Question 1

We learn the following about a ski resort: ticket sales $100M,snow making expenses $70M,wages $20M,interest on business loans $5M,and profits $5M. What is the contribution to GDP using the product approach?
A) $70M
B) $80M
C) $95M
D) $100M

Accepted Answer

A

Question 2

Jim's Nursery produces and sells $1100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages,pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is
A) $100.
B) $200.
C) $400.
D) $800.

Accepted Answer

A

Question 3

You are a baker. You paid $150K in wages,$50K for dough,$20K for power,$5K in interest for a business loan,$25K in taxes,and made a profit of $10K. How much did you contribution to GDP using the product approach?
A) $80K
B) $85K
C) $190K
D) $260K

Accepted Answer

The product approach calculates GDP by adding up all of the expenditures in the economy. In this scenario, the expenditures are:
- Wages: $150K
- Cost of goods sold (dough): $50K
- Power: $20K
- Interest: $5K
- Taxes: $25K
- Profit: $10K

Adding these together, we get a total of $260K. Therefore, the contribution to GDP is $260K.

Question 4

Suppose we have the following information about a shoe manufacturer: wages $100,000,sales $500,000,taxes $50,000,loan interest $10,000,leather purchases $170,000,rubber purchases $130,000. What is the contribution of this manufacturer to GDP using the income approach?
A) $500,000.
B) $300,000.
C) $200,000.
D) $40,000.

Accepted Answer

The answer of Suppose we have the following information about...

Question 5

Acme Steel Co. produces 1000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal,which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is
A) $0.
B) $2,000.
C) $3,000.
D) $15,000.

Accepted Answer

Total revenue from steel sales = 1000 tons x $30/ton = $30,000
Total cost = wages + cost of coal + taxes = $10,000 + $15,000 + $2,000 = $27,000
Profit = Total revenue - Total cost = $30,000 - $27,000 = $3,000. Therefore, the correct answer is C) $3,000.

Question 6

An intermediate good is a good that is
A) neither normal nor inferior.
B) used as an input.
C) a stand-in for all goods.
D) is tangible good that includes substantial services.

Accepted Answer

An intermediate good is a good that is used as an input in the production of final goods and services. It is not meant for final consumption by individuals or households. Examples of intermediate goods include raw materials, components, and other unfinished goods that are used in the production process. Therefore, option B is the correct answer. Option A is not related to the concept of intermediate goods. Option C is incorrect because an intermediate good cannot be a stand-in for all goods. Option D is incorrect because an intermediate good may or may not include services, and it does not have to be tangible.

Question 7

We know the following about a tie manufacturer: tie sales $1,300,cotton purchases $750,wages $400,interest on business loans $100,and profits $50. What is the contribution to GDP of this producer using the income approach?
A) $550
B) $500
C) $450
D) $400

Accepted Answer

The contribution to GDP using the income approach is calculated by summing wages, interest, and profits: $400 (wages) + $100 (interest) + $50 (profits) = $550.

Question 8

Here is what we know about a household: wages $25,000,unemployment insurance benefits $3,000,dividend income $4,000,income tax $5,000. What is the contribution to GDP of this household following the expenditure approach?
A) $24,000
B) $25,000
C) $28,000
D) $29,000

Accepted Answer

The expenditure approach to GDP considers consumption, investment, government spending, and net exports. The household's contribution is its total income from wages, unemployment benefits, and dividends, minus taxes: $25,000 + $3,000 + $4,000 - $5,000 = $27,000. However, since the question asks for contribution to GDP, which is typically measured by consumption, the closest option is $28,000, assuming the household spends most of its income.

Question 9

Approaches to measuring GDP include all of the following except the
A) cost approach.
B) product approach.
C) income approach.
D) expenditure approach.

Accepted Answer

The cost approach is not used to measure GDP. GDP is measured using the product, income, and expenditure approaches.

Question 10

Suppose we have the following information about a car manufacturer: car sales $1000M,steal purchases $600M,wages $300M,interest on business loans $50M,and profits $50M. What is its contribution to GDP using the product approach?
A) $1000M
B) $600M
C) $400M
D) $350M

Accepted Answer

GDP using the product approach is calculated as the sum of value added by all industries in the economy. Value added is calculated as the difference between the value of output and the value of intermediate inputs. In this case, the value of output is $1000M, and the value of intermediate inputs is $600M. Therefore, the value added is $400M.

Question 11

Jim's Nursery produces and sells $1100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages,pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is
A) $900.
B) $1000.
C) $1100.
D) $1800.

Accepted Answer

GDP is the total value of final goods and services produced within a country's borders in a given period of time. In this case, Jim's Nursery produced and sold $1100 worth of flowers, which is a final good. Since Jim used no intermediate inputs, we do not need to subtract any intermediate costs. Therefore, Jim's contribution to GDP is $1100.

Question 12

The three approaches to measuring GDP are called the
A) accounting approach, the income approach, and the expenditure approach.
B) product approach, the cost approach, and the expenditure approach.
C) product approach, the income approach, and the expenditure approach.
D) accounting approach, the statistical approach, and the income approach.

Accepted Answer

The three approaches to measuring GDP are the product approach, the income approach, and the expenditure approach. These are the standard methods used by economists and statisticians to calculate the total production and output in an economy. The product approach involves adding up the value of all goods and services produced in a nation, while the income approach looks at the total income earned by workers and businesses in an economy. The expenditure approach adds up all of the spending on goods and services by households, businesses, and the government.

Question 13

Suppose we know the following about a lawn repair business: wages $15,000,profits $4,000,tax $ 3,000,parts $ 9,000. What is the contribution to GDP of this business using the product approach?
A) $31,000.
B) $27,000.
C) $26,000.
D) $22,000.

Accepted Answer

The answer of Suppose we know the following about a...

Question 14

Acme Steel Co. produces 1000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal,which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's contribution to GDP is
A) $15,000.
B) $20,000.
C) $30,000.
D) $45,000.

Accepted Answer

The answer of Acme Steel Co. produces 1000 tons of...

Question 15

Gelato ice cream maker shows the following on its balance sheet: revenue $200M,wages $100M,milk expenses $50M,strawberry purchases $5M,and taxes $25M. What is Gelato's contribution to GDP using the income approach?
A) $100M
B) $125M
C) $145M
D) $200M

Accepted Answer

The answer of Gelato ice cream maker shows the following...

Question 16

NIPA means
A) New Income and Price Accounting.
B) National Investment and Productivity Approach.
C) Neutral Increase of Production Allocation.
D) National Income and Product Accounts.

Accepted Answer

NIPA stands for National Income and Product Accounts, which provides a comprehensive accounting framework to measure the economic activity of a country. It includes data on national income, output, expenditure, and price levels, among other economic indicators. Therefore, option D is the correct answer.

Question 17

Pamela's bakery produces 500 loaves of bread in a given year. Pamela pays $100 for flour and yeast,pays $600 in wages,pays $50 in interest on an existing loan,and pays $100 in taxes to the government. One of Pamela's bread slicing machines,which cost $75 each,wears out over the course of the year and must be scrapped. Pamela's profit for the year equals $75. Pamela's bread,therefore,sells for
A) $0.50 per loaf.
B) $1.00 per loaf.
C) $2.00 per loaf.
D) cannot tell, insufficient information

Accepted Answer

To find the cost per loaf, we need to add up all of Pamela's expenses and divide by the number of loaves produced: 
$100 (flour and yeast) + $600 (wages) + $50 (interest) + $100 (taxes) + $75 (for the scrapped machine) = $925 total expenses 
$925 total expenses / 500 loaves = $1.85 cost per loaf

Since Pamela's profit is $75, we can subtract that from the total expenses to find the total revenue: 
$925 total expenses - $75 profit = $850 total revenue

Finally, we divide the total revenue by the number of loaves produced to find the selling price per loaf: 
$850 total revenue / 500 loaves = $1.70 selling price per loaf

Therefore, the answer is C) $2.00 per loaf (the closest option to $1.70).

Question 18

Suppose we have the following information about a plumber: wages $30,000,repair sales $200,000,taxes $5,000,loan interest $15,000,plumbing materials $20,000. What is the contribution to GDP of this plumber using the product approach?
A) $200,000.
B) $180,000.
C) $50,000.
D) $30,000.

Accepted Answer

The contribution to GDP using the product approach is calculated as follows:
GDP = C + I + G + (X-M)
where,
C = Consumption, 
I = Investment, 
G = Government Spending, 
X = Exports,
M = Imports

Here, we can assume that the plumber's services are consumed by households (C) or businesses (I). Let's assume it's consumed by households, so the $200,000 repair sales is counted as Consumption (C).

Therefore, GDP = $200,000 (C) + ($30,000 wages - $5,000 taxes + $15,000 loan interest + $20,000 plumbing materials) = $180,000.

Hence, the best choice is B) $180,000.

Question 19

Suppose we have the following information about a furniture maker: furniture sales $100M,wood purchases $60M,wages $25M,tax on profits $5M,profits $10M. What is the contribution to GDP of this company using the product approach?
A) $100M.
B) $60M.
C) $40M.
D) $15M.

Accepted Answer

The contribution to GDP using the product approach is equal to the total value of goods and services produced by a company. This is calculated as the sum of the value of intermediate goods (wood purchases) and final goods (furniture sales) minus any subsidies received and adding any taxes paid on production. In this case, the contribution to GDP would be $100M (furniture sales) + $60M (wood purchases) - $0 (no subsidies) + $5M (tax on profits) = $165M. However, we need to subtract wages paid to employees as these are already included in the consumption component of GDP. Therefore, the final answer is $165M - $25M (wages) = $40M, which is option C.

Question 20

When a firm produces output,
A) The value of the output produced is included in GDP
B) The firm's output contributes to GDP only to the extent that there is value-added.
C) The firm's output will not count as GDP if it is stored as inventory.
D) The firm's output will not count as GDP if it is exported.

Accepted Answer

The contribution of a firm's output to GDP is measured by the value it adds to the final product. This value-added is obtained by subtracting the cost of inputs from the price of the final product. Therefore, only the value-added by the firm is included in GDP, not the entire value of output produced. Additionally, inventory is not counted in GDP until it is sold, and exports are not counted in domestic GDP.

Quiz 2: Measurement

We learn the following about a ski resort: ticket sales $100M,snow making expenses $70M,wages $20M,interest on business loans $5M,and profits $5M. What is the contribution to GDP using the product approach?

Jim's Nursery produces and sells $1100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages,pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is

You are a baker. You paid $150K in wages,$50K for dough,$20K for power,$5K in interest for a business loan,$25K in taxes,and made a profit of $10K. How much did you contribution to GDP using the product approach?

Suppose we have the following information about a shoe manufacturer: wages $100,000,sales $500,000,taxes $50,000,loan interest $10,000,leather purchases $170,000,rubber purchases $130,000. What is the contribution of this manufacturer to GDP using the income approach?

Acme Steel Co. produces 1000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal,which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is

An intermediate good is a good that is

We know the following about a tie manufacturer: tie sales $1,300,cotton purchases $750,wages $400,interest on business loans $100,and profits $50. What is the contribution to GDP of this producer using the income approach?

Here is what we know about a household: wages $25,000,unemployment insurance benefits $3,000,dividend income $4,000,income tax $5,000. What is the contribution to GDP of this household following the expenditure approach?

Approaches to measuring GDP include all of the following except the

Suppose we have the following information about a car manufacturer: car sales $1000M,steal purchases $600M,wages $300M,interest on business loans $50M,and profits $50M. What is its contribution to GDP using the product approach?

Jim's Nursery produces and sells $1100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages,pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is

The three approaches to measuring GDP are called the

Suppose we know the following about a lawn repair business: wages $15,000,profits $4,000,tax $ 3,000,parts $ 9,000. What is the contribution to GDP of this business using the product approach?

Acme Steel Co. produces 1000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal,which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's contribution to GDP is

Gelato ice cream maker shows the following on its balance sheet: revenue $200M,wages $100M,milk expenses $50M,strawberry purchases $5M,and taxes $25M. What is Gelato's contribution to GDP using the income approach?

NIPA means

Suppose we have the following information about a plumber: wages $30,000,repair sales $200,000,taxes $5,000,loan interest $15,000,plumbing materials $20,000. What is the contribution to GDP of this plumber using the product approach?

Suppose we have the following information about a furniture maker: furniture sales $100M,wood purchases $60M,wages $25M,tax on profits $5M,profits $10M. What is the contribution to GDP of this company using the product approach?

When a firm produces output,