econ 231 chapter 23

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.

all except Expenditures on federal highways

An accountant starts a client's 2017 tax return on April 14, 2018, finishing it just before midnight on April 15, 2018.

excluded

Calculo, a U.S. electronics company, produces a calculator at a plant in Indonesia on March 31, 2017. Calculo imports the calculator into the United States on May 30, 2017.

excluded

Rotato, a U.S. tire company, produces a set of tires at a plant in Michigan on September 2, 2017. It sells the set of tires to Speedmaster for use in the production of a two-door coupe that will be made in the United States in 2017. (Note: Focus exclusively on whether production of the set of tires increases GDP directly, and ignore the effect of production of the two-door coupe on GDP.)

excluded

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 $175 Kenji spends to purchase a necklace from Classy's Jewelry Store -Lucia's labor

Eileen gets a new refrigerator made in the United States.

C

Clancy buys a sweater made in Guatemala.

C, M

The town of Swarthmore puts on a fireworks display for the Fourth of July.

G

Hubert buys a new set of tools to use in his plumbing business.

I

Clancy's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China.

X

Why is real GDP a more accurate measure of an economy's production than nominal GDP?

Real GDP is not influenced by price changes, but nominal GDP is.

Based on this model, households earn income when ____ purchase ________ in markets for factors of production.

firms, labor and capital

Fastlane, a Japanese automobile company, produces a sedan at a plant in Indiana on December 1, 2017. A family buys the sedan on December 28.

included

Zippycar, a U.S. automobile company, produces a convertible at a manufacturing plant in Minneapolis on January 31, 2017. It sells the car at a dealership in Chicago on February 13, 2017.

included

When a U.S. company purchases and imports electronic parts from China to use to produce MP3 players within the United States, this purchase increases the component of GDP while also net exports by the same amount. Therefore, the purchase of electronic parts from China causes in US GDP.

investment, decreasing, no overall change

Lucia earns $650 per week working for Classy's Jewelry Store.

market for factors of production

Kenji spends $175 to purchase a necklace from Classy's Jewelry Store.

market for goods and services

Lucia spends $10 to buy a box of aspirin.

market for goods and services

The gross domestic product (GDP) of the United States is defined as the market value of all final goods and services produced within the United States in a given period of time.

market value, all final goods and services produced, within the United States