Macro ch 23

Tyler and Camille both live in Oklahoma. A new-car dealer in Oklahoma bought a new car from the manufacturer for $18,000 and sold it to Tyler for $22,000. Later that year, Tyler sold the car to Camille for $17,000. By how much did these transactions contribute to U.S. GDP for the year?

$22,000

Graph

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In the actual economy, goods and services are purchased by

Firms, but not households or the government

Until recently, George lived in a home that was newly constructed in 2005. In 2005, he paid $200,000 for the brand new house. He sold the house in 2006 for $225,000. Which of the following statements is correct regarding the sale of the house?

The 2006 sale affected neither 2005 nor 2006 GDP

The local Chevrolet dealership has an increase in inventory of 25 cars in 2006. In 2007, it sells all 25 cars. Which of the following statements is correct?

The value of the cars in inventory will be counted as part of 2006 GDP, and the value of the cars sold in 2007 will not increase 2007 GDP

An Italian company operates a pasta restaurant in the U.S. The value of the output produced by this pasta restaurant is included in

US GDP and Italian GNP

Gina, a U.S. citizen, works only in Germany. The value of Gina's production is included in

US GNP and German GDP

When an American household purchases a bottle of Italian wine for $100,

US consumption increases by $100, US net exports do not change, and US GDP increases by $100

Spots, Inc. produces ink and sells it to Write on Target, which makes pens. The ink produced by Spots, Inc. is called

an intermediate good

Which of the following is an example of depreciation?

computers become obsolete

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

Gasoline is considered a final good if it is sold by a

gasoline station to a bus company that operates a bus route between San Francisco and Los Angeles

Which of the following items is included US GDP?

goods produced by foreign citizens working in the United States

If an economy's GDP falls, then it must be the case that the economy's

income and expenditure both fall

Consider the following three items of spending by the government: (1) the federal government pays a $500 unemployment benefit to an unemployed person; (2) the federal government makes a $2,000 salary payment to a Navy lieutenant; (3) the city of Bozeman, Montana makes a $10,000 payment to ABC Lighting Company for street lights in Bozeman. Which of these payments contributes directly to government purchases in the national income accounts?

only items (2) and (3)

A recession has traditionally been defined as a period during which

real GDP declines for two consecutive quarters

Which of the following represents a transfer payment?

the government sends your grandfather his Social Security check

To encourage formation of small businesses, the government could provide subsidies; these subsidies

would not be included in GDP because the government raises taxes to pay for them