Question 1

When George buys a new computer for his business,it is included in GDP as _______,and when he buys a new computer for use at home,it counts as ________.

Accepted Answer

When George buys a new computer for his business, it is considered an investment because it is being used to produce goods or services for his business. When he buys a new computer for personal use at home, it is considered consumption because it is not being used to produce goods or services for an income-producing purpose.

Question 2

Joe sells the house he has lived in for 10 years to the Smith family for $300,000.He receives $50,000 more than his original purchase price 10 years ago.Joe pays his real estate agent a 5% sales commission.This transaction will increase GDP by:

Accepted Answer

The answer of Joe sells the house he has lived...

Question 3

You bought stock in 2010 for $100 and you sold it in 2012 for $200.You used a broker to sell the stock for you,and he charged you $20.This transaction contributed ________ to GDP.

Accepted Answer

The broker's fee of $20 is the only part of the transaction that contributes to GDP, as it represents a service provided in the economy. The buying and selling of the stock itself are financial transactions and do not directly contribute to GDP.

Question 4

Goods that firms repackage with other goods for sale at a later stage are:

Accepted Answer

Repackaging of goods is considered an intermediate stage of production and these goods are classified as intermediate goods.

Question 5

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 GDP is:

Accepted Answer

The contribution to GDP is calculated by taking the final selling price of the chocolate bars ($150,000) and subtracting the value of the intermediate good (sugar) used in the production process ($50,000). Therefore, the contribution to GDP is $150,000 - $50,000 = $100,000.

Question 6

Consider the following data, which shows the quantities and prices of two goods produced in the economy, to answer the next three questions:
 
-To avoid double-counting when calculating GDP,it is best to:

Accepted Answer

To avoid double-counting, it is best to only count the value added at each stage of production, rather than the full value of the goods and services produced. This ensures that only the final value of the good or service is included in GDP.

Question 7

An example of an intermediate good would be:

Accepted Answer

Intermediate goods are those goods that are used in the production of final goods or services. In this case, the pencils purchased by a restaurant are not the final product sold to consumers but are instead used in the process of providing a service to customers.

Question 8

You bought a popular video game last year for $75 and sold it to a store this year for $20.The store sells the used game to a consumer for $40.When you sell your game to the store,how is this included in GDP?

Accepted Answer

The answer of You bought a popular video game last...

Question 9

Bob wins the lottery.This ________ included in ________ category of GDP.

Accepted Answer

Lottery winnings are not included in any category of GDP as they are considered transfer payments and not a part of the production process.

Question 10

The four major expenditure categories of GDP are:

Accepted Answer

The four major expenditure categories of GDP are consumption (C), investment (I), government purchases (G), and net exports (NX). Option C correctly identifies all four categories. Option A is incorrect as imports and exports fall under the category of net exports. Option B is incorrect as taxes are not a major expenditure category of GDP. Option D is incorrect as stocks are not a major expenditure category of GDP. Option E is incorrect as taxes are not included in the major expenditure categories, and net exports are missing.

Question 11

When people in the United States buy clothing made in China,this counts as:

Accepted Answer

Buying clothing made in China counts as import consumption as the clothing is being brought into the United States from another country.

Question 12

You bought a popular video game last year for $75 and sold it to a store this year for $20.The store sells the used game to a consumer for $50.This adds _____ to GDP when the store sells the game to the consumer.

Accepted Answer

The answer of You bought a popular video game last...

Question 13

A company produces a computer.They pay $100 for the keyboard and outer case,$200 for the internal hardware,and $100 for the software.They sell it to a consumer for $500.The contribution to GDP is:

Accepted Answer

The contribution to GDP is the final sale price of the computer, which is $500. Intermediate costs are not counted separately in GDP.

Question 14

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

Accepted Answer

The answer of When John buys new tires for his...

Question 15

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 GDP is:

Accepted Answer

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

Question 16

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 GDP is:

Accepted Answer

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

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:
 
-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 GDP is:

Accepted Answer

GDP measures the total value of goods and services produced within a country's borders. In this case, the value added by each company should be considered. Company X's contribution to GDP is the price at which it sold the leather, which is $60,000. Company Y's contribution is the value of the shoes it produced, which is $180,000 minus the cost of the leather, which is $60,000, giving a contribution of $120,000. Therefore, the total contribution to GDP is $60,000 + $120,000 = $180,000.

Question 18

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 GDP is:

Accepted Answer

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

Question 19

Bob sells his car to Stan's Used Car Lot for $5,000.Stan's Used Car Lot sells the car to Bill for $5,500.This transaction contributes ________ to GDP.

Accepted Answer

Only the value added to the product contributes to GDP. In this transaction, Stan's Used Car Lot added value by reselling the car to Bill at a higher price. Therefore, the value added, which is $500, contributes to GDP. The original price that Bob sold the car for, $5,000, does not contribute to GDP since it is just a transfer of ownership.

Question 20

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 GDP this month is:

Accepted Answer

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

Quiz 6: Introduction to Macroeconomics and Gross Domestic Product

When George buys a new computer for his business,it is included in GDP as _,and when he buys a new computer for use at home,it counts as __.