Econ 202 Chp 5

If a music company purchases 50 cents worth of materials and pays $5.00 per CD to workers to produce an $18.00 CD, that firms value added per CD is:

$17.50; 18-.50=17.50

If an economy produced 10 bushels of corn at $20 each and 20 jars of peanut butter at $3 each in 1995, real gross domestic product would be:

$260; 20*10=200 and 20*3=60

Suppose that factory produces $5,000 of output and causes $3,000 worth of pollution as a result of production. The factory's official contribution to GDP would be ________ and its overall contribution to society would be ________.

$5,000, $2,000

Suppose that a hardware store has $1000 of paintbrushes on its shelves at the beginning of the year and $1500 at year end. The inventory amount included in GDP would be:

$500; 1500-1000=500

If real GDP were 200 in year 1 and 220 in year 2, the growth rate of real GDP between these years would be:

10%; 20/200*100=10%; 200= base year and 20=difference

Suppose that in 1995 a country produced 30 computers at a price of $2,000 each an 10 cars at a price of $5,000 each. In 1996 a country produced 30 computers at a price of $1,000 each and 8 cars at a price of $5,000 each. What do we know has happened?

Nominal GDP has decreased, and real GDP has decreased

Which of the following is not a component of GDP?

Purchases by consumers of used goods

How does real gross domestic product differ from nominal GDP?

Real GDP controls for price changes, while nominal GDP doesn't

Which of the following should be included in US GDP?

a car manufactured in the US and sold in Japan

An intermediate good is:

a good used only in the production of other products

Which of the following is an example of a consumption expenditure?

admission to an amusement park

For the purposes of GDP accounting, government purchases include:

both A and B; the purchases of new buildings, such as airports and schools. The wages spent on govt workers.

Refrigerators are examples of

durable goods

For the purpose of GDP accounting, consumption expenditures include:

durable goods, non durable goods, and services.

When there are sustained increases in real GDP over time, we say that the economy is undergoing:

economic growth

GDP understates the value of output produced by an economy because it:

excludes transactions that don't take place in organized markets; such as home-cooked meals.

We measure gross domestic product by multiplying the quantities of goods by their prices because it allows us to:

express the values of products in a common unit of measurement

In factor markets

households supply inputs which firms demand

The difference between US GDP and US NP is the GAP includes _______ and excludes ______.

income of foreign firms producing in the US; income of US firms producing in foreign countries.

When a country runs a trade deficit it must:

must sell assets to individuals or governments in foreign countries

Suppose that in 1995 a country produced 20 computers at a price of $2,000 each and 4 cars at a price of $5,000 each. In 1996 a country produced 15 computers at a price of $3,000 each and 5 cars at a price of $6,000 each. What do we know has happened?

nominal GDP has increased, and real GDP has decreased.

Which of the following is not a component of private investment, for purposes of GDP accounting?

purchases by firms of used machinery

A nations gross domestic product:

reflects the total market value of all final goods/services produced within an economy in a given year

Macroeconomics involves the study of economics from the standpoint of:

the aggregate economy

Depreciation is:

the wear and tear on private investment

Government transfer payments include all of the following except:

wage payments to police officers

Which of the following would not be considered a macroeconomic question?

what factors determine the price of computers