Review: GDP Concepts
an underground economy involves all of the following except...
buying and selling of goods and services by obtaining a permit from the government
value added equals the market price of the firm's product minus...
the price of intermediate goods
Refer to the table. Consider the data above (in billions of dollars) for an economy: Gross domestic product (in billions of dollars) for this economy equals _____.
$1,200
CANOES−R−US makes canoes. It buys the shell of the canoe from another local firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1,200. The value added of CANOES−R−US for each canoe equals _____.
$500
In 2011, Kendall Ford, an automobile dealership, spent $20,000 on a new car lift for its repair shop, $2,000 on a new copy machine for its sales division, and $600,000 on Ford Motor company stock. Unsold cars and trucks were valued at $400,000 on January 1, 2018 and unsold cars and trucks were valued at $900,000 on December 31, 2018. What is Kendall Ford's total investment spending in 2018?
$522,000
Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals
$6,400
real GDP for Tyrovia for 2018 using 2009 as the base year equals _____.
$690
Refer to the table above showing three stages of production of an automobile. The value added by the automobile dealer equals _____.
$7,000
Suppose that a simple economy produces only four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume all of the coffee beans are used in the production of the coffee drinks. Using the information in the above table, nominal GDP for this simple economy equals...
$8,750
investment, as defined by economists, would not include which of the following?
Ford buys U.S. government bonds
Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?
GDP will decrease
which of the following goods is directly counted in GDP?
a 12-inch Subway sandwich purchased by a student
an example of business fixed investment spending is...
a purchase of a computer by an accounting firm
Which of the following are likely to increase the measured level of GDP and which are likely to reduce it? a) when the number of people working outside the home decreases, the measured level of GDP _____ b) when there is a sharp decrease in the crime rate, the measured level of GDP _____ c) if lower tax rates cause fewer people to hide the income they earn, the measured GDP _____
a) decreases b) may increase or decrease c) increases
Indicate whether each of the following is a final good, an intermediate good, or neither. a) coffee beans purchased by a coffee shop b) one share of Google stock c) a new pick-up truck purchased by a consumer d) a new house purchased by a family
a) intermediate good b) neither c) final good d) final good
investment, as defined by economists, would include the purchase of a...
computer by an accounting firm
the purchase of a new automobile is included in...
consumption expenditures on durable goods
inventories are part of investment and therefore included in GDP because...
firms produce goods, however sometimes the goods may be unsold at the time GDP is computed
which of the following is not an example of a transfer payment?
health insurance payments to an army private
GDP is an imperfect measure of economic well-being because it fails to measure what types of production?
household production and the underground economy
legalizing all forms of illegal activities...
increases GDP and reduces the size of the underground economy
the purchase of a new house is included in...
investment expenditures
which of the following would be directly counted in GDP in 2018?
kitchen cabinets purchased from Home Depot in 2018 to be installed in a house built in 1997
some countries have larger underground economies than do other countries, because...
of government policies that are retarding economic growth
gross domestic product (GDP) is defined as...
the market value of all final goods and services produced in a country during a period of time
gross domestic product is calculated by summing up...
the total market value of final goods and services produced in the economy during a period of time
even if GDP included these types of production, why would it still be an imperfect measure of economic well-being?
the value of leisure is not included in GDP, GDP is not adjusted for crime or other social problems, and GDP is not adjusted for pollution and it does not account for unequal income distribution
Real GDP per capita is often used as a measure of generalwell-being. While increases in real GDP often do lead to increases in thewell-being of thepopulation, why is real GDP not a perfect measure ofwell-being?
the value of leisure is not included, the costs of pollution are not included, and GDP does not include crime rates or income distribution
suppose, in 2018, you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2018?
the value of the services of the real estate agent
transfer payments are NOT included in GDP calculations because
transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service
which of the following transactions represents the purchase of a final good?
your father buys a new John Deere riding lawn mower
