Question 1

If an automobile manufacturer pays $200 for a car windshield,$400 for four car tires,$100 for a car CD player,and sells cars made with these parts for $20,000,then each car the automobile manufacturer sells contributes how much to GDP?
A) $19,300.
B) $20,000.
C) $20,200.
D) $20,400.
E) $20,700.

Accepted Answer

GDP is calculated based on the market value of final goods and services. The car is a final good sold for $20,000, so it contributes $20,000 to GDP. The costs of individual parts are not separately counted in GDP.

Question 2

Factories and machines are examples of
A) consumption goods.
B) non-market goods.
C) value-added goods.
D) publicly provided goods.
E) capital goods.

Accepted Answer

Factories and machines are used to produce other goods and are not consumed directly. They are therefore examples of capital goods.

Question 3

Educational services provided by public schools are
A) included in GDP at market prices.
B) excluded from GDP because they are not sold in markets.
C) excluded from GDP because they are intermediate goods.
D) excluded from GDP because they are publicly provided.
E) included in GDP at cost.

Accepted Answer

Educational services provided by public schools are included in GDP at cost because they are government services, and government spending is part of GDP.

Question 4

Intermediate goods and services are ________ production and ________ counted in GDP.
A) the end product of;are
B) the end product of;are not
C) used up in the process of;are
D) used up in the process of;are not
E) the ultimate purpose of;are

Accepted Answer

Intermediate goods and services are used up in the process of production and are not directly counted in GDP. Only final goods and services, which are sold to end consumers, are included in GDP.

Question 5

Long-lived goods used for producing other goods and services are called
A) consumption goods.
B) non-market goods.
C) value-added goods.
D) publicly provided goods.
E) capital goods.

Accepted Answer

Long-lived goods used for producing other goods and services are called capital goods. Consumption goods are goods used by households for immediate consumption, non-market goods are goods that have no price and are not traded in markets, value-added goods are goods that have value added to them during the production process, and publicly provided goods are goods provided by the government for public use.

Question 6

Capital goods are
A) long-lived goods used for producing other goods and services.
B) the ultimate purpose of production.
C) publicly provided.
D) non-market goods.
E) excluded from GDP.

Accepted Answer

Capital goods are goods used to produce other goods and services, such as machinery and equipment, and are designed to have a long life span. They are treated as part of investment spending by businesses and are included in GDP calculations. Choices B, C, D, and E do not accurately describe capital goods.

Question 7

_________ is/are the market value of final goods and services produced within a country during a given period of time.
A) GDP
B) Consumption
C) Value added
D) Transfer payments
E) Net exports

Accepted Answer

GDP (Gross Domestic Product) is the market value of all final goods and services produced within a country's borders during a specific period of time, typically a year or a quarter. It measures the strength of a country's economy and is often used as an indicator of standard of living.

Question 8

Suppose that the total production of an economy consists of 10 billion oranges and 5 billion candy bars,each orange sells for $0.20,and each candy bar sells for $1.00.What is the market value of production in this economy?
A) $1 billion.
B) $2 billion.
C) $5 billion.
D) $7 billion.
E) $11 billion.

Accepted Answer

The answer of Suppose that the total production of an...

Question 9

Gross domestic product (GDP)equals the ________ of final ________ produced within a country during a given period of time.
A) market value;goods
B) market value;services
C) market value;goods and services
D) quantity;goods
E) quantity;goods and services

Accepted Answer

GDP is a monetary measurement of the market value of all goods and services produced within a country's borders in a specific time period. Hence, the correct answer is, 'market value;goods and services.' Options A and B are incorrect as they refer to only one type of output, either goods or services, while the actual calculation considers both. Options D and E are also incorrect as GDP is measured in monetary terms, not in physical quantity.

Question 10

If Bountiful Orchard grows $100,000 worth of peaches,sells $50,000 worth of peaches to consumers,and uses the rest to make jam that is sold to consumers for $100,000,Bountiful Orchard's contribution to GDP is
A) $50,000.
B) $100,000.
C) $150,000.
D) $200,000.
E) $250,000.

Accepted Answer

The contribution to GDP is equal to the total value of goods and services produced, so we need to add up the value of the peaches sold to consumers ($50,000) and the value of the jam sold to consumers ($100,000), which gives us a total of $150,000. The value of the peaches grown but not sold is not included in GDP.

Question 11

If the Citrus Growers Association grows $1 million worth of oranges,sells $500,000 worth of oranges to consumers,and uses the rest to make orange juice that is sold to consumers for $3 million,the Citrus Growers' contribution to GDP is
A) $500,000.
B) $1,000,000.
C) $3,500,000.
D) $4,000,000.
E) $4,500,000.

Accepted Answer

The Citrus Growers Association's contribution to GDP is the total value of the goods and services it produces in a year. In this case, the total value of oranges grown is $1 million, of which $500,000 is sold directly to consumers (which is already included in GDP) and $3 million worth of orange juice is sold to consumers. Therefore, the total value of Citrus Growers Association's contribution to GDP is $1 million + $3 million = $4 million. However, since $1 million of this is already included in the $3 million value of orange juice sold, we only add the remaining $3 million to the GDP. Therefore, the answer is $3,500,000.

Question 12

The market value of final goods and services produced within a country during a period of time is called
A) guaranteed direct prices.
B) general domestic productivity.
C) government documented production.
D) gross domestic product.
E) growth determined profit.

Accepted Answer

Gross Domestic Product (GDP) is the market value of all final goods and services produced within a country in a given period of time, typically a year.

Question 13

Suppose that the total production an economy consists of 4 billion oranges and 10 billion candy bars,each orange sells for $0.25,and each candy bar sells for $0.50.What is the market value of production in this economy?
A) $0.75 billion.
B) $1 billion.
C) $4.5 billion.
D) $5 billion.
E) $6 billion.

Accepted Answer

The answer of Suppose that the total production an economy...

Question 14

The value of unpaid work by a homemaker _________ included in GDP and value of housekeeping services sold in the market _________ included in GDP.
A) is;is not
B) is;is
C) is not;is not
D) is not;is
E) is sometimes;is

Accepted Answer

According to the traditional definition of GDP, only market transactions are included in the calculation. Unpaid work by a homemaker is not included in GDP because there is no market exchange involved. However, the value of housekeeping services sold in the market is included in GDP because it is a market transaction. Therefore, option D is the correct choice.

Question 15

The value of unpaid childcare services provided by a stay-at-home dad ________ included in GDP and the value of daycare services purchased from a licenced childcare provider _______ included in GDP.
A) is;is not
B) is;is
C) is not;is not
D) is not;is
E) is sometimes;is

Accepted Answer

The value of unpaid childcare services provided by a stay-at-home dad is not included in GDP because GDP only considers the value of goods and services that are exchanged in the marketplace. However, the value of daycare services purchased from a licensed childcare provider is included in GDP because it represents a monetary transaction in the market. Therefore, the correct answer is D.

Question 16

Final goods and services are _______ production and ________ counted in GDP.
A) the end product of;are
B) the end product of;are not
C) used up in the process of;are
D) used up in the process of;are not
E) transformed in;are not

Accepted Answer

Final goods and services are the end products of production and are counted in GDP because they represent the value of goods and services produced for consumption, investment, government, and net exports.

Question 17

If a pizza maker pays $1 for tomatoes,$1 for cheese,$2 for sausage,and sells the pizza made with these ingredients for $7,then each pizza sold contributes how much to GDP?
A) $3.
B) $4.
C) $7.
D) $9.
E) $11.

Accepted Answer

The contribution to GDP is the final selling price of the pizza, which is $7. The costs of the ingredients are intermediate goods and are not subtracted when calculating GDP.

Question 18

National defence services provided by the military are
A) included in GDP at market prices.
B) included in GDP at cost.
C) excluded from GDP because they are not sold in markets.
D) excluded from GDP because they are intermediate goods.
E) excluded from GDP because they are publicly provided.

Accepted Answer

National defense services are included in GDP at cost because they are government services that are not sold in markets but are valued at their cost of production.

Question 19

A drawback of using market values to aggregate the quantities of goods and services produced in an economy is that
A) higher-priced items count more.
B) GDP increases when not all goods are produced in greater quantities.
C) market prices generally reflect the economic benefit consumers expect to receive from an item.
D) not all economically valuable goods and services are bought and sold in markets.
E) lower-priced items count morE.

Accepted Answer

Not all economically valuable goods and services are bought and sold in markets, so using market values to aggregate the quantities of goods and services produced in an economy may not fully capture all economic activity. For example, unpaid work such as caring for children or the elderly is not included in GDP calculations.

Question 20

When economists use market values to aggregate output,they sum the
A) number of items produced.
B) quantity of items produced.
C) price multiplied by the quantity of items produced.
D) social value of items produced.
E) amount of each item produced.

Accepted Answer

When economists use market values to aggregate output, they use the price multiplied by the quantity of items produced. This is because in a market economy, the price of a good or service reflects its value to society. Therefore, by multiplying the price by the quantity produced, economists can get a measure of the total value of output in an economy.

Quiz 5: Spending and Output in the Short Run

If an automobile manufacturer pays $200 for a car windshield,$400 for four car tires,$100 for a car CD player,and sells cars made with these parts for $20,000,then each car the automobile manufacturer sells contributes how much to GDP?

Factories and machines are examples of

Educational services provided by public schools are

Intermediate goods and services are production and counted in GDP.

Long-lived goods used for producing other goods and services are called

Capital goods are

_________ is/are the market value of final goods and services produced within a country during a given period of time.

Suppose that the total production of an economy consists of 10 billion oranges and 5 billion candy bars,each orange sells for $0.20,and each candy bar sells for $1.00.What is the market value of production in this economy?

Gross domestic product (GDP) equals the of final produced within a country during a given period of time.

If Bountiful Orchard grows $100,000 worth of peaches,sells $50,000 worth of peaches to consumers,and uses the rest to make jam that is sold to consumers for $100,000,Bountiful Orchard's contribution to GDP is

If the Citrus Growers Association grows $1 million worth of oranges,sells $500,000 worth of oranges to consumers,and uses the rest to make orange juice that is sold to consumers for $3 million,the Citrus Growers' contribution to GDP is

The market value of final goods and services produced within a country during a period of time is called

Suppose that the total production an economy consists of 4 billion oranges and 10 billion candy bars,each orange sells for $0.25,and each candy bar sells for $0.50.What is the market value of production in this economy?

The value of unpaid work by a homemaker _ included in GDP and value of housekeeping services sold in the market _ included in GDP.

The value of unpaid childcare services provided by a stay-at-home dad __ included in GDP and the value of daycare services purchased from a licenced childcare provider _ included in GDP.

Final goods and services are _ production and __ counted in GDP.

If a pizza maker pays $1 for tomatoes,$1 for cheese,$2 for sausage,and sells the pizza made with these ingredients for $7,then each pizza sold contributes how much to GDP?

National defence services provided by the military are

A drawback of using market values to aggregate the quantities of goods and services produced in an economy is that

When economists use market values to aggregate output,they sum the