EC111 Chapter 10

If a cobbler buys leather for $100 and thread for $50 and uses them to produce and sell $500 worth of shoes to consumers, the contribution to GDP is

$500

How is your purchase of a $40,000 BMW automobile that was produced entirely in Germany recorded in the U.S. GDP accounts?

Consumption increases by $40,000 and net exports decrease by $40,000.

The value of plant and equipment worn out in the process of manufacturing goods and services is measured by

Depreciation

An example of a transfer payment is

Unemployment benefits

Which of the following would be excluded from 2019 GDP? The sale of

a home built in 2018 and first sold in 2019.

Real GDP is measured in ______ prices while nominal GDP is measured in ______ prices.

base year; current year

GDP would include which of the following?

consulting services

Gross domestic product can be measured as the sum of

consumption, investment, government purchases, and net exports

U.S. GDP would exclude which of the following?

cotton purchased by Lee Jeans

Gross domestic product is the sum of the market value of the

final goods and services

If U.S. GDP exceeds U.S. GNP, then

foreigners are producing more in the United States than Americans are producing in foreign countries

If your grandparents buy a new retirement home, this transaction would affect

investment

U.S. gross domestic product (in contrast to gross national product) measures the production and income of

people and factories located within the borders of the United States

If nominal GDP in 2019 exceeds nominal GDP in 2018, then the production of output must have

risen or fallen because there is not enough information to determine what happened to real output.