Question 1

Which of the following is a final good or service?
A) Coffee grounds you use to make your coffee every morning
B) Coffee grounds used by a coffee shop to make your coffee every morning
C) Coffee grounds used by Edy's to make coffee ice cream
D) None of these is a final good or service.

Accepted Answer

Coffee grounds you use to make your coffee every morning are a final good because they are purchased for personal consumption and not for further production or resale.

Question 2

An example of a final good is:
A) chocolate chips purchased by Nabisco to make Keebler chocolate chip cookies.
B) chocolate chips purchased by you to make chocolate chip cookies.
C) chocolate chips purchased by a restaurant to make a chocolate chip cookie pie to sell.
D) chocolate used to make Cocoa Rice Krispies.

Accepted Answer

Final goods are goods that are purchased for consumption by the end user. In this case, chocolate chips purchased by you to make cookies are for personal use, making them a final good.

Question 3

An example of a final service is:
A) a tire to replace your flat.
B) a used car.
C) getting the oil changed in your car.
D) Tires purchased by Ford to put on their new Explorers.

Accepted Answer

Getting the oil changed in your car is a service provided to the end consumer, making it a final service.

Question 4

An example of an intermediate good would be:
A) the rice used to make Chex cereal.
B) a bag of Uncle Ben's rice sold to consumers.
C) a bag of Quaker's rice cakes sold to consumers.
D) All of these are intermediate goods

Accepted Answer

An intermediate good is a product that is used as an input in the production of a final good. In this case, the rice is used to make Chex cereal, which is the final good sold to consumers. The bag of Uncle Ben's rice and bag of Quaker's rice cakes are both final goods sold directly to consumers, making them not intermediate goods.

Question 5

Which of the following is an intermediate good?
A) Tomatoes grown in your garden that you use to make salsa.
B) Tomatoes you buy at a local farmer's stand that you use to make salsa.
C) Tomatoes sold in the grocery store that you use to make salsa.
D) Tomatoes sold to a factory and used in the production of spaghetti sauce.

Accepted Answer

An intermediate good is a product that is used as an input in the production of final goods. In this case, the tomatoes sold to a factory are being used as an input in the production of spaghetti sauce, which is a final good. The other options involve the use of tomatoes in the production of a good for personal consumption (salsa), which would make them a final good.

Question 6

Which of the following is not a final good or service?
A) A gallon of milk for your breakfast cereal
B) A notebook for your college courses
C) The cheese on the pizza you bought from Domino's
D) The salsa you use while watching football on the weekend.

Accepted Answer

The cheese on the pizza is an intermediate good used in the production of the final good, which is the pizza itself.

Question 7

An example of a good or service that would not count in the U.S. GDP would be:
A) a car made by Toyota in Tennessee.
B) a car made by Ford in Michigan.
C) sneakers made by Nike in Indonesia.
D) sneakers made by New Balance in Ohio.

Accepted Answer

Sneakers made by Nike in Indonesia would not count in the U.S. GDP because they are not produced within the U.S.

Question 8

You purchase a bag of chocolate chips for $3, a bag of flour for $1, a bag of sugar for $.50, a half dozen eggs for $.50, and a half pound of butter for $2. You use all these ingredients to make three dozen cookies. Your roommate offers you $15 for them, and you happily accept. How much does this process contribute to GDP?
A) $7
B) $15
C) $22
D) $8

Accepted Answer

The answer of You purchase a bag of chocolate chips...

Question 9

An example of a good or service that would not count in the U.S. GDP would be:
A) a t-shirt made by The Gap in Cambodia.
B) a t-shirt made by Organi-tee in Oregon.
C) a TV made by Toshiba in Georgia.
D) a bottle of water made by Poland Springs in Maine.

Accepted Answer

The t-shirt made by The Gap in Cambodia would not count in the U.S. GDP because it is produced outside of the United States. GDP only includes goods and services produced within a country's borders.

Question 10

Sally is a U.S. citizen who works for an Italian company at the branch office located in Tulsa, Oklahoma. Sally's work will contribute toward:
A) U.S. GDP since Sally's a citizen.
B) U.S. GDP since the location of her office is in the U.S.
C) Italian GDP since she's working for an Italian firm.
D) both the U.S. and Italy's GDP.

Accepted Answer

Sally works at the branch office located in Tulsa, Oklahoma, which is in the U.S. Therefore, her work will contribute to U.S. GDP. Her citizenship and the fact that she works for an Italian company are not relevant in determining which country's GDP her work contributes to.

Question 11

The goods and services that count toward GDP are defined in terms of:
A) the location of production, not the citizenship of the producer.
B) the citizenship of the producer, not the location of production.
C) citizens producing within a country's borders.
D) total production of companies owned by citizens, regardless of the actual location of production.

Accepted Answer

GDP measures the value of goods and services produced within a country's borders, regardless of the nationality of the producer.

Question 12

An American citizen works for a U.S.-owned architectural firm located in Mexico. This architect will contribute toward:
A) U.S. GDP since he's a U.S. citizen.
B) U.S. GDP since he's working for a U.S. firm.
C) Mexico's GDP since he's working in Mexico.
D) both Mexico's and U.S. GDP.

Accepted Answer

The architect is working in Mexico, therefore he is contributing to Mexico's GDP, not the U.S. GDP. The fact that the firm is U.S.-owned is irrelevant in determining which country's GDP is affected.

Question 13

Which of the following is not an intermediate good?
A) Tires purchased by Ford to put on their new Explorers.
B) Tires sold by Goodyear to put on your Explorer.
C) Tomatoes used by Ortega to make their salsa.
D) Beef purchased by McDonald's to make a Big Mac.

Accepted Answer

Intermediate goods are goods that are used to produce other goods, and are not sold to consumers. Option B refers to tires sold by Goodyear to consumers, and therefore is not an intermediate good. The other options all involve goods being used in the production process and are intermediate goods.

Question 14

Clarence is a Japanese citizen working for Toyota at the manufacturing plant located in Tennessee. Clarence's work will contribute toward:
A) U.S. GDP since the location of the plant is in the U.S.
B) Japan's GDP since he's a Japanese citizen.
C) Japan's GDP since it's a Japanese firm.
D) both the U.S. and Japan's GDP.

Accepted Answer

Clarence's work is adding value to the production of a good in the U.S. Therefore, it will contribute toward the U.S. GDP. Even though he is a Japanese citizen and works for a Japanese company, the location of the plant is in the U.S. and thus the output produced there will be counted as a part of U.S. GDP.

Question 15

Intermediate goods are not included in GDP because:
A) certain goods that are used in the production of a final good would be counted twice.
B) the value of goods bought by producers to make something else would be counted twice.
C) the value of goods used by firms to make the goods they sell is included in the firm's product; accounting for the value twice would overestimate GDP.
D) All of these statements are true

Accepted Answer

Intermediate goods are excluded from GDP to prevent double counting, as their value is already included in the final goods.

Question 16

A Chinese restaurant buys 10 cups of rice for $1; soy, fish and oyster sauces for $1 each; and assorted vegetables for $20. They create 10 meals with these ingredients and sell each one for $5. How much does this process contribute to GDP?
A) $23
B) $50
C) $73
D) $27

Accepted Answer

The contribution to GDP is the total revenue from selling the meals, which is 10 meals x $5 each = $50.

Question 17

The goods and services that count toward GDP are:
A) defined in terms of the location of production, not the citizenship of the producer.
B) anything produced by a nationâ€™s citizens, regardless of who owns it.
C) citizens producing things no matter where they produce it.
D) things like stocks and bonds issued by a corporation.

Accepted Answer

GDP measures goods and services produced within a country's borders, regardless of the nationality of the producer. Therefore, it is defined in terms of the location of production and not the citizenship of the producer.

Question 18

An example of a good or service that would count in the U.S. GDP would be a bag of coffee made in:
A) Vermont by Green Mountain Coffee Roasters.
B) Colombia by Dunkin' Donuts.
C) Canada by Starbucks.
D) All of these would count in U.S. GDP.

Accepted Answer

Only the bag of coffee made in Vermont by Green Mountain Coffee Roasters would count in U.S. GDP as it was produced within the United States. The bags made in Colombia by Dunkin' Donuts and Canada by Starbucks were produced outside of the United States and therefore would not be counted in the U.S. GDP.

Question 19

An example of a good or service that would count in the U.S. GNP would be a bag of coffee made in:
A) Vermont by Green Mountain Coffee Roasters.
B) Colombia by Dunkin' Donuts.
C) Canada by Starbucks.
D) All of these would count in U.S. GNP.

Accepted Answer

The answer of An example of a good or service...

Question 20

Suzi is a British citizen who works for Yankee Candles in Massachusetts. Suzi's work will be included in:
A) U.S. GDP since she's working for a U.S. firm.
B) U.S. GDP since she's working for a firm located in the U.S.
C) England's GDP since she's a British citizen.
D) both the U.S. and England's GDP.

Accepted Answer

GDP measures the value of goods and services produced within a country's borders. Since Suzi is working for a firm located in the U.S., her work will be included in the calculation of U.S. GDP. It is not included in England's GDP since she is not working in England.

Quiz 7: Measuring GDP

Which of the following is a final good or service?

An example of a final good is:

An example of a final service is:

An example of an intermediate good would be:

Which of the following is an intermediate good?

Which of the following is not a final good or service?

An example of a good or service that would not count in the U.S. GDP would be:

An example of a good or service that would not count in the U.S. GDP would be:

Sally is a U.S. citizen who works for an Italian company at the branch office located in Tulsa, Oklahoma. Sally's work will contribute toward:

The goods and services that count toward GDP are defined in terms of:

An American citizen works for a U.S.-owned architectural firm located in Mexico. This architect will contribute toward:

Which of the following is not an intermediate good?

Clarence is a Japanese citizen working for Toyota at the manufacturing plant located in Tennessee. Clarence's work will contribute toward:

Intermediate goods are not included in GDP because:

A Chinese restaurant buys 10 cups of rice for $1; soy, fish and oyster sauces for $1 each; and assorted vegetables for $20. They create 10 meals with these ingredients and sell each one for $5. How much does this process contribute to GDP?

The goods and services that count toward GDP are:

An example of a good or service that would count in the U.S. GDP would be a bag of coffee made in:

An example of a good or service that would count in the U.S. GNP would be a bag of coffee made in:

Suzi is a British citizen who works for Yankee Candles in Massachusetts. Suzi's work will be included in: