Chapter 23 GDP 1 In the equation Y = C + I + G + NX (E I), a Y represents the economy’s total expenditure b C represents household expenditures on services and durable goods c all of the variables are.
Chapter 23: GDP In the equation Y = C + I + G + NX (E-I), a Y represents the economy’s total expenditure b C represents household expenditures on services and durable goods c all of the variables are always positive numbers d All of the above are correct GDP is equal to a the market value of all final goods and services produced within a country in a given period of time b Y c C + I + G + NX d All of the above are correct The consumption component of GDP includes spending on a durable goods and nondurable goods, but not spending on services b durable goods and services, but not spending on nondurable goods c nondurable goods and services, but not spending on durable goods d durable goods, nondurable goods, and services Consumption consists of spending by households on goods and services, with the exception of a purchases of intangible services b purchases of durable goods c purchases of new houses d spending on education Which of the following is included in the consumption component of GDP? a household purchases of appliances b household purchases of medical care c household purchases of food d All of the above are included in the consumption component of GDP Which of the following is an example of a durable good? a a hair dryer b a suit c a pair of shoes d All of the above are correct Which of the following is not an example of a durable good? a a refrigerator b an automobile c a business suit d a furnace Which of the following is included in the consumption component of U.S GDP? a purchases of staplers, paper clips, and pens by U.S business firms b purchases of natural gas by U.S households c purchases of newly constructed homes by U.S households d All of the above are correct 9 Micah buys a used car for $10,000 and spends $200 on a new radio that is made in the U.S The end result of these two transactions is a U.S consumption purchases increase by $200 and U.S GDP increases by $200 b U.S consumption purchases increase by $200 and U.S GDP increases by $10,000 c U.S consumption purchases increase by $10,000 and U.S GDP increases by $10,200 d U.S consumption purchases increase by $10,200 and U.S GDP increases by $10,200 10 For the purpose of calculating GDP, investment is spending on a stocks, bonds, and other financial assets b real estate and financial assets such as stocks and bonds c capital equipment, inventories, and structures, including household purchases of new housing d capital equipment, inventories, and structures, excluding household purchases of new housing 11 What word economists use to refer to the purchase of goods that will be used in the future to produce more goods and services? a capital b consumption c investment d costs 12 Which of the following is included in the investment component of GDP? a households’ purchases of newly constructed homes b net additions to firms’ inventories c firms’ purchases of capital equipment d All of the above are correct 13 Which of the following is included in the investment component of GDP? a spending to build new houses b spending to build new factories c spending on business equipment such as welding equipment d All of the above are included in the investment component of GDP 14 Which of the following is included in the investment component of GDP? a Elaine pays her college tuition bill b John’s law firm buys him a new computer c Laura buys a bond that McDonald’s sells to raise funds d All of the above are correct 15 The value of goods added to a firm's inventory in a certain year is treated as a consumption, since the goods will be sold to consumers in another period b intermediate goods, and so is not included in that year’s GDP c investment, since GDP aims to measure the value of the economy's production that year d spending on durable goods, since the goods could not be inventoried unless they were durable 16 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, a 2009 GDP increased and 2010 GDP decreased b 2009 GDP decreased and 2010 GDP increased c 2009 GDP did not change and 2010 GDP increased d 2009 GDP increased and 2010 GDP did not change 17 Which of the following is included in government purchases? a unemployment benefits a state pays b Social Security payments the U.S government makes c the services of a U.S government attorney valued at the cost of her salary d All of the above are correct 18 If a U.S citizen buys a dress made in Nepal by a Nepalese firm, then a U.S consumption increases, U.S net exports decrease, and U.S GDP decreases b U.S consumption increases, U.S net exports decrease, and U.S GDP is unaffected c U.S consumption decreases, U.S net exports increase, and U.S GDP increases d U.S consumption decreases, U.S net exports increase, and U.S GDP is unaffected 19 When an American household purchases a bottle of Italian wine for $100, a U.S consumption does not change, U.S net exports decrease by $100, and U.S GDP decreases by $100 b U.S consumption does not change, U.S net exports increase by $100, and U.S GDP increases by $100 c U.S consumption increases by $100, U.S net exports decrease by $100, and U.S GDP does not change d U.S consumption increases by $100, U.S net exports not change, and U.S GDP increases by $100 20 The U.S Air Force pays a Turkish citizen $30,000 to work on a U.S base in Turkey As a result, a U.S government purchases increase by $30,000; U.S net exports decrease by $30,000; and U.S GDP is unaffected b U.S government purchases increase by $30,000; U.S net exports are unaffected; and U.S GDP increases by $30,000 c U.S government purchases, net exports, and GDP are unaffected d U.S government purchases are unaffected; U.S net exports decrease by $30,000; and U.S GDP decreases by $30,000 21 A Texas household receives a Social Security check for $1500, which it uses to purchase a $40 pair of shoes made in Thailand by a Thai firm, a $1240 television made by a Korean firm in Korea, and $220 on groceries from a local store As a result, U.S GDP a increases by $40 b increases by $220 c increases by $280 d increases by $1500 22 An American soldier stationed in North Carolina receives a paycheck from the federal government for $300, which she uses to purchase a $100 MP3 player made in China by a Chinese firm and $200 for fruit and vegetables from a local farmers market As a result, U.S GDP increases by a $200 b $300 c $500 d $600 23 In the economy of Talikastan in 2015, consumption was $5000, exports were $400, government purchases were $1000, imports were $600, and investment was $1200 What was Talikastan’s GDP in 2015? a $6200 b $6400 c $7000 d $8200 24 In the economy of Talikastan in 2015, consumption was $4000, exports were $800, GDP was $7500, imports were $200, and investment was $1000 What were Talikastan’s government purchases in 2015? a $1200 b $1900 c $2500 d $4500 25 In the economy of Talikastan in 2015, consumption was $200, exports were $150, GDP was $475, government purchases were $100, imports were $75, and investment was $100 What were Talikastan’s net exports in 2015? a -$75 b -$225 c $225 d $75 26 Suppose there are only two firms in an economy: Rolling Rawhide produces rawhide and sells it to Chewy Chomp, Inc., which uses the rawhide to produce and sell dog chews With each $1 worth of rawhide that it buys from Rolling Rawhide, Chewy Chomp, Inc produces a dog chew and sells it for $2.50 Neither firm had any inventory at the beginning of 2014 During that year, Rolling Rawhide produced enough rawhide for 2000 dog chews Chewy Chomp, Inc bought 90% of that rawhide for $1800 and promised to buy the remaining 10% for $200 in 2015 Chewy Chomp, Inc produced 1800 dog chews during 2014 and sold each one during that year for $2.50 What was the economy's GDP for 2014? a $3,800 b $4,500 c $4,700 d $5,000 Y=C+I+G+NX Rolling - $200 inventory Chewy -$4,500 sold Net exports = $88 - $120 = -$32 Refer to Table 23-2 What was country A’s consumption in 2010? $3311=$1293+$1717+$301 Refer to Table 23-2 What was country A’s investment in 2010? $704+$310+$611+$374=$1999 Refer to Table 23-2 What were country A’s government purchases in 2010? $1975 = 1422 + 553 29 Refer to Table 23-2 What was country A’s GDP in 2010? 1975+3311+1999-32=7253 30 There are four firms in the simple economy, one to manufacture steel, one to manufacture machinery and equipment used in the automotive industry, one to manufacture an automobile and one to manufacture car tires Suppose the steel maker, both controlling ore mining and selling steel, is 4,000 million VND, of which 1,000 million VND is sold to machinery and equipment manufacturers, 3,000 million VND is sold to the automobile manufacturer The machinery maker uses up all the steel to buy and sell the machinery and equipment at a price of 2,000 million VND to the car manufacturer The car tire manufacturer, as well as the production of rubber caps, has produced and sold 500 million VND of tires to the car manufacturer The automaker uses up all the steel, and the tires have bought and sold to consumers a volume of cars worth 5,000 million VND. Calculate GDP? ... on net, a 2009 GDP increased and 2010 GDP decreased b 2009 GDP decreased and 2010 GDP increased c 2009 GDP did not change and 2010 GDP increased d 2009 GDP increased and 2010 GDP did not change... increase by $200 and U.S GDP increases by $200 b U.S consumption purchases increase by $200 and U.S GDP increases by $10,000 c U.S consumption purchases increase by $10,000 and U.S GDP increases by $10,200... decrease, and U.S GDP decreases b U.S consumption increases, U.S net exports decrease, and U.S GDP is unaffected c U.S consumption decreases, U.S net exports increase, and U.S GDP increases d U.S