Question 1

A transfer payment is a payment made by

Accepted Answer

A transfer payment is a payment made by the government, but not in exchange for a currently produced good or service. Examples of transfer payments include social security benefits, welfare payments, and disaster relief funds.

Question 2

A stove is produced by a firm in 2014,added to the firm's inventory in 2014,and sold to a household in 2015.It follows that

Accepted Answer

The stove is counted as investment in 2014 when it is added to inventory. In 2015, it is counted as consumption when sold, and subtracted from investment to avoid double counting.

Question 3

A transfer payment is

Accepted Answer

Transfer payments are a type of government spending where funds are transferred from the government to individuals or groups without any exchange of goods or services in return. Examples of transfer payments include welfare payments, Social Security benefits, and unemployment benefits. Options A and B are not related to transfer payments, and option D describes the concept of a net benefit.

Question 4

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

Accepted Answer

Government purchases include spending on goods and services by all levels of government, including salaries of government employees and payments to private firms for services.

Question 5

Which of the following items is included in GDP?

Accepted Answer

Only the sale of final goods and services, such as the services performed by a doctor, are included in GDP. The sale of used goods is not included since they were already accounted for in previous GDP calculations. The sale of stocks and bonds is also not included in GDP since they are not final goods or services, but rather financial assets.

Question 6

Transfer payments are

Accepted Answer

Transfer payments are not payments for currently produced goods or services, so they do not directly contribute to GDP. Examples of transfer payments include Social Security, unemployment benefits, and veterans' benefits. While these payments do represent income to individuals, they are not counted as part of GDP because they do not directly involve the production of goods and services.

Question 7

Which of the following represents a transfer payment?

Accepted Answer

A transfer payment is a payment made by a government for which no goods or services are exchanged. Social Security is an example of a transfer payment, as the government distributes funds to eligible recipients without requiring any goods or services in return. Choices A, C, and D all involve financial transactions in which goods or services are exchanged, and thus do not represent transfer payments.

Question 8

Which of the following is included in government purchases?

Accepted Answer

Government purchases are expenditures made by government entities to acquire goods or services to operate/maintain public services. Unemployment benefits and Social Security payments are transfer payments and not purchases, whereas the services of a government attorney are a direct purchase of labor. Therefore, the correct option is C.

Question 9

Unemployment compensation is

Accepted Answer

Unemployment compensation is not part of GDP because it is a transfer payment, which refers to government payments to individuals that are not made in exchange for goods or services. Transfer payments are not included in GDP because they do not represent economic production.

Question 10

The U.S.government pays an economist at the U.S.Department of Commerce $100,000 in salary in 2013.The economist then retires.In 2014,the government pays him $60,000 in Social Security benefits.Which of the following is correct?

Accepted Answer

The 2013 payment is included in 2013 GDP as a government employee's compensation, which is a part of the government's consumption expenditure. The retirement benefit paid in 2014 is a transfer payment, and it is not included in GDP since it does not involve any current production of goods or services.

Question 11

To encourage formation of small businesses,the government could provide subsidies;these subsidies

Accepted Answer

Subsidies are considered transfer payments because they are payments for which no goods or services are exchanged directly. They are not counted in GDP as they do not reflect the production of goods or services.

Question 12

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

Investment includes any increase in inventories, whether it's raw materials like sugar or finished goods like energy drinks.

Question 13

Transfer payments

Accepted Answer

Transfer payments are payments made without any befit of currently produced goods or services. They only alter the overall household income and do not reflect the productivity of an economy. These payments generally flow from the government to households, including subsidies, pensions, and welfare benefits. Hence, all the above options are correct.

Question 14

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 means that it includes both purchases for government consumption (such as salaries for government employees) and purchases for gross investment (such as infrastructure projects). Option A includes transfer payments, which are not considered government purchases. Option B refers only to investment by government, leaving out government consumption expenditure. Option D only includes wages, salaries, and investment expenditure, but it does not cover all types of government purchases.

Question 15

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 good was produced in 2009, so it was counted in the GDP of 2009. When it was sold in 2010, it was already part of the inventory, so it does not affect the GDP of 2010.

Question 16

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.

Question 17

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 government spending that is not made in exchange for a currently produced good or service. Consumption refers to the purchase of goods and services by households, while investment refers to spending by businesses on capital goods like factories and machinery.

Question 18

Social Security payments are

Accepted Answer

Social Security payments are excluded from GDP because they do not reflect the economy's production. GDP only includes goods and services that are produced within a country's borders during a specific time period. Social Security payments are transfer payments made to individuals, and they do not reflect any new production of goods or services.

Question 19

After the terrorist attacks on September 11,2001,governments within the United States raised expenditures to increase security at airports.These purchases of goods and services are

Accepted Answer

Expenditures made by governments on goods and services are included in GDP calculation as a component of government spending. Therefore, the security measures implemented by the US government would be included in GDP calculation. It is important to note that the fact that the government collects taxes to pay for them does not affect their inclusion in GDP.

Question 20

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

Accepted Answer

Only option B involves the government directly purchasing a good or service. Option A involves a transfer payment and option C involves government spending on a transfer program.

Quiz 10: Measuring a Nations Income: The Components of GDP

A transfer payment is a payment made by

A stove is produced by a firm in 2014,added to the firm's inventory in 2014,and sold to a household in 2015.It follows that

A transfer payment is

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

Which of the following items is included in GDP?

Transfer payments are

Which of the following represents a transfer payment?

Which of the following is included in government purchases?

Unemployment compensation is

The U.S.government pays an economist at the U.S.Department of Commerce $100,000 in salary in 2013.The economist then retires.In 2014,the government pays him $60,000 in Social Security benefits.Which of the following is correct?

To encourage formation of small businesses,the government could provide subsidies;these subsidies

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

Transfer payments

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

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,

Government purchases include spending on goods and services by

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

Social Security payments are

After the terrorist attacks on September 11,2001,governments within the United States raised expenditures to increase security at airports.These purchases of goods and services are

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