xland in 2010, consumption was $500, exports were $200, GDP was $1200, government purchases were $250, and investment was $300. What were Xland's imports in 2010?

b. $50

John buys a used car for $5,400 and spends $600 on new parts, made in the U.S., to fix the car. The end result of these two transactions is

b. U.S. consumption purchases increase by $600 and U.S. GDP increases by $600.

Social Security payments are

b. excluded from GDP because they do not reflect the economy's production.

Grapes are considered intermediate goods

b. if the purchaser uses them to make wine to sell others but not if the purchaser eats them.

If net exports is a negative number for a particular year, then

b. the value of foreign goods purchased exceeded the value of goods sold to foreigners during the year.

Over time, people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

c. caused measured GDP to rise.

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

D. $250 to GDP.

A country reported nominal GDP of $100 billion in 2010 and $75 billion in 2009. It also reported a GDP deflator of 125 in 2010 and 120 in 2009. Between 2009 and 2010,

D. real output and the price level both rose.

GDP is not a perfect measure of well-being; for example,

GDP excludes the value of volunteer work. GDP does not address the distribution of income. GDP does not address environmental quality.

Suppose an economy produces only eggs and ham. In 2009, 100 dozen eggs are sold at $3 per dozen and 50 pounds of ham sold at $4 per pound. In 2010, the base year, eggs sold at $1.50 per dozen and ham sold at $5 per pound. For 2009,

a. nominal GDP is $500, real GDP is $400, and the GDP deflator is 125.

In 2009, Corny Company grows and sells $2 million worth of corn to Tasty Cereal Company, which makes corn flakes. Tasty Cereal Company produces $6 million worth of corn flakes in 2009, with sales to households during the year of $4.5 million. The unsold $1.5 million worth of corn flakes remains in Tasty Cereal Company's inventory at the end of 2009. The transactions just described contribute how much to GDP for 2009?

d. $6 million

After the terrorist attacks on September 11, 2001, governments within the United States raised expenditures to increase security at airports. These purchases of goods and services are

d. Included in GDP since government expenditures on goods and services are included in GDP.

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

d. The value of the goods and services produced by the restaurant is included in French GDP, but not in U.S. GDP.

Consumer goods that are produced, go into inventory, and are not sold during the current period are

d. included in current period GDP as inventory investment.

Consumption consists of spending by households on goods and services, with the exception of

d. purchases of new houses.