Question 1

The four components of aggregate expenditures are:

Accepted Answer

The four components of aggregate expenditures are consumption (C), investment (I), government spending (G), and net exports (NX). Choice D correctly identifies these four components.

Question 2

Consumption expenditures include spending by households on:

Accepted Answer

Consumption expenditures refer to spending by households on goods and services. Choice A is incorrect as exports are not purchased by households. Choice B is incorrect as inventories refer to goods held by businesses for future sale and are not purchased by households. Choice C is incorrect as residential housing is a type of investment expenditure, not consumption expenditure. Therefore, D is the best choice as it refers to services purchased and consumed by households.

Question 3

Which of the following transactions would be included in the GDP of the United States?

Accepted Answer

Only the production of goods and services within the geographic borders of a country are included in its GDP. Therefore, Honda's production of cars in Ohio would be included in the GDP of the United States. The other transactions involve production or sales outside of the United States and would not be included in the country's GDP.

Question 4

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:  What is the value added of Friendly Groceries?

Accepted Answer

The answer of Suppose a jar of DeLux popcorn that...

Question 5

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process:  If the oranges were grown and the jam produced in the year 2015, but the marmalade was sold at The Corner Store in the year 2016, what is the contribution of these transactions to GDP in the year 2015?

Accepted Answer

The answer of Suppose a jar of orange marmalade that...

Question 6

The total market value of production in an economy must equal total:

Accepted Answer

The total market value of production, measured by Gross Domestic Product (GDP), is equal to the total spending on final goods and services within an economy. This includes consumption by households, investments by firms, government spending, and net exports (exports minus imports). It does not necessarily equal profits or revenues from all transactions.

Question 7

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process:  What is the sum of the value added of all the firms?

Accepted Answer

The answer of Suppose a jar of orange marmalade that...

Question 8

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process:  If the oranges were grown and the jam produced in the year 2015, but the marmalade was sold at The Corner Store in the year 2016, what is the contribution of these transactions to GDP in the year 2016?

Accepted Answer

The answer of Suppose a jar of orange marmalade that...

Question 9

Which of the following would be included in the GDP of the United States?

Accepted Answer

GDP includes all goods and services produced within a country's borders. Boeing building a plane in Seattle is a production activity within the U.S., so it is included in the U.S. GDP.

Question 10

The four categories of final users of GDP are:

Accepted Answer

The four categories of final users of GDP are households, firms, governments, and the foreign sector. Households and firms are the two largest categories of final users, as they consume the majority of goods and services produced in the economy. Governments also consume a significant portion of goods and services, particularly in areas such as defense, education, and infrastructure. Finally, the foreign sector includes exports, which are goods and services produced in the domestic economy and sold to consumers abroad, as well as imports, which are goods and services produced abroad and consumed by domestic consumers.

Question 11

In 2015, Pete Rich purchases a 1642 painting by Rembrandt for $20 million.He also pays a one percent commission to the auction house that sold the painting.What is the contribution of these transactions to GDP in the year 2015?

Accepted Answer

The answer of In 2015, Pete Rich purchases a 1642...

Question 12

The market value of all domestically produced final goods and services arealso equal to the total amount spent by ______________ less spending on imported goods and services.

Accepted Answer

All final buyers of goods and services, which make up GDP, come from households, firms, governments or the foreign sector.

Question 13

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:  What is the sum of the value added of all of the firms?

Accepted Answer

The answer of Suppose a jar of DeLux popcorn that...

Question 14

Total spending on final goods and services in an economy must equal total:

Accepted Answer

Total spending on final goods and services must equal the value of producing those same goods and services because any good or service produced will also be purchased by some economic agent.

Question 15

When the production process extends over more than one year, the value of the final product is:

Accepted Answer

GDP is conventionally an annual measure. However, when production takes longer than a year, the price of the final product is divided into the amount of value added each year for national accounting purposes.

Question 16

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:  What is the value added of DeLux Popcorn Co.?

Accepted Answer

The answer of Suppose a jar of DeLux popcorn that...

Question 17

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:  If the corn was grown and the jar of popcorn produced in the year 2015, but the jar was sold at Friendly Groceries in the year 2016, what is the contribution of these transactions to GDP in the year 2015?

Accepted Answer

The answer of Suppose a jar of DeLux popcorn that...

Question 18

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:  If the corn was grown and the jar of popcorn produced in the year 2015, but the jar was sold at Friendly Groceries in the year 2016, what is the contribution of these transactions to GDP in the year 2016?

Accepted Answer

The answer of Suppose a jar of DeLux popcorn that...

Question 19

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:  What is the value added of Fulton Family Farm?

Accepted Answer

The answer of Suppose a jar of DeLux popcorn that...

Question 20

In 2015, Janice Quinn sells a five-year-old car to Used Car, Inc.for $3,000.In the same year, Used Car, Inc.resells the car to Hilda Goner for $3,500.What is the contribution of these transactions to GDP in the year 2015?

Accepted Answer

The contribution to GDP is $500, which is the value added by Used Car, Inc. when it resells the car. The original sale from Janice to Used Car, Inc. does not contribute to GDP as it is a second-hand sale.

Quiz 4: Spending, Income, and GDP

The four components of aggregate expenditures are:

Consumption expenditures include spending by households on:

Which of the following transactions would be included in the GDP of the United States?

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: What is the value added of Friendly Groceries?

The total market value of production in an economy must equal total:

Suppose a jar of orange marmalade that is ultimately sold to a customer at The Corner Store is produced by the following production process: What is the sum of the value added of all the firms?

Which of the following would be included in the GDP of the United States?

The four categories of final users of GDP are:

In 2015, Pete Rich purchases a 1642 painting by Rembrandt for $20 million.He also pays a one percent commission to the auction house that sold the painting.What is the contribution of these transactions to GDP in the year 2015?

The market value of all domestically produced final goods and services arealso equal to the total amount spent by ______________ less spending on imported goods and services.

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: What is the sum of the value added of all of the firms?

Total spending on final goods and services in an economy must equal total:

When the production process extends over more than one year, the value of the final product is:

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: What is the value added of DeLux Popcorn Co.?

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process: What is the value added of Fulton Family Farm?

In 2015, Janice Quinn sells a five-year-old car to Used Car, Inc.for $3,000.In the same year, Used Car, Inc.resells the car to Hilda Goner for $3,500.What is the contribution of these transactions to GDP in the year 2015?