Question 1

A U.S.firm produces nail guns in the first quarter of 2010 and adds them to its inventory.In the second quarter of 2010 the firm sells the nail guns to a U.S.construction company.In which quarter(s)is (are)GDP higher?

Accepted Answer

The answer of A U.S.firm produces nail guns in the...

Question 2

A good is produced by a firm in 2010,added to the firm's inventory in 2010,and sold to a household in 2011.It follows that

Accepted Answer

The answer of A good is produced by a firm...

Question 3

A Minnesota farmer buys a new tractor made in Iowa by a German company.As a result,

Accepted Answer

The answer of A Minnesota farmer buys a new tractor...

Question 4

Consumer goods that are produced,go into inventory,and are not sold during the current period are

Accepted Answer

Consumer goods held in inventory are considered inventory investment and are included in current period GDP. They are not counted as consumption until they are actually sold to consumers.

Question 5

Rocket Energy Drink Company buys sugar to produce energy drinks.At the end of a quarter both its inventory of sugar and its inventory of energy drinks has increased.Investment for the quarter will include

Accepted Answer

The answer of Rocket Energy Drink Company buys sugar to...

Question 6

A form of government spending that is not made in exchange for a currently produced good or service is called

Accepted Answer

Transfer payments are payments made by the government to individuals or other levels of government without the exchange of a currently produced good or service. Examples of transfer payments include Social Security, Medicare, and welfare benefits.

Question 7

During the third quarter of this year a firm produces consumer goods and adds some of those goods to its inventory.During the fourth quarter of this year,the firm sells the goods at a retail outlet,with the result that the value of its inventory at the end of the fourth quarter is smaller than the value of its inventory at the end of the third quarter.These actions affect which component(s)of fourth-quarter GDP?

Accepted Answer

The actions of producing consumer goods and adding some of those goods to inventory in the third quarter increase investment (because inventory is considered part of investment). However, selling the goods in the fourth quarter decreases inventory and thus decreases investment. At the same time, selling the goods at a retail outlet also increases consumption. Therefore, the actions affect both consumption and investment, with consumption increasing and investment decreasing.

Question 8

A U.S.firm produces nail guns in the first quarter of 2010 and adds them to its inventory.In the second quarter of 2010 the firm sells the nail guns to a U.S.construction company.In which quarter(s)does(do)these transactions raise investment?

Accepted Answer

The answer of A U.S.firm produces nail guns in the...

Question 9

Which of the following items is included in GDP?

Accepted Answer

Only the sale of final goods and services produced during a specific time period is included in GDP. The sale of stocks and bonds does not involve the production of final goods or services, and the sale of used goods is not considered because they were already included in GDP in the year they were produced. However, services such as those performed by a doctor are final goods and services which are produced in the current year and are included in GDP.

Question 10

GA wind farm in Iowa buys a large turbine generator from a Swedish-owned factory located in Connecticut that uses workers who live in Connecticut.As a result,

Accepted Answer

The answer of GA wind farm in Iowa buys a...

Question 11

During the current quarter,a firm produces consumer goods and adds some of those goods to its inventory rather than selling them.The value of the goods added to inventory is

Accepted Answer

Goods added to inventory are considered investment in the current period as they are seen as an increase in the firm's capital stock. Therefore, they are included in the current quarter GDP as investment.

Question 12

Recently,the U.S.national income accounts have switched to calling government purchases

Accepted Answer

The U.S. national income accounts have switched to calling government purchases "government consumption expenditure and gross investment." This more accurately reflects the fact that these purchases are either consumed immediately or contribute to future production, rather than being a form of investment.

Question 13

The local Chevrolet dealership has an increase in inventory of 25 newly produced cars in 2006.In 2007,it sells all 25 cars.Which of the following statements is correct?

Accepted Answer

The answer of The local Chevrolet dealership has an increase...

Question 14

A good is produced by a firm in 2009,added to the firm's inventory in 2010,and sold to a household in 2010.As a result,on net,

Accepted Answer

The answer of A good is produced by a firm...

Question 15

A movie company makes 500,000 DVDs of one of its latest releases.It sells 300,000 of them before the end of the second quarter,and holds the others in its warehouse.How will the 200,000 unsold DVDs be treated in the GDP statistics?

Accepted Answer

The 200,000 unsold DVDs will be treated as a change in inventory in the second quarter and will be included in second-quarter GDP. This is because inventory investment is a component of GDP and represents the value of goods produced but not yet sold. Therefore, the value of the unsold DVDs will be included in the calculation of second-quarter GDP as a part of inventory investment.

Question 16

Which of the following items is counted as part of government purchases?

Accepted Answer

The answer of Which of the following items is counted...

Question 17

A transfer payment is

Accepted Answer

A transfer payment is a type of government spending that is not made in exchange for a currently produced good or service. Examples of transfer payments include social security payments, unemployment benefits, and welfare payments.

Question 18

A U.S.firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory.In the second quarter of 2010 the firm sells the sweatshirts to consumers.In which quarter(s)does(do)these transactions raise consumption?

Accepted Answer

Consumption refers to the actual purchase or use of goods and services by households. Therefore, the production of sweatshirts in the first quarter does not immediately raise consumption since they have not been purchased or used yet. The sale of the sweatshirts to consumers in the second quarter, however, does raise consumption since they have been purchased and used by households. Therefore, the correct choice is C, the second quarter but not the first.

Question 19

The value of goods added to a firm's inventory in a certain year is treated as

Accepted Answer

The value of goods added to a firm's inventory in a certain year is treated as investment, since GDP aims to measure the value of the economy's production for that year. It is included in the calculation of GDP as part of investment spending.

Question 20

Government purchases include spending on goods and services by

Accepted Answer

Government purchases include spending on goods and services by all levels of government- federal, state, and local.

Quiz 23: Measuring a Nations Income

A U.S.firm produces nail guns in the first quarter of 2010 and adds them to its inventory.In the second quarter of 2010 the firm sells the nail guns to a U.S.construction company.In which quarter(s) is (are) GDP higher?