Question 1

Which of the following is included in the investment component of GDP?

Accepted Answer

The investment component of GDP includes all three options: households' purchases of newly constructed homes, net additions to firms' inventories, and firms' purchases of capital equipment. These represent investments made by households and firms in productive assets that are expected to generate future returns.

Question 2

Which of the following examples of household spending is categorized as investment rather than consumption?

Accepted Answer

Expenditures on new housing are categorized as investment as they are purchases of a long-term asset that is expected to appreciate in value and provide future benefits. Expenditures on durable goods and intangible items are categorized as consumption as they are purchased for immediate use and do not provide long-term benefits.

Question 3

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

Accepted Answer

The payments for the son's fees and tuition are considered consumption of services as education is a service provided by the university.

Question 4

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

Accepted Answer

The answer of Which of the following is included in...

Question 5

Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?

Accepted Answer

The estimated rental value of owner-occupied housing (item 1) is not an actual purchase of a good or service, so it is not included in GDP. However, it is still included in the calculation of the consumption component of GDP since it represents a benefit that households receive from their housing. Purchases of newly-constructed homes (item 2) are included in the investment component of GDP since they represent new investment in a physical asset.

Question 6

Which of the following is included in the investment component of GDP?

Accepted Answer

Investment component of GDP includes spending on new business equipment such as power tools but not spending on stocks and bonds. Spending on stocks and bonds are not considered investment in the production of goods and services.

Question 7

Which of the following is included in the investment component of GDP?

Accepted Answer

The answer of Which of the following is included in...

Question 8

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

Accepted Answer

The purchase of a new house is categorized as investment because it represents the acquisition of a long-term asset that is expected to generate future returns, such as rental income or capital gains upon its sale. In contrast, spending on education, the purchase of stocks and bonds, and the purchase of durable goods are considered consumption expenditures because they are used up in the current period and do not generate future returns.

Question 9

If you buy a burger and fries at your favorite fast food restaurant,

Accepted Answer

The answer of If you buy a burger and fries...

Question 10

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

Accepted Answer

Economists use the term "investment" to refer to the purchase of goods that will be used in the future to produce more goods and services. This can include buying machinery, equipment or even education and training, which can improve future productivity and output.

Question 11

Which of the following is included in the investment component of GDP?

Accepted Answer

All of the options - spending to build new houses, spending to build new factories, and spending on business equipment such as welding equipment - are included in the investment component of GDP. This component represents business spending on goods and services that are utilized in future production. It also includes changes in inventory levels.

Question 12

Which of the following is an example of a durable good?

Accepted Answer

A refrigerator is a long-lasting item that is meant to be used for many years, making it a durable good. The other options are either consumable goods or not meant for long-term use.

Question 13

Household spending on education is included in

Accepted Answer

Household spending on education is considered a long-term investment in human capital, which is why it could fit in the investment category. However, since it provides an immediate benefit of acquiring knowledge and skills, it is also considered consumption. Therefore, although it is debatable, household spending on education is typically included in the consumption component of GDP.

Question 14

John buys a used car for $5,400 and spends $600 on new parts, made in the U.S., to fix the car. The end result of these two transactions is

Accepted Answer

The answer of John buys a used car for $5,400...

Question 15

Which of the following is not an example of a durable good?

Accepted Answer

A durable good is a product that lasts for an extended period, typically over three years, without significant deterioration in its condition, and can be used repeatedly or continuously. A business suit is not a durable good as it is typically worn in a professional setting and does not last for an extended period, compared to other durable goods like refrigerators, automobiles, and furnaces.

Question 16

When economists refer to intangible items, they are referring to such things as

Accepted Answer

The answer of When economists refer to intangible items, they...

Question 17

For the purpose of calculating GDP, investment is spending on

Accepted Answer

Investment, for the purpose of calculating GDP, includes spending on capital equipment, inventories, and structures, including household purchases of new housing. It does not include spending on financial assets such as stocks and bonds, which fall under the category of financial investment rather than physical investment in the economy.

Question 18

Household spending on education is counted in which component or subcomponent of GDP?

Accepted Answer

Household spending on education falls under the category of consumption of services in GDP.

Question 19

Which of the following is not an example of a nondurable good?

Accepted Answer

A nondurable good is a good that is consumed or used up within a short period of time, typically less than three years. A loaf of bread, a pound of bacon, and even a pair of jeans can be considered nondurable goods since they are all used up or worn out relatively quickly. However, a microwave is a durable good since it is expected to last for several years.

Question 20

Which of the following is included in the consumption component of GDP?

Accepted Answer

The consumption component of GDP includes all household purchases, including appliances, medical care, and food, among other goods and services.

Quiz 5: Measuring a Nations Income

Which of the following is included in the investment component of GDP?

Which of the following examples of household spending is categorized as investment rather than consumption?

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

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

Consider two items that might be included in GDP: (1) the estimated rental value of owner-occupied housing and (2) purchases of newly-constructed homes. How are these two items accounted for when GDP is calculated?

Which of the following is included in the investment component of GDP?

Which of the following is included in the investment component of GDP?

Which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?

If you buy a burger and fries at your favorite fast food restaurant,

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

Which of the following is included in the investment component of GDP?

Which of the following is an example of a durable good?

Household spending on education is included in

John buys a used car for $5,400 and spends $600 on new parts, made in the U.S., to fix the car. The end result of these two transactions is

Which of the following is not an example of a durable good?

When economists refer to intangible items, they are referring to such things as

For the purpose of calculating GDP, investment is spending on

Household spending on education is counted in which component or subcomponent of GDP?

Which of the following is not an example of a nondurable good?

Which of the following is included in the consumption component of GDP?