Question 1

GDP may be defined as:
A) the monetary value of all goods and services (final,intermediate,and non-market)produced in a given year.
B) total resource income less taxes,saving,and spending on exports.
C) the economic value of all economic resources used in the production of a year's output.
D) the market value of all final goods and services produced within country in a specific year.

Accepted Answer

GDP is the market value of all final goods and services produced within a country in a specific year. It does not include intermediate goods or non-market transactions. This measure is widely used to gauge the economic performance of a country.

Question 2

By summing the dollar value of all market transactions in the economy we would:
A) be determining the market value of all resources used in the production process.
B) obtain a sum substantially larger than the GDP.
C) be determining value added for the economy.
D) be measuring GDP.

Accepted Answer

B

Question 3

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:
A) $110
B) $30
C) $40
D) $70

Accepted Answer

The value added by the manufacturer is calculated by subtracting the cost of components from the selling price of the speaker. 
Value added = Selling price - Cost of components 
Value added = $70 - $40 = $30 
Therefore, the manufacturer adds $30 of value for each speaker.

Question 4

GDP includes:
A) neither intermediate nor final goods.
B) both intermediate and final goods.
C) intermediate,but not final,goods.
D) final,but not intermediate,goods.

Accepted Answer

The answer of GDP includes:
A) neither intermediate nor final goods.
B)...

Question 5

A business buys $5,000 worth of resources to produce a product.The business makes 100 units of the product and each of them sells for $65.The value added by the business to these products is:
A) $5,000
B) $6,500
C) $1,000
D) $1,500

Accepted Answer

The value added by the business is the difference between the revenue generated from selling the product and the cost of the resources purchased to make the product.

Revenue generated from selling 100 units at $65 each = 100 x $65 = $6,500

Cost of resources purchased = $5,000

Value added by the business = Revenue generated - Cost of resources purchased = $6,500 - $5,000 = $1,500

Question 6

Which is included in GDP?
A) used autos purchased by consumers
B) transfer payments
C) telephone service for a home
D) bread for a restaurant

Accepted Answer

Only final goods and services are included in GDP, and telephone service for a home is a final good. Used autos purchased by consumers and bread for a restaurant are intermediate goods, and transfer payments are not included in GDP.

Question 7

If all the final goods and intermediate goods and services were included in GDP:
A) the GDP would then have to be deflated for changes in the price level.
B) nominal GDP would exceed real GDP.
C) the GDP would be overstated.
D) the GDP would be understated.

Accepted Answer

Including intermediate goods and services in GDP would result in double counting, as these goods and services are already accounted for in the value of the final goods and services. This would overstate the value of GDP, hence it would be overstated.

Question 8

An example of an intermediate good or service would be:
A) bricks bought by a homeowner for constructing a patio.
B) sacks of groceries bought by a dentist for his family.
C) a car bought by a household for commuting to work.
D) a desk bought by an accountant for her office.

Accepted Answer

A desk bought by an accountant for her office is an intermediate good because it is a product that is purchased by a business (the accountant) to be used in the production of a final good or service (the accounting service provided by the accountant).

Question 9

GDP is the total market value of:
A) all expenditures on natural resources,labor,and capital goods in an economy in a given year.
B) all expenditures on consumption,investment,and net exports in an economy in a given year.
C) all intermediate goods and services produced in an economy in a given year.
D) all final goods and services produced in an economy in a given year.

Accepted Answer

GDP is the total market value of all final goods and services produced in an economy in a given year, not including intermediate goods and services. Option A does include labor and capital goods, but fails to exclude intermediate goods and services. Option B includes net exports, but fails to exclude intermediate goods and services. Option C only includes intermediate goods and services, not final goods and services. Therefore, option D is the best choice.

Question 10

The GDP is the:
A) monetary value of all final goods and services produced within a nation in a particular year.
B) national income minus all non-income charges against output.
C) monetary value of all economic resources used in producing a year's output.
D) monetary value of all goods and services,final and intermediate,produced in a specific year.

Accepted Answer

The GDP (Gross Domestic Product) is defined as the total monetary value of all final goods and services produced within a nation's borders during a specific time period, usually a year. This includes all goods and services, whether they are consumer goods, investment goods, or government services. The “final goods and services” means that it does not include intermediate goods and services as they are already included in the value of the final goods and services.

Question 11

A nation's gross domestic product (GDP): A) is the dollar value of the total output produced within the borders of the nation. B) is the dollar value of the total output produced by its citizens,regardless of where they are living. C) can be found by summing C + I_n + S + X_n. D) is always some amount less than its C + I_g + G + X_n.

Accepted Answer

GDP measures the value of all goods and services produced within a nation's borders, regardless of the nationality of the producers. It is calculated by the sum of personal consumption expenditures (C), gross private domestic investment (I), government purchases (G), and net exports (X), or GDP = C + I + G + X. Therefore, choice A is the correct answer. Choices B, C, and D are incorrect.

Question 12

Gross domestic product (GDP)measures and reports output:
A) as an index number.
B) in percentage terms.
C) in dollar amounts.
D) in quantities of physical units (for example,kilos,litres,and bushels).

Accepted Answer

GDP measures and reports output in dollar amounts. It is the total value of all final goods and services produced within a country's borders in a specific time period, typically a year.

Question 13

The term "final goods and services" refers to:
A) goods and services which are unsold and therefore added to inventories.
B) goods and services whose value has been adjusted for changes in the price level.
C) goods and services purchased by ultimate users,as opposed to resale or further processing.
D) the excess of Canadians exports over Canadians imports.

Accepted Answer

Final goods and services are those that are purchased by ultimate users, as opposed to resale or further processing. These are products that are ready for consumption and not used for further production. Option A is incorrect because goods and services added to inventories are not final goods and services, as they may be used in further production. Option B is incorrect because the term 'final goods and services' does not refer to price level changes. Option D is incorrect because it refers to the trade balance between exports and imports, and not to final goods and services.

Question 14

Setup Corporation buys $100,000 of sand,rock,and cement to produce ready-mix concrete.It sells 10,000 cubic yards of concrete at $30 a cubic yard.The value added by Setup Corporation is:
A) $200,000
B) $100,000
C) $300,000
D) zero dollars.

Accepted Answer

The answer of Setup Corporation buys $100,000 of sand,rock,and cement...

Question 15

Which of the following is a final good or service?
A) diesel fuel bought for a delivery truck
B) fertilizer purchased by a farm supplier
C) a haircut
D) Chevrolet windows purchased by a General Motors assembly plant

Accepted Answer

A haircut is a final service that is directly consumed by the end user, whereas the other options are intermediate goods that will go towards producing a final good or service. Diesel fuel will power a delivery truck that will transport goods to be sold as final goods, fertilizer will be used by the farm to cultivate crops that will be sold as final goods, and Chevrolet windows will be installed into finished cars that will be sold as final goods.

Question 16

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:
A) net investment for a business.
B) profit and cost.
C) value added from the economic activity.
D) surplus or deficit from the economic activity.

Accepted Answer

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of value added from the economic activity. Value-added is considered the most accurate measure of economic output and is a key indicator of a country's economic health. It represents the increase in the value of goods and services at each stage of production.

Question 17

Value added refers to:
A) any increase in GDP which has been adjusted for adverse environmental effects.
B) the excess of gross investment over net investment.
C) the difference between the value of a firm's output and the value of the inputs it has purchased from others.
D) the portion of any increase in GDP which is caused by inflation as opposed to an increase in real output.

Accepted Answer

Value added refers to the value that a firm adds to its inputs in the production process. It is calculated as the difference between the value of a firm's output and the value of the inputs it has purchased from others. This concept is important in measuring a firm's contribution to GDP.

Question 18

Suppose the total market value of all final goods and services produced in a particular country in 2000 is $600 billion and the total market value of final goods and services sold is $525 billion.We can conclude that:
A) GDP in 2000 is $525 billion.
B) NDI in 2000 is $525 billion.
C) GDP in 2000 is $600 billion.
D) inventories in 2000 fell by $75 billion.

Accepted Answer

GDP measures the total market value of all final goods and services produced within a country in a given period, which is $600 billion in this case.

Question 19

An example of a final good in national income accounts would be new:
A) lawn mowers purchased by Cut-rite Mowers.
B) flowers purchased by homeowner Lenny Davis.
C) chemicals purchased by Green Grass Lawn Care.
D) trees purchased by Wendy Lee's Garden Center.

Accepted Answer

Final goods are goods that are purchased by the end user for consumption or investment purposes. In this case, the flowers purchased by homeowner Lenny Davis are a final good as they are being purchased for personal use. The other options involve purchases by businesses for production purposes and would not be considered final goods.

Question 20

National income accountants can avoid multiple counting by:
A) including transfers in their calculations.
B) counting both intermediate and final goods.
C) only counting final goods.
D) only counting intermediate goods.

Accepted Answer

National income accountants can avoid multiple counting by only counting final goods, as they already include the value of intermediate goods in the final price of the product. Counting both intermediate and final goods would result in double counting and overestimating the total output of an economy. Including transfers in the calculations would not help with avoiding multiple counting, as transfers do not contribute to the production of goods and services. Only counting intermediate goods would underestimate the total output of an economy.

Quiz 7: Measuring the Economys Output

GDP may be defined as:

By summing the dollar value of all market transactions in the economy we would:

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:

GDP includes:

A business buys $5,000 worth of resources to produce a product.The business makes 100 units of the product and each of them sells for $65.The value added by the business to these products is:

Which is included in GDP?

If all the final goods and intermediate goods and services were included in GDP:

An example of an intermediate good or service would be:

GDP is the total market value of:

The GDP is the:

A nation's gross domestic product (GDP) :

Gross domestic product (GDP) measures and reports output:

The term "final goods and services" refers to:

Setup Corporation buys $100,000 of sand,rock,and cement to produce ready-mix concrete.It sells 10,000 cubic yards of concrete at $30 a cubic yard.The value added by Setup Corporation is:

Which of the following is a final good or service?

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

Value added refers to:

Suppose the total market value of all final goods and services produced in a particular country in 2000 is $600 billion and the total market value of final goods and services sold is $525 billion.We can conclude that:

An example of a final good in national income accounts would be new:

National income accountants can avoid multiple counting by: