Chapter 13 "measuring GDP"

CANOES-R-US makes canoes. It buys the shell of the canoe from another firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1,200.

$1200

CANOES-R-US makes canoes. It buys the shell of the canoe from another firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1200

$500

In 2013, Kendall Ford, an automobile dealership, spent $20,000 on a new car lift for its repair shop, $2,000 on a new copy machine for its sales division, and $600,000 on Ford Motor company stock. Unsold cars and trucks were valued at $400,000 on January 1, 2013 and unsold cars and trucks were valued at $900,000 on December 31, 2013. What is Kendall Ford's total investment spending in 2013?

$522,000

A car that is produced in 2013 is not sold until 2014. According to the definition of GDP, in which year's GDP should it be counted?

2013

Which of the following would increase gross private domestic investment in an economy?

An increase in the level of Apple's inventory

Which of the following would be directly counted in GDP in 2014?

Kitchen cabinets purchased from Home Depot in 2014 to be installed in a house built in 1997.

In 2016, which component of GDP had a negative value?

Net exports

The purchase of a new automobile is included in

consumption expenditures on durable goods

What is the largest component of spending in the United States?

consumption spending

Which of the following is not an example of a transfer payment?

health insurance payments to an army private

Which of the following is not directly counted in GDP

intermediate goods

The purchase of a new house is included in

investment expenditures

The purchase by a foreign government of an airplane produced in the United States is included in U.S.

net exports

The purchase by a household in China of a CD produced in the United States is included in U.S.

net exports

Real GDP will increase

only if the quantity of final goods and services produced rises.

An example of an intermediate good would be

the bread that goes into a sub sandwich that is sold by Quiznos.

Value added equals the market price of the firm's product minus

the price of intermediate goods

Suppose in 2014, you purchase a house built in 2003. Which of the following would be included in the gross domestic product for 2014?

the value of the services of the real estate agent

In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA

values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.

An example of a transfer payment is

A welfare payment

To examine how the total production of an economy has changed over time, it would be better to examine

Real GDP

How are intermediate goods treated in the calculation of GDP?

Their value is not counted separately, but included as part of the value of the final good for which they are an input.

The nominal GDP of the U.S. in 2015 was approximately $16.2 trillion. This means that

Total income of 2012 was around 16.2 trillion Total spending of 2012 was around 16.2 trillion The value of output in 2012 was around 16.2 trillion

Which of the following transactions would be included in the official calculation of GDP?

You buy a new iPod.

Which of the following transactions represents the purchase of a final good?

Your father buys a new John Deere riding lawn mower.

Which of the following goods is directly counted in GDP?

a 12-inch Subway sandwich purchased by a student

Investment, as defined by economists, would not include which of the following? Ford

buys U.S. government bonds

Investment spending includes spending on

changes in business inventories

Investment, as defined by economists, would include the purchase of a

computer by an accounting firm