Question 1

Darin grows and sells marijuana to Jennifer.Thomas is an organic farmer who sells broccoli to Jennifer.Marijuana is an illegal good and broccoli is a legal good.Assume that if Jennifer marries either,they give her what they use to sell her.Which of the following statements is consistent with the way GDP is computed?

Accepted Answer

GDP is a measure of legal economic activity. Since the sale of marijuana is illegal, it is not included in GDP. Therefore, if Jennifer marries Darin and he gives her marijuana as a gift, it would not be a part of GDP. However, if she marries Thomas and he gives her broccoli as a gift, it would be a part of GDP because it is a legal good. Therefore, if Jennifer marries Thomas, GDP will not fall as his contribution to the economy is legal. But if she marries Darin, GDP will fall because his contribution is illegal and not included in the GDP.

Question 2

Sam,an American citizen,prepares meals for his family at home.Ellen,a Canadian citizen,commutes to the U.S.to help prepare meals at a restaurant in Idaho.Whose value of services preparing meals is included in U.S.GDP?

Accepted Answer

The answer of Sam,an American citizen,prepares meals for his family...

Question 3

Most goods and services produced at home

Accepted Answer

The answer of Most goods and services produced at home
...

Question 4

A farmer sells $50,000 of apples to individuals who take them home to eat and $75,000 of apples to a company that uses them all to produce cider.How much of the farmer's sales will be included as apples in GDP?

Accepted Answer

The answer of A farmer sells $50,000 of apples to...

Question 5

Ralph pays someone to mow his lawn,while Mike mows his own lawn.Regarding these two practices,which of the following statements is correct?

Accepted Answer

Only Ralph's payments are included in GDP because GDP only counts the value of goods and services that are exchanged for money in the marketplace. Mike's mowing services, which are not exchanged for money, are not included in GDP.

Question 6

If a state made a previously-illegal activity,such as gambling or prostitution,legal,then,other things equal,GDP

Accepted Answer

Legalizing previously-illegal activities such as gambling or prostitution increases economic activity, generates tax revenue and employment opportunities, leading to an increase in GDP.

Question 7

GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because

Accepted Answer

GDP only includes items that are produced and sold through official channels, making it difficult to measure items that are produced and sold illegally or produced and consumed at home. It is not a matter of the quality of the items, government preference, or tax reporting.

Question 8

Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself.Which of the following is correct? The value of changing the oil is

Accepted Answer

The value of changing the oil is only included in GDP if Susan pays Speedy Lube to change it. If she changes it herself, it is not included in GDP as it is not a transaction in a market.

Question 9

Over time,people have come to rely more on market-produced goods and services and less on goods and services they produce for themselves.For example,busy people with high incomes,rather than cleaning their own houses,hire people to clean their houses.By itself,this change has

Accepted Answer

The reliance on market-produced goods and services has led to an increase in the production and consumption of these goods and services, resulting in a rise in measured GDP. As more people hire others to clean their houses, for example, there is a greater demand for cleaning services, which increases the market value of these services and contributes to higher GDP.

Question 10

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

Accepted Answer

Gasoline is considered a final good when it is sold to a consumer, such as a motorist in Los Angeles, for their personal use. Options A and B involve sales to businesses, which would likely use the gasoline as an intermediate good to produce other goods or services.

Question 11

Estimates of the values of which of the following non-market goods or services are included in GDP?

Accepted Answer

The estimated rental value of owner-occupied homes is included in GDP as a measure of housing services. A and B are not included as they are non-market goods or services that do not have a market value.

Question 12

Rachel babysits for her sister for no pay.When she babysits for someone else she charges $8 an hour.When is Rachel's babysitting included in GDP?

Accepted Answer

Only paid services are included in GDP. Therefore, Rachel's babysitting for her sister is not included in GDP as it is not a market transaction. Only when she babysits for someone else and charges $8 an hour, it is considered as a paid service and is included in GDP.

Question 13

Grapes are considered intermediate goods

Accepted Answer

The answer of Grapes are considered intermediate goods
...

Question 14

Which of the following is not included in GDP?

Accepted Answer

Only goods and services that are exchanged for money in the current period and produced within the country's borders are included in GDP. Carrots grown in your garden and consumed by your family are not sold in the market and hence are not included in GDP.

Question 15

Over the last few decades,Americans have chosen to cook less at home and eat more at restaurants.This change in behavior,by itself,has

Accepted Answer

This change in behavior has increased measured GDP by the value added by the restaurant's preparation and serving of the meals. As more people dine out, the restaurant industry grows and contributes to the economy by creating jobs and generating revenue. The value added by the restaurants is included in the GDP calculation, therefore, there is an increase in the measured GDP.

Question 16

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

Accepted Answer

Spots Inc.'s ink is an intermediate good as it is not the final product that is sold to the end consumer. Instead, it is further processed and used as an input in the production of pens by Write on Target.

Question 17

Which of the following is included in GDP?

Accepted Answer

Only goods and services that are produced legally and sold through legal channels are included in GDP. Medical marijuana purchased from a government-run pharmacy by a glaucoma patient is a legal transaction and the production and sale of medical marijuana is included in GDP. Recreational marijuana purchased from a drug dealer or produced and consumed illegally is not included in GDP.

Question 18

Ryan lives in an apartment where he pays $7,000 a year in rent.Alexis lives in a house that could be rented for $14,000 a year.How much do these housing services contribute to GDP?

Accepted Answer

Both housing services are part of GDP, as they are a consumption expenditure, and contribute a total of $21,000 to GDP ($7,000 + $14,000).

Question 19

The purchase of rice produced this period is included in GDP if the rice is

Accepted Answer

The answer of The purchase of rice produced this period...

Question 20

A professional gambler moves from a state where gambling is illegal to a state where gambling is legal.Most of his income was,and continues to be,from gambling.His move

Accepted Answer

The answer of A professional gambler moves from a state...

Quiz 15: Measuring a Nations Income