Question 1

If you sold your stereo to your friend for $500, it would increase the value of the gross national product by $500.

Accepted Answer

The sale of a used item between two individuals does not count towards the gross national product (GNP) as it is not a new production of goods or services. GNP measures the market value of all final goods and services produced in a country within a specific time period, typically a year.

Question 2

Investment spending includes all purchases of capital goods, including buildings, equipment and inventories by private businesses and nonprofit institutions, but excludes purchases of new residential housing by individuals.

Accepted Answer

Investment spending includes purchases of new residential housing by individuals as part of gross private domestic investment.

Question 3

Consumption spending refers to spending by individuals and nonprofit organizations on newly produced goods and services except for housing) and is frequently broken down into three categories: nondurable goods, durable goods, and services.

Accepted Answer

This statement is true. Consumption spending refers to spending by individuals and nonprofit organizations on newly produced goods and services, excluding housing, and is commonly divided into three categories: nondurable goods, durable goods, and services.

Question 4

Gross national product for a country is the market value of all goods and services, both intermediate and final, produced with factors of production owned by the residents of a country, during some particular time period, usually one year.

Accepted Answer

Gross National Product (GNP) measures the market value of all final goods and services produced within a time period by the factors of production owned by a country's residents, not including intermediate goods to avoid double counting.

Question 5

Gross domestic product for a country is the market value of all goods and services, both intermediate and final, produced within the country, regardless of the ownership of the productive factors, during some particular time period, usually one year.

Accepted Answer

Gross domestic product (GDP) for a country is the market value of all final goods and services produced within the country, regardless of the ownership of the productive factors, during some particular time period, usually one year. It does not include intermediate goods to avoid double counting.

Question 6

Consumption spending refers to spending by individuals and nonprofit organizations on newly produced goods and services except for housing).

Accepted Answer

Consumption spending refers to spending by individuals and nonprofit organizations on newly produced goods and services, which excludes housing.

Question 7

If a U.S. resident were working in Germany for her firm, the market value of her final goods and services would be counted in the gross domestic product of the U.S.

Accepted Answer

The market value of her final goods and services would be counted in the gross domestic product (GDP) of Germany, not the U.S. GDP measures the value of goods and services produced within a country's borders, regardless of the nationality of the workers involved.

Question 8

Gross national product for a country is the market value of all final goods and services produced with factors of production owned by the residents of a country, during some particular time period, usually one year.

Accepted Answer

This is the definition of Gross National Product (GNP) according to standard economic theory.

Question 9

Government expenditures do not include such things as welfare payments because these are considered to be transfers of income, not payment for goods and services.

Accepted Answer

Government expenditures refer to the money spent by the government on goods and services, such as defense, infrastructure, education, and other public programs. Welfare payments are considered transfers of income because they are meant to provide financial assistance to those in need, rather than pay for specific goods or services.

Question 10

Government expenditures are expenditures for newly produced goods and services, including government invest expenditures, by all levels of government.

Accepted Answer

Government expenditures refer to all the expenditure made by all levels of the government on the production of goods and services, including investment expenditures. Therefore, option A is correct.

Question 11

The value of owner-occupied houses and the purchases of such dwellings are included in consumption spending.

Accepted Answer

The value of owner-occupied houses is considered an investment, not consumption spending, in national accounts. Purchases of new dwellings are also classified as investments.

Question 12

Net exports is the term denoting the value of newly produced foreign goods purchased by the United States imports) less the value of newly produced U.S. goods and services purchased by foreigners exports).

Accepted Answer

Net exports is the term denoting the value of newly produced U.S. goods and services purchased by foreigners (exports) less the value of newly produced foreign goods purchased by the United States (imports).

Question 13

Investment spending includes all purchases of capital goods, including buildings, and inventories by private businesses and nonprofit institutions, and purchases of new residential housing by individuals.

Accepted Answer

Investment spending is defined as the purchase of capital goods, including buildings and inventories, by private businesses and nonprofit institutions, as well as purchases of new residential housing by individuals.

Question 14

The market value of the final goods and services produced in a Japanese owned and operated factory in the United States would be counted in the gross domestic product.

Accepted Answer

The market value of final goods and services produced within a country's borders, regardless of ownership, is counted in the country's gross domestic product. Therefore, even if the factory is owned and operated by a Japanese company, if it is producing goods and services within the United States, their market value would be included in the U.S. GDP.

Question 15

It is important to use the market value of all final goods and services so the double counting does not occur.

Accepted Answer

Using the market value of final goods and services avoids double counting because intermediate goods and services have already been accounted for in the value of the final product.

Question 16

Forecasting is the process of analyzing available data on economic variables and relationships and predicting future values of certain economic variables.

Accepted Answer

Forecasting involves analyzing available data to make predictions about future economic variables.

Question 17

Consumption spending refers to spending by individuals and nonprofit organizations on newly produced goods and services except for housing) and is frequently broken down into three categories: noninvestment goods, investment goods, and current consumption.

Accepted Answer

Consumption spending refers to spending by individuals and households on goods and services, excluding purchases of new housing. It is typically not broken down into noninvestment goods, investment goods, and current consumption; rather, it is often categorized into durable goods, nondurable goods, and services.

Question 18

Net Exports is the term denoting the value of newly produced U.S. goods and services purchased by foreigners exports) less the value of newly produced foreign goods purchased by the United States imports).

Accepted Answer

This is the correct definition of Net Exports.

Question 19

Investment spending includes all purchases of capital goods, including buildings, and inventories by private businesses and nonprofit institutions, as well as all money spent on stocks and bonds.

Accepted Answer

Investment spending in economics primarily refers to purchases of physical assets like capital goods, buildings, and inventories by businesses and nonprofit institutions. It does not include money spent on financial assets like stocks and bonds.

Question 20

Gross domestic product for a country is the market value of all final goods and services produced within the country, regardless of the ownership of the productive factors, during some particular time period, usually one year.

Accepted Answer

This is the true definition of gross domestic product (GDP).

Quiz 4: Economic Forecasting