Econ Exam 1

A tire manufacturer produces 400 tires valued at $20 each. Three hundred tires are sold to a tire shop, which then sells them to households for $50 each. The remaining tires are unsold and are added to the tire manufacturer's inventory. How much is added to GDP?

$17000

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

$250 to GDP

One bag of flour is sold for $1.00 to a bakery, which uses the flour to bake bread that is sold for $3.00 to consumers. A second bag of flour is sold to a consumer in a grocery store for $2.00. Taking these three transactions into account, what is the effect on GDP?

GDP increases by $5.00

Which of the following is included in the calculation of GDP?

The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.

For an economy as a whole, income must equal expenditure because

every dollar of spending by some buyer is a dollar of income for some seller

Over the last few decades, American have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has

increased measured GDP, by the value added by the restaurant's preparation and serving of the meals

If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP

increases

GDP is defined as the

value of all final goods and services produced within a country in a given period of time