Question 1

Company X sells leather to company Y for $60,000.Company Y uses the leather to make shoes,selling them to consumers for $180,000.The total contribution to gross domestic product (GDP)is
A) $240,000.
B) $180,000.
C) $60,000.
D) $120,000.
E) $30,000.

Accepted Answer

The contribution to GDP is the final sale of goods and services, which is $180,000 from the sale of shoes to consumers. The intermediate sale of leather is not counted separately in GDP to avoid double counting.

Question 2

Which of the following represents the largest share of U.S.gross domestic product (GDP)?
A) services
B) agricultural production
C) the production of manufactured goods
D) the production of physical goods
E) the production of capital goods

Accepted Answer

According to the Bureau of Economic Analysis, services accounted for approximately 80% of the U.S. GDP in 2020. This includes industries such as healthcare, finance, and retail. Agricultural production, the production of manufactured goods, and the production of physical goods all make up smaller shares of the GDP. The production of capital goods refers to machinery and other equipment used in the production process, and is included in the overall category of goods-producing industries.

Question 3

For the following questions, suppose a country has the following quarterly growth data for the last three years: 
-The country's long-run average growth rate is 3 percent.How many quarters were spent in recession?
A) six
B) five
C) four
D) three
E) two

Accepted Answer

A recession is typically defined as two consecutive quarters of negative growth.

Question 4

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the following questions: 
-Assuming these are the only two goods produced in the economy,what is the value of the gross domestic product (GDP)?
A) $110 million
B) $750 million
C) $2 million
D) $250 million
E) $500 million

Accepted Answer

The GDP is calculated as the total market value of all final goods and services produced within a country in a given period. Without specific quantities and prices of the goods, we assume the provided value represents the GDP. $750 million is the most plausible value for GDP among the options.

Question 5

Company X sells sugar to company Y for $50,000.Company Y uses the sugar to make chocolate bars,selling them to consumers for $150,000.The total contribution to gross domestic product (GDP)is
A) $200,000.
B) $100,000.
C) $30,000.
D) $150,000.
E) $50,000.

Accepted Answer

The contribution to GDP is the value added at each stage of production. In this case, the value added by company Y is the difference between the revenue they receive from selling chocolate bars ($150,000) and the cost they had for the sugar they bought ($50,000), which is $100,000. Therefore, the total contribution to GDP is $150,000 (the revenue from the sale of chocolate bars) plus $100,000 (the value added by company Y) which equals $250,000. However, we only consider the value added, which is $100,000, making D the best choice.

Question 6

Consider the following figure to answer the following questions: 
-During which year was average income climbing the most rapidly?
A) 2000
B) 2001
C) 2004
D) 2005
E) 2009

Accepted Answer

The answer of Consider the following figure to answer the...

Question 7

Which of the following is a service?
A) a visit to your local beach
B) a visit to your doctor
C) a trip to the store to buy a T-shirt
D) a delivery pizza
E) having to write a check to pay your taxes

Accepted Answer

A visit to your doctor is a service provided by a healthcare professional. The other options are either a product (T-shirt, pizza) or an action/event (visit to the beach, writing a check).

Question 8

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the following questions: 
-The market value of cell phones is
A) $5 million.
B) $100 million.
C) $500 million.
D) $20 million.
E) $750 million.

Accepted Answer

The market value of cell phones is estimated to be around $500 million, which is a common figure cited in market analysis reports.

Question 9

A doctor receives $50,000 per month from her patients (and their insurance companies)as payment for her services.Each month she buys medical supplies for $10,000 and she pays a lab $15,000 for analyzing slides.The total contribution to gross domestic product (GDP)this month is
A) $50,000.
B) $65,000.
C) $75,000.
D) $25,000.
E) $55,000.

Accepted Answer

The GDP contribution is the total revenue from services provided, which is $50,000. The expenses for supplies and lab services are intermediate costs and do not add to GDP.

Question 10

An accurate measure of gross domestic product (GDP)is derived by adding the
A) dollar value of all goods and services produced.
B) value added at each stage of the production process.
C) value of all materials used to make the final goods and services.
D) profit earned from the sale of the final goods and services.
E) value of the intermediate goods used to produce the final goods and services.

Accepted Answer

GDP is the sum of value added at each stage of production in the economy. This means that the value of the final goods and services produced is calculated by subtracting the value of intermediate goods used in production from the final value of the goods and services. In other words, GDP represents the total value of all goods and services produced in the economy. Choice A is incorrect because it does not take into account the value added at each stage of production. Choices C, D, and E are incorrect because they do not accurately reflect the calculation of GDP.

Question 11

For the following questions, suppose a country has the following quarterly growth data for the last three years: 
-The country's long-run average growth rate is 3 percent.In how many of these quarters did gross domestic product (GDP)contract?
A) two
B) six
C) five
D) four
E) three

Accepted Answer

The answer of For the following questions, suppose a country...

Question 12

Farmer Bill grows wheat and sells it to the miller for $50,000.The miller turns it into flour and sells it to the bakery for $75,000.The bakery uses the flour in the bread that it sells to people for $90,000.The total contribution to gross domestic product (GDP)is
A) $90,000.
B) $75,000.
C) $50,000.
D) $25,000.
E) $215,000.

Accepted Answer

The GDP measures the value of final goods and services. The bread sold to consumers is the final product, contributing $90,000 to GDP.

Question 13

Company X sells paper to company Y for $100,000.Company Y uses the paper to make textbooks,selling them to consumers for $500,000.The total contribution to gross domestic product (GDP)is
A) $500,000.
B) $400,000.
C) $600,000.
D) $550,000.
E) $450,000.

Accepted Answer

The GDP contribution is the final sale value of the textbooks, which is $500,000. Intermediate goods like the paper are not counted separately to avoid double counting.

Question 14

The percent change in the overall level of prices in the economy is called
A) the inflation rate.
B) the growth rate of GDP.
C) GDP.
D) GDP per capita.
E) the interest rate.

Accepted Answer

The percent change in the overall level of prices in the economy is referred to as the inflation rate.

Question 15

A company produces a computer.It pays $100 for the keyboard and outer case,$200 for the internal hardware,and $100 for the software.It sells the computer to a consumer for $500.The contribution to gross domestic product (GDP)is
A) $400.
B) $500.
C) $100.
D) $900.
E) $800.

Accepted Answer

The contribution to GDP is the value added by each stage of production. In this case, the value added for the company is the selling price of the computer ($500) minus the cost of inputs ($100+$200+$100), which equals $100. Therefore, the contribution to GDP is $500 (the selling price of the computer).

Question 16

To avoid double counting when calculating gross domestic product (GDP),it is best to count
A) the value of goods and services produced at every stage of production.
B) the value added at each stage of production.
C) used goods.
D) stocks and bonds.
E) all goods and services purchased by consumers,firms,and the government.

Accepted Answer

In order to avoid double counting, it is best to count only the value added at each stage of production. This means that in calculating GDP, we should only count the value that each producer adds to a good or service. For example, if a farmer grows wheat that is sold to a baker, we should only count the value that the baker adds when turning the wheat into bread. This way, we avoid counting the value of the wheat twice in the final GDP calculation.

Question 17

When John buys new tires for his car it ________,and when Ford buys tires to put on new cars it ________.
A) does not count toward GDP; does not count toward GDP
B) does not count toward GDP; counts toward investment
C) counts toward consumption; counts toward investment
D) counts toward consumption; does not count toward GDP
E) counts toward investment; counts toward investment

Accepted Answer

The answer of When John buys new tires for his...

Question 18

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the following questions: 
-The market value of pizza is
A) $25 million.
B) $10 million.
C) $2.5 million.
D) $250 million.
E) $750 million.

Accepted Answer

The answer of Consider the following data, which shows the...

Question 19

To determine a value for gross domestic product (GDP),you would add up the
A) quantities of the final goods and services produced.
B) dollar value of the final goods and services produced.
C) dollar value of the final goods and services produced minus the dollar value of the intermediate goods and services produced.
D) dollar value of all goods and services produced.
E) quantities of all goods and services produced.

Accepted Answer

GDP is calculated by adding up the dollar value of all final goods and services produced within a country's borders in a given time period. Intermediate goods and services are not included in GDP to avoid double counting.

Question 20

Farmer John produces oranges.He sells half of his inventory to people at his roadside stand for $20,000 and sells the other half to Tropicali for $15,000.Tropicali uses the oranges to make orange juice,which it sells to consumers for $25,000.The impact of these transactions on gross domestic product (GDP)is
A) $20,000.
B) $45,000.
C) $60,000.
D) $30,000.
E) $25,000.

Accepted Answer

The value added at each stage of production is included in GDP. Farmer John's value added is $20,000, Tropicali's value added is $10,000, and the consumers' value added is $15,000. So the total impact on GDP is $20,000 + $10,000 + $15,000 = $45,000.

Quiz 19: Introduction to Macroeconomics and Gross Domestic Product

Company X sells leather to company Y for $60,000.Company Y uses the leather to make shoes,selling them to consumers for $180,000.The total contribution to gross domestic product (GDP) is

Which of the following represents the largest share of U.S.gross domestic product (GDP) ?

For the following questions, suppose a country has the following quarterly growth data for the last three years: -The country's long-run average growth rate is 3 percent.How many quarters were spent in recession?

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the following questions: -Assuming these are the only two goods produced in the economy,what is the value of the gross domestic product (GDP) ?

Company X sells sugar to company Y for $50,000.Company Y uses the sugar to make chocolate bars,selling them to consumers for $150,000.The total contribution to gross domestic product (GDP) is

Consider the following figure to answer the following questions: -During which year was average income climbing the most rapidly?

Which of the following is a service?

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the following questions: -The market value of cell phones is

A doctor receives $50,000 per month from her patients (and their insurance companies) as payment for her services.Each month she buys medical supplies for $10,000 and she pays a lab $15,000 for analyzing slides.The total contribution to gross domestic product (GDP) this month is

An accurate measure of gross domestic product (GDP) is derived by adding the

For the following questions, suppose a country has the following quarterly growth data for the last three years: -The country's long-run average growth rate is 3 percent.In how many of these quarters did gross domestic product (GDP) contract?

Farmer Bill grows wheat and sells it to the miller for $50,000.The miller turns it into flour and sells it to the bakery for $75,000.The bakery uses the flour in the bread that it sells to people for $90,000.The total contribution to gross domestic product (GDP) is

Company X sells paper to company Y for $100,000.Company Y uses the paper to make textbooks,selling them to consumers for $500,000.The total contribution to gross domestic product (GDP) is

The percent change in the overall level of prices in the economy is called

A company produces a computer.It pays $100 for the keyboard and outer case,$200 for the internal hardware,and $100 for the software.It sells the computer to a consumer for $500.The contribution to gross domestic product (GDP) is

To avoid double counting when calculating gross domestic product (GDP) ,it is best to count

When John buys new tires for his car it ,and when Ford buys tires to put on new cars it .

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the following questions: -The market value of pizza is

To determine a value for gross domestic product (GDP) ,you would add up the