ECO 200: Principals of Macroeconomics, Homework Chapter 10

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

Which of the following statements regarding GDP is correct?

GDP includes factory production, but not any harm that may be inflicted on the environment.

In a simple circular-flow diagram, total income and total expenditure are

always equal because every transaction has a buyer and a seller

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

gasoline station to a motorist in Los Angeles

Jackie, a Canadian citizen, works only in the United States. The value of the output she produces is

included in U.S. GDP, but it is not included in U.S. GNP

Gross domestic product measures

income and expenditures

In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,

market prices

In a simple circular-flow diagram, firms

purchase resources from households

Which of the following is included in the consumption component of U.S. GDP?

purchases of natural gas by U.S. households

GDP is defined as the

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