GDP True or False

GDP includes the sale of intermediate goods and excludes the sale of final goods.

False

GDP measures at their market values the total output of all goods and services produced in an economy during a year.

False

Government purchases include spending by all units of government on the finished product of business, but excludes all direct purchases of resources such as labor.

False

Personal Consumption expenditures only include expenditures for durable and nondurable goods.

False

Social security payments and other transfer payments are counted as part of GDP.

False

The expenditure made by a household to have a new home built is a personal consumption expenditure.

False

The spillover costs from pollution and other activities associated with the production of GDP are deducted from the total output.

False

A durable good is a good that lasts a long time.

True

GDP is not affected by inflation.

True

Negative externalities can include pollution and traffic.

True

The income approach to GDP includes compensation of employees, rents, interest income, proprietors income, and corporate profits.

True

The sale of stocks and bonds are excluded from GDP.

True