Question 1

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 2

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 answer of Farmer Bill grows wheat and sells it...

Question 3

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 because it involves a professional providing a service to you for payment. The other options are either a physical item or an activity, which are not categorized as services.

Question 4

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the next three questions: $$\begin{array} { l c l } 
\hline & \text { Quantity produced } & \text { Price } \
\hline \text { Cell phones } & 5 \text { million } & \$ 100 / \text { cell phone } \
\text { Pizza } & 25 \text { million } & \$ 10 / \text { pizza } \
\hline
\end{array}$$
-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 market value of pizza is calculated by multiplying its quantity by its price, which gives us $250 million ($5 million x 50 million units).

Question 5

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 answer of Company X sells paper to company Y...

Question 6

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 answer of A doctor receives $50,000 per month from...

Question 7

For the next  questions, suppose a country has the following quarterly growth data for the last three years: $$\begin{array} { l l l l l } 
\hline \text { Year } & \text { Q1 } & \text { Q2 } &{ \mathrm { Q } 3 } & \mathrm { Q } 4 \
\hline 2010 & 3.1 \text { percent } & 3.2 \text { percent } & 2.2 \text { percent } & 1.2 \text { percent } \
2011 & 3.1 \text { percent } & - 4.1 \text { percent } & - 2.2 \text { percent } & 1.5 \text { percent } \
2012 & 1.3 \text { percent } & 1.2 \text { percent } & 3.2 \text { percent } & 3.3 \text { percent } \
\hline
\end{array}$$
-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

The answer of For the next  questions, suppose a...

Question 8

Consider the following figure to answer the next  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 9

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 inflation rate. Choice B, Growth rate of GDP refers to the percentage increase in real GDP over time; Choice C, GDP, refers to the total value of all final goods and services produced in the economy; Choice D, GDP per capita, refers to the total value of goods and services produced in the economy per person; Choice E, Interest rate refers to the cost of borrowing money.

Question 10

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 total contribution to GDP is the value added by each company in the production process. Company Y's value added is $150,000 (revenue from selling chocolate bars) minus $50,000 (cost of sugar from Company X) which equals $100,000. Therefore, the total contribution to GDP is $100,000.

Question 11

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

Counting the value added at each stage of production helps to avoid double counting because it only includes the value added to the final product at each stage of production, rather than the entire value of each intermediate good used in production.

Question 12

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 answer of Assuming these are the only two goods...

Question 13

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 calculated by adding the value added at each stage of the production process. This means that all intermediate goods used in the production process are not included in the calculation, only the value added by each stage of production. This method avoids double-counting of goods and services and provides a more accurate measure of a country's economic output.

Question 14

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 answer of Company X sells leather to company Y...

Question 15

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

Gross domestic product (GDP) is the dollar value of all final goods and services produced within a country's borders in a given period of time. Therefore, to determine the value of GDP, we need to add the dollar value of the final goods and services produced.

Question 16

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

Services represent the largest share of U.S. GDP, accounting for approximately 80% of the total. This includes a wide range of industries such as healthcare, finance, retail, transportation, and hospitality.

Question 17

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the next three questions: $$\begin{array} { l c l } 
\hline & \text { Quantity produced } & \text { Price } \
\hline \text { Cell phones } & 5 \text { million } & \$ 100 / \text { cell phone } \
\text { Pizza } & 25 \text { million } & \$ 10 / \text { pizza } \
\hline
\end{array}$$
-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 answer of Consider the following data, which shows the...

Question 18

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 the company to the final product. In this case, the value added is the difference between the selling price ($500) and the cost of inputs ($100 for keyboard and outer case + $200 for internal hardware + $100 for software = $400). Therefore, the contribution to GDP is $500 - $400 = $100.

Question 19

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 answer of Farmer John produces oranges. He sells half...

Question 20

For the next  questions, suppose a country has the following quarterly growth data for the last three years: $$\begin{array} { l l l l l } 
\hline \text { Year } & \text { Q1 } & \text { Q2 } &{ \mathrm { Q } 3 } & \mathrm { Q } 4 \
\hline 2010 & 3.1 \text { percent } & 3.2 \text { percent } & 2.2 \text { percent } & 1.2 \text { percent } \
2011 & 3.1 \text { percent } & - 4.1 \text { percent } & - 2.2 \text { percent } & 1.5 \text { percent } \
2012 & 1.3 \text { percent } & 1.2 \text { percent } & 3.2 \text { percent } & 3.3 \text { percent } \
\hline
\end{array}$$
-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 next  questions, suppose a...

Quiz 6: Introduction to Macroeconomics and Gross Domestic Product

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

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

Which of the following is a service?

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 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

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

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

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

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

Assuming these are the only two goods produced in the economy, what is the value of the gross domestic product GDP) ?

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

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

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

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

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