Question 1

A stove is produced by a firm in 2014, added to the firm's inventory in 2014, and sold to a household in 2015. It follows that

Accepted Answer

The answer of A stove is produced by a firm...

Question 2

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 made by the Carters for their son's fees and tuition can be considered as consumption of services as they are paying for a service provided by the university.

Question 3

The local car dealership has an increase in inventory of 100 newly produced cars in 2015. In 2016, it sells all 100 cars. Which of the following statements is correct?

Accepted Answer

The answer of The local car dealership has an increase...

Question 4

During the third quarter of this year a firm produces consumer goods and adds some of those goods to its inventory. During the fourth quarter of this year, the firm sells the goods at a retail outlet, with the result that the value of its inventory at the end of the fourth quarter is smaller than the value of its inventory at the end of the third quarter. These actions affect which components) of fourth-quarter GDP?

Accepted Answer

The answer of During the third quarter of this year...

Question 5

The value of goods added to a firm's inventory in a certain year is treated as

Accepted Answer

Adding goods to inventory is considered investment because it represents the purchase of goods that will ultimately be sold in the future. GDP aims to measure the value of the economy's production in a given year, and the value of the goods added to inventory in that year represents a part of that production.

Question 6

Which of the following is not included in the investment component of GDP?

Accepted Answer

The answer of Which of the following is not included...

Question 7

onsumer goods that are produced, go into inventory, and are not sold during the current period are

Accepted Answer

Goods that are produced and go into inventory are not counted as final consumption or intermediate goods. Instead, they are counted as inventory investment, which is a component of GDP. However, they are only included in GDP when they are produced, not when they are sold or remain unsold.

Question 8

GA wind farm in Iowa buys a large turbine generator from a Swedish-owned factory located in Connecticut that uses workers who live in Connecticut. As a result,

Accepted Answer

The answer of GA wind farm in Iowa buys a...

Question 9

A good is produced by a firm in 2009, added to the firm's inventory in 2010, and sold to a household in 2010. As a result, on net,

Accepted Answer

The answer of A good is produced by a firm...

Question 10

A Minnesota farmer buys a new tractor made in Iowa by a German company. As a result,

Accepted Answer

The answer of A Minnesota farmer buys a new tractor...

Question 11

Rocket Energy Drink Company buys sugar to produce energy drinks. At the end of a quarter both its inventory of sugar and its inventory of energy drinks has increased. Investment for the quarter will include

Accepted Answer

The answer of Rocket Energy Drink Company buys sugar to...

Question 12

A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. In which quarters) doesdo) these transactions raise consumption?

Accepted Answer

The production of the sweatshirts in the first quarter does not raise consumption; it only adds to inventory. It is in the second quarter when the firm sells the sweatshirts to consumers that consumption is raised. Therefore, only the second quarter transaction raises consumption.

Question 13

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarters) doesdo) these transactions raise investment?

Accepted Answer

The answer of A U.S. firm produces nail guns in...

Question 14

A manufacturer produces 1 million televisions in the first quarter of the year. It sells 900,000 of them before the end of the first quarter, and holds the others in its warehouse. How will the 100,000 unsold televisions be treated in the GDP statistics?

Accepted Answer

The unsold televisions will be counted as a change in inventory in the first quarter and will be included in first-quarter GDP. This is because an unsold item in inventory represents an output that has been produced but not yet sold or consumed, and therefore contributes to current production and current GDP.

Question 15

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

Item 1) (estimated rental value of owner-occupied housing) is not a market transaction and therefore not included in GDP. However, it is included in the calculation of "imputed rent," which is a component of the consumption component of GDP. Item 2) (purchases of newly-constructed homes) is a market transaction and is included in the investment component of GDP. Therefore, option B is the correct answer.

Question 16

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

Accepted Answer

Investment component of GDP includes purchases of business capital, such as equipment, machinery, and computers. John's law firm buying him a new computer falls under this category. The other options are personal consumption expenditure and financial investment, respectively, and not a part of the investment component of GDP.

Question 17

A U.S. publisher purchases new computers that were manufactured in the U.S. This purchase by itself makes

Accepted Answer

The purchase of new computers by the publisher counts as investment in the national accounts, as it is a purchase of a durable good that will be used to produce other goods and services. Additionally, because the computers were manufactured in the U.S., the purchase contributes to U.S. GDP, as the value of the computers produced domestically is included in GDP.

Question 18

Which of the following items is included in GDP?

Accepted Answer

GDP (Gross Domestic Product) measures the total value of all final goods and services produced within a country's borders in a given period of time.

Stocks and bonds (A) are not included in GDP because they are not goods or services but financial instruments.

Used goods (B) are not included in GDP because they were already counted in GDP when they were first produced and sold as new goods.

Services (C) such as those performed by doctors, lawyers, and hairdressers are included in GDP because they are final goods produced within the country's borders.

Therefore, the correct answer is C.

Question 19

During the current quarter, a firm produces consumer goods and adds some of those goods to its inventory rather than selling them. The value of the goods added to inventory is

Accepted Answer

Goods added to inventory are considered investment because they increase the stock of physical capital, which is a component of investment in GDP accounting. Therefore, it is included in the current quarter GDP as investment.

Question 20

A U.S. firm produces nail guns in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the nail guns to a U.S. construction company. In which quarters) is are) GDP higher?

Accepted Answer