Question 1

To measure GDP using the production approach, it is necessary to add up the total value of the new goods and services produced in the economy for the given time period.

Accepted Answer

The answer of To measure GDP using the production approach,...

Question 2

A soft-drink bottling company supplies six-packs of cola to retailers for $2.5 each. If the components in each six-pack cost the bottling company $1.50, how much value added per six-pack does the bottling company create?

Accepted Answer

The answer of A soft-drink bottling company supplies six-packs of...

Question 3

Answer the questions below:

Accepted Answer

The answer of Answer the questions below:
 
...

Question 4

Exhibit 18-3 
-According to the data in Exhibit 18-3, the contribution to GDP from the production of a loaf of bread is

Accepted Answer

The contribution to GDP from the production of a loaf of bread is the value added at each stage of production, which is the final sale price of $2.00.

Question 5

Value added can be determined by

Accepted Answer

Value added is the difference between the value of a firm's output and the value of the inputs it purchases from other firms. Therefore, choice A is correct because it involves subtracting the cost of intermediate goods (inputs) from the price of the final product (output) at each stage of production.

Question 6

Exhibit 18-3 
-According to the data in Exhibit 18-3, the value added by the grocer is

Accepted Answer

The answer of Exhibit 18-3 
-According to the data in...

Question 7

For the economy described in the table below, what do net exports equal?

Accepted Answer

The answer of For the economy described in the table...

Question 8

The concept of value added refers to

Accepted Answer

Value added refers to the increase in the value of a product that occurs at each stage of production. Each stage adds value to the product, ultimately leading to the final sale price.

Question 9

The spending approach to calculating GDP is the only approach in which double counting needs to be avoided.

Accepted Answer

Double counting can occur in all three approaches to calculating GDP, including the spending approach, income approach, and production approach. Double counting can occur when intermediate goods and services are counted multiple times or when a final good is included in multiple stages of production.

Question 10

Profits include depreciation.

Accepted Answer

Profits are calculated after accounting for expenses, including depreciation, but depreciation itself is not included in profits; it is an expense that reduces profit.

Question 11

Explain how each of the following transactions would affect GDP for the current year. Which spending categories are affected?

Accepted Answer

The answer of Explain how each of the following transactions...

Question 12

For the hypothetical economy described in the table below, what were investment, consumption, and GDP in period 1? And for period 2?

Accepted Answer

The answer of For the hypothetical economy described in the...

Question 13

When computing GDP using the production approach, one must count only the value added by each business, as opposed to the total value of output produced by each business, in order to avoid double counting.

Accepted Answer

This is because GDP is calculated as the sum of all value added at each stage of production in the economy, rather than simply adding up the total value of output produced by each business. This avoids counting the same value multiple times and provides a more accurate representation of the overall economic activity.

Question 14

Investment in the United States was about 27 percent of GDP in 2015.

Accepted Answer

In 2015, investment in the United States was not about 27 percent of GDP; it was lower. According to the World Bank, gross fixed capital formation (which approximates investment) was about 20% of GDP in the United States for that year.

Question 15

Answer the questions below:

Accepted Answer

The answer of Answer the questions below:
 
...

Question 16

Two components of investment expenditures are new homes purchased by consumers and increases in inventories. Explain why these two components are included in investment expenditures when calculating GDP using the spending approach.

Accepted Answer

The answer of Two components of investment expenditures are new...

Question 17

GDP can be measured by adding up all the income people earn by producing new final goods and services.

Accepted Answer

This is the basic formula for calculating GDP, known as the income approach. It includes all income earned by individuals and businesses from the production of final goods and services.

Question 18

Consider the case of a hypothetical economy that has no government or foreign trade. This economy produces one final product, books. Moreover, there are only two stages of production, writing by authors and publishing by a single publishing company, Inco. In 2017, Inco produced $4 million worth of books, and consumers purchased $3 million of those books.

Accepted Answer

The answer of Consider the case of a hypothetical economy...

Question 19

Exhibit 18-3 
-The total value added in Exhibit 18-3 is the same as

Accepted Answer

The total value added is equivalent to the final retail price of the loaf of bread because it represents the sum of all the value added at each stage of production, from the initial raw materials to the final product sold to consumers.

Question 20

What are the three ways to measure GDP? Explain what they mean.

Accepted Answer

The answer of What are the three ways to measure...

Quiz 18: Measuring the Production, Income, and Spending of Nations

To measure GDP using the production approach, it is necessary to add up the total value of the new goods and services produced in the economy for the given time period.

A soft-drink bottling company supplies six-packs of cola to retailers for $2.5 each. If the components in each six-pack cost the bottling company $1.50, how much value added per six-pack does the bottling company create?

Answer the questions below:

Exhibit 18-3 -According to the data in Exhibit 18-3, the contribution to GDP from the production of a loaf of bread is

Value added can be determined by

Exhibit 18-3 -According to the data in Exhibit 18-3, the value added by the grocer is

For the economy described in the table below, what do net exports equal?

The concept of value added refers to

The spending approach to calculating GDP is the only approach in which double counting needs to be avoided.

Profits include depreciation.

Explain how each of the following transactions would affect GDP for the current year. Which spending categories are affected?

For the hypothetical economy described in the table below, what were investment, consumption, and GDP in period 1? And for period 2?

When computing GDP using the production approach, one must count only the value added by each business, as opposed to the total value of output produced by each business, in order to avoid double counting.

Investment in the United States was about 27 percent of GDP in 2015.

Answer the questions below:

Two components of investment expenditures are new homes purchased by consumers and increases in inventories. Explain why these two components are included in investment expenditures when calculating GDP using the spending approach.

GDP can be measured by adding up all the income people earn by producing new final goods and services.

Exhibit 18-3 -The total value added in Exhibit 18-3 is the same as

What are the three ways to measure GDP? Explain what they mean.