Question 1

Use the following to answer questions .
Exhibit: Stages of Production of Toy Model Airplanes
 
-(Exhibit: Stages of Production of Toy Model Airplanes) The value added by the extraction of the crude oil is _____.
A) $2
B) $3
C) $4
D) $5

Accepted Answer

The answer of Use the following to answer questions .
Exhibit:...

Question 2

The gross national product (GNP) of the U.S. measures:
A) the market value of final goods and services sold in the U.S. during a particular period.
B) the market value of final goods and services produced using factors of production owned by U.S. residents during a particular period.
C) the market value of goods and services produced anywhere in the world, by U.S. citizens and foreigners residing in the U.S. during a particular period.
D) the market value of goods and services produced in the U.S. by foreigners residing in the U.S. during a particular period.

Accepted Answer

The gross national product (GNP) measures the market value of final goods and services produced using factors of production owned by U.S. residents during a particular period. This includes the economic contribution of U.S. residents and entities that operate abroad, but excludes the economic contribution of foreign residents and entities operating within the U.S.

Question 3

China's gross national product can be calculated from China's GDP by:
A) adding the value of output produced by China's residents and sold abroad.
B) adding the income earned by China's residents from the rest of the world and subtracting payments made by China's residents to the rest of the world.
C) subtracting the value of output produced by China's residents and sold abroad.
D) subtracting the income earned by China's residents from the rest of the world and adding payments made by China's residents to the rest of the world.

Accepted Answer

Gross national product (GNP) is the total value of goods and services produced by a country's residents, regardless of their location, while Gross Domestic Product (GDP) is the total value of goods and services produced within a country's borders, regardless of the nationality of those who produce them. To calculate GNP, we need to add the income earned by a country's residents from the rest of the world (such as remittances from abroad or profits earned by domestic corporations overseas) and subtract payments made by a country's residents to the rest of the world (such as interest payments on foreign loans or royalties paid to foreign companies). Therefore, the correct answer is B.

Question 4

The gross domestic product of an economy is defined as the:
A) total value of all industrial goods produced and sold during a given period.
B) total value of all final goods and services produced during a given period.
C) value of all noneconomic transactions made among consumers during a particular period.
D) value of all non-monetary transactions between consumers and firms during a given period.

Accepted Answer

Gross domestic product (GDP) is the total value of all final goods and services produced within a country's borders during a specific time period, usually a year. It excludes intermediate goods and services because they are already included in the value of final goods and services. It also includes goods and services produced by foreign-owned firms located within the country, but excludes goods and services produced by domestic firms located abroad. Choices A, C, and D are incorrect because they do not match the definition of GDP.

Question 5

Use the following to answer questions .
Exhibit: Stages of Production of Toy Model Airplanes
 
-(Exhibit: Stages of Production of Toy Model Airplanes) The total sales value of all transactions involved in the production of a model airplane is _____.
A) $5
B) $21
C) $56
D) $77

Accepted Answer

The total sales value is the sum of all transactions at each stage of production, which adds up to $77.

Question 6

Use the following to answer questions .
Exhibit: Components of GDP for an Economy 2
 
-(Exhibit: Components of GDP for an Economy 2) Net exports are negative. This would mean that:
A) imports are larger than exports and there is a trade surplus.
B) exports are larger than imports and there is a trade surplus.
C) imports are larger than exports and there is a trade deficit.
D) exports are larger than imports and there is a trade deficit.

Accepted Answer

Net exports are calculated by subtracting imports from exports. A negative value for net exports means that imports are larger than exports, indicating a trade deficit.

Question 7

GDP can be calculated by totaling either the:
A) market values of all final goods and services or the total volume of all intermediate goods at all stages of production.
B) market values of all final goods and services or the value added at all stages of production.
C) total sales values of all intermediate goods at all stages of production or the value added at all stages of production.
D) market values of all final goods and services or the values added by labor at all stages of production.

Accepted Answer

GDP can be calculated by totaling the market values of all final goods and services or the value added at all stages of production. Option B correctly states this relationship between GDP and market values of final goods and services or value added.

Question 8

Use the following to answer questions .
Exhibit: Stages of Production of Toy Model Airplanes
 
-(Exhibit: Stages of Production of Toy Model Airplanes) The final value of a model airplane is _____.
A) $5
B) $21
C) $56
D) $77

Accepted Answer

Based on the given exhibit, the final value of a model airplane is the sum of all the stages of production, which is $21.

Question 9

Which of the following is an example of an intermediate good or service?
A) The purchase of a new yacht by a boating enthusiast
B) The purchase of lumber by a construction company
C) The salaries paid to military personnel
D) The salary earned by a construction worker

Accepted Answer

An intermediate good or service is one that is used only as a component or input in the production of another good or service. Lumber is an example of an intermediate good because it is used as a raw material in the construction of buildings or other structures. The purchase of a yacht (A) is not an intermediate good because it is not used to produce anything else. The salaries paid to military personnel (C) and the salary earned by a construction worker (D) are not goods or services at all, they are payments for labor.

Question 10

Use the following to answer questions .
Exhibit: Stages of Production of Toy Model Airplanes
 
-(Exhibit: Stages of Production of Toy Model Airplanes) The total value added in the production of a model airplane is _____.
A) $16
B) $17
C) $21
D) $77

Accepted Answer

The total value added in the production of a model airplane is calculated by adding the value of all inputs used in the production process. In this exhibit, the values of all inputs used at each stage of production are given. Adding up the values of all inputs used at each stage gives us the total value added, which is $21.

Question 11

Pfeister Inc., a firm located in New York, is a German manufacturer of heavy-duty glass doors. It uses glass-cutting machinery imported from Germany in production. The firm's output of glass doors will be counted in:
A) U.S. GDP.
B) U.S. domestic private investment.
C) Germany's GDP.
D) Germany's net exports.

Accepted Answer

The output of Pfeister Inc. is produced within the borders of the United States, therefore it will be counted as a part of the U.S. Gross Domestic Product (GDP).

Question 12

Double counting in GDP accounting:
A) refers to the fact that accountants check their figures twice.
B) refers to the inclusion of both intermediate goods and final goods in GDP.
C) is the method of using both income and expenditures in measuring GDP.
D) is the method of calculating the GDP by including the net incomes received by residents of a nation living abroad.

Accepted Answer

Double counting in GDP accounting refers to the inclusion of both intermediate goods (goods used in production that are not sold to final consumers, such as steel used to make cars) and final goods (goods sold directly to final consumers, such as the cars themselves) in GDP. To avoid double counting, only the value of final goods is included in GDP.

Question 13

If we sum up the value added at every stage of production of a good, we will get:
A) the total cost of the labor used to produce the good.
B) the prices of the factors of production used to produce the good.
C) the final value of the good.
D) the capital-labor ratio.

Accepted Answer

When we sum up the value added at every stage of production of a good, we are essentially adding the value that each producer adds to the good as it moves through the production process. This value added represents the difference between the cost of the inputs used to produce the good and the final price at which the good is sold. Therefore, summing up the value added at every stage of production gives us the final value of the good.

Question 14

The total volume of sales in an economy is much larger than the value of GDP because:
A) GDP understates the value of total output.
B) the output approach to measuring GDP excludes intermediate transactions.
C) GDP includes transfer payments.
D) total sales include sales to foreign countries but GDP excludes sale of output to foreign countries.

Accepted Answer

GDP measures the value of final goods and services, excluding intermediate transactions to avoid double counting, whereas total sales include all transactions, including intermediate sales.

Question 15

Value added is defined as:
A) the value of productivity gains that arise when a firm increases its capital-labor ratio.
B) the difference between the total cost of production of a product and the total revenues earned from the sale of the product.
C) the amount by which the value of a firm's final output exceeds the total value of the intermediate goods and services used to produce the good.
D) the cost savings that a firm enjoys when it reduces the cost of its resources by employing a more efficient production method.

Accepted Answer

Value added is the amount by which the value of a firm's final output exceeds the total value of the intermediate goods and services used to produce the good. It reflects the contribution of a firm to the overall economy and is used as a measure of economic performance. Option A refers to productivity gains, option B refers to profit, and option D refers to cost savings, which are not the same as value added.

Question 16

A resident of San Diego, California, owns and operates a garage across the U.S.-Mexican border in Tijuana, Mexico. The value of the garage services produced at the shop would be counted in _____.
A) U.S. GNP
B) Mexico's GNP
C) U.S. GDP
D) U.S.'s net exports

Accepted Answer

The value of the garage services would be counted in the U.S. GNP because it is produced by a U.S. resident, regardless of the location of production.

Question 17

Which of the following statements about GNP is correct?
A) It measures the market value of all goods and services, both final and intermediate, produced by resources located within a nation regardless of who owns those resources.
B) It measures the market value of all goods and services, both final and intermediate, produced by residents and firms regardless of the location of production.
C) It measures the market value of all final goods and services produced by residents and firms of a nation regardless of the location of production.
D) It measures the market value of all final goods and services produced by resources located within a nation regardless of who owns those resources.

Accepted Answer

GNP (Gross National Product) measures the market value of all final goods and services produced by the residents and firms of a nation, regardless of where the production takes place.

Question 18

The amount by which the value of a firm's output exceeds the value of the goods and services that the firm purchases from other firms is called _____.
A) profit
B) value added
C) the markup rate
D) the marginal product

Accepted Answer

Value added is the amount by which the value of a firm's output exceeds the value of the goods and services that the firm purchases from other firms. It represents the contribution of the firm to the economy and is a measure of its productivity. Option A is not correct because profit is the difference between revenue and costs, which may include expenses incurred outside the production process, such as interest payments, taxes, and dividends. Option C is not correct because the markup rate is the percentage by which the price of a product exceeds its cost of production, and it does not take into account the value of the inputs used by the firm. Option D is not correct because the marginal product is the additional output that is produced when one more unit of input is added to the production process, and it does not reflect the value of the output relative to the value of the inputs.

Question 19

Use the following to answer questions .
Exhibit: Stages of Production of Toy Model Airplanes
 
-(Exhibit: Stages of Production of Toy Model Airplanes) The value added by the sale of a model airplane to the customer is _____.
A) $2
B) $3
C) $4
D) $5

Accepted Answer

The value added by the sale of a model airplane to the customer is the final selling price minus the cost of materials and the cost of labor. In this exhibit, the final selling price is $6, the cost of materials is $1, and the cost of labor is $1, so the value added by the sale of the model airplane to the customer is $4 ($6 - $1 - $1 = $4). Therefore, the best choice is C.

Question 20

The value of GDP differs from the value of GNP because:
A) net exports are excluded from GDP but included in GNP.
B) production in a country usually employs factors of production owned by residents of other countries.
C) production in a country employs only factors of production owned by its residents.
D) government purchases are excluded from GDP but included in GNP.

Accepted Answer

GNP includes production by factors of production (such as foreign workers) that are owned by residents of the country, even if that production takes place outside of the country. GDP only includes production that takes place within the country's borders, regardless of the ownership of the factors of production.

Quiz 6: Measuring Total Output and Income

Use the following to answer questions . Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The value added by the extraction of the crude oil is _____.

The gross national product (GNP) of the U.S. measures:

China's gross national product can be calculated from China's GDP by:

The gross domestic product of an economy is defined as the:

Use the following to answer questions . Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The total sales value of all transactions involved in the production of a model airplane is _____.

Use the following to answer questions . Exhibit: Components of GDP for an Economy 2 -(Exhibit: Components of GDP for an Economy 2) Net exports are negative. This would mean that:

GDP can be calculated by totaling either the:

Use the following to answer questions . Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The final value of a model airplane is _____.

Which of the following is an example of an intermediate good or service?

Use the following to answer questions . Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The total value added in the production of a model airplane is _____.

Pfeister Inc., a firm located in New York, is a German manufacturer of heavy-duty glass doors. It uses glass-cutting machinery imported from Germany in production. The firm's output of glass doors will be counted in:

Double counting in GDP accounting:

If we sum up the value added at every stage of production of a good, we will get:

The total volume of sales in an economy is much larger than the value of GDP because:

Value added is defined as:

A resident of San Diego, California, owns and operates a garage across the U.S.-Mexican border in Tijuana, Mexico. The value of the garage services produced at the shop would be counted in _____.

Which of the following statements about GNP is correct?

The amount by which the value of a firm's output exceeds the value of the goods and services that the firm purchases from other firms is called _____.

Use the following to answer questions . Exhibit: Stages of Production of Toy Model Airplanes -(Exhibit: Stages of Production of Toy Model Airplanes) The value added by the sale of a model airplane to the customer is _____.

The value of GDP differs from the value of GNP because: