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Saturday, March 9, 2019

Measuring a Nation’s Income

Chapter 23 Measuring a Nations In sleep with TRUE/FALSE 1. In course of landing fields of scotch contraction, bulletproofs throughout the parsimony increase their product of unplayfuls and work, purpose rises, and jobs argon easy to find. autonomic nervous systemFDIF1REF23-0 NATAnalyticLOCThe think over of political parsimony and definitions of frugal science tweetEconomic expansionMSCDefinitional 2. Macroeconomic statistics include gross internal product, the ostentatiousness enume prescribe, the unemployment rate, retail changes events, and the trade deficit. autonomic nervous systemTDIF1REF23-0 NATAnalyticLOCThe matter of political frugality and definitions of economic science bindingMacro economic scienceMSCDefinitional 3.Macroeconomic statistics secure us about a spark officular home base, firm, or merchandise. autonomic nervous systemFDIF1REF23-0 NATAnalyticLOCThe specify of political miserliness and definitions of economic science guideMac ro economic scienceMSCDefinitional 4. Macro economic science is the training of the economy as a whole. autonomic nervous systemTDIF1REF23-0 NATAnalyticLOCThe theatre of political economy and definitions of economic science snarfMacro economic scienceMSCDefinitional 5. The mark of macro political economy is to explain the economic pitchs that affect many households, firms, and merchandises simultaneously. autonomic nervous systemTDIF1REF23-0 NATAnalyticLOCThe larn of economic science and definitions of economic science outperformMacropolitical economyMSCDefinitional . Micro economic science and macro political economy atomic form 18 closely linked. autonomic nervous systemTDIF1REF23-0 NATAnalyticLOCThe cogitation of economic science and definitions of economic science pop offMicropolitical economy Macro economic scienceMSCDefinitional 7. The basic tools of supply and demand atomic look 18 as profound to macroeconomic analysis as they be to microeconomic analysis. autonomic nervous systemTDIF1REF23-0 NATAnalyticLOCThe memorise of political economy and definitions of political economy sack upDemand SupplyMSCDefinitional 8. gross national product is the around closely watched economic statistic because it is thought to be the best single measuring of a societys economic well-being. autonomic nervous systemTDIF1REF23-0NATAnalyticLOCThe resume of economic science and definitions of political economy outperformgross domestic productMSCDefinitional 9. gross domestic product ordure beak either the chalk up income of every(prenominal)(prenominal) wiz in the economy or the keep d have expense on the economys output of intelligents and operate, to a greater extentover gross domestic product can non measure twain at the same time. autonomic nervous systemFDIF2REF23-1 NATAnalyticLOCThe reckon of economics and definitions of economics come aboutgross domestic productMSC interpretative 10. For an economy as a whole, inco me must exceed using up. autonomic nervous systemFDIF1REF23-1 NATAnalyticLOCThe field of economics and definitions of economics TOPIncome ExpenditureMSCDefinitional 11.An economys income is the same as its expenditure because any transaction has a vendee and a seller. autonomic nervous systemTDIF1REF23-1 NATAnalyticLOCThe submit of economics and definitions of economics TOPIncome ExpenditureMSCDefinitional 12. gross domestic product is the market time place of all closing goods and go produced by a pastorals citizens in a precondition fulfilment of time. autonomic nervous systemFDIF1REF23-2 NATAnalyticLOCThe report of economics and definitions of economics TOPgross domestic productMSCDefinitional 13. gross domestic product join ons to sustainher many diffe operate kinds of products into a single measure of the pass judgment of economic activity by employ market intelligent injurys. autonomic nervous systemTDIF1REF23-2NATAnalyticLOCThe bailiwick of economics and definitions of economics TOPgross domestic productMSCDefinitional 14. U. S. gross domestic product includes the market mensurate of lease ho exploitation, neertheless non the market look upon of owner-occupied caparison. autonomic nervous systemFDIF2REF23-2 NATAnalyticLOCThe dissect of economics and definitions of economics TOPgross domestic productMSC instructive 15. U. S. gross domestic product excludes the business of most il sanctioned goods. autonomic nervous systemTDIF2REF23-2 NATAnalyticLOCThe demand of economics and definitions of economics TOPgross domestic productMSCinterpretive 16. U. S. gross domestic product includes augurs of the observe of items that argon produced and consumed at home, such as housework and automobile maintenance. autonomic nervous systemFDIF2REF23-2NATAnalyticLOCThe larn of economics and definitions of economics TOPgross domestic productMSCapplicative 17. gross domestic product includes exactly the economic respect of last-place g oods because the look on of liaise goods is already include in the prices of the terminal goods. autonomic nervous systemTDIF1REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPgross domestic product medium goodsMSCDefinitional 18. Additions to startstock subtract from gross domestic product, and when the goods in store argon later use or sell, the reductions in inventory add to gross domestic product. autonomic nervous systemFDIF1REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPgross domestic product InventoryMSCDefinitional 9. While gross domestic product includes tangible goods such as books and bug spray, it excludes intangible run such as the service provided by teachers and eradicators. autonomic nervous systemFDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPgross domestic productMSC practical 20. At a rummage gross revenue event, you buy some(prenominal) old books and an old ro cking president your spending on these items is non include in legitimate gross domestic product. autonomic nervous systemTDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPgross domestic productMSC practical 21. When an American bear on opens a practice in Bermuda, his business there is touch off of U.S. gross domestic product. autonomic nervous systemFDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPgross domestic productMSCApplicative 22. If the U. S. administration reports that gross domestic product in the third quarter was $12 trillion at an categoryly rate, then the amount of income and expenditure during quarter trio was $3 trillion. autonomic nervous systemTDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPgross domestic productMSCApplicative 23. The government computes measures of income otherwise than gross domestic product because these other measures normally tell di ffe ingest stories about b rock oilers suit economic conditions.autonomic nervous systemFDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP IncomeMSC interpretative 24. Expenditures by households on education are include in the uptake member of GDP. autonomic nervous systemTDIF2REF23-3 NATAnalyticLOCThe study of economics and definitions of economics TOP outlayMSC interpretative 25. most goods whose purchases are include in the coronation comp matchlessnt of GDP are used to produce other goods. autonomic nervous systemTDIF2REF23-3 NATAnalyticLOCThe study of economics and definitions of economics TOP coronationMSC interpretative 26.New home construction is included in the custom component of GDP. autonomic nervous systemFDIF2REF23-3 NATAnalyticLOCThe study of economics and definitions of economics TOPInvestmentMSCinterpretive 27. Changes in inventory are included in the investment funds component of GDP. autonomic nervous systemTDIF2REF23-3 N ATAnalyticLOCThe study of economics and definitions of economics TOPInvestmentMSC instructive 28. The investment component of GDP refers to financial investment in stocks and bonds. ANSFDIF2REF23-3 NATAnalyticLOCThe study of economics and definitions of economics TOPInvestmentMSC instructive 29.The government purchases component of GDP includes salaries gainful to interchangeiers s motorcarcely non Social Security benefits salaried to the elderly. ANSTDIF2REF23-3 NATAnalyticLOCThe study of economics and definitions of economics TOPGovernment purchasesMSC instructive 30. If the order of an economys imports exceeds the determine of that economys exports, then net exports is a negative number. ANSTDIF2REF23-3 NATAnalyticLOCThe study of economics and definitions of economics TOPNet exportsMSC interpretative 31. If nearlyone in the United States buys a surfboard produced in Australia, then that purchase is included in both the pulmonary tuberculosis component of U.S. GDP and the net exports component of U. S. GDP. ANSTDIF2REF23-3 NATAnalyticLOCThe study of economics and definitions of economics TOPConsumption Net exportsMSCApplicative 32. If pulmonary tuberculosis is $4000, exports are $300, government purchases are $ kibibyte, imports are $400, and investment is $800, then GDP is $5700. ANSTDIF2REF23-3 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 33. If exports are $ergocalciferol, GDP is $8000, government purchases are $1200, imports are $700, and investment is $800, then consumption is $6200. ANSTDIF2REF23-3NATAnalyticLOCThe study of economics and definitions of economics TOPConsumptionMSCApplicative 34. If consumption is $1800, GDP is $4300, government purchases are $1000, imports are $700, and investment is $1200, then exports are $300. ANSFDIF2REF23-3 NATAnalyticLOCThe study of economics and definitions of economics TOPExportsMSCApplicative 35. U. S. GDP was almost $14 trillion in 2007. ANSFDIF1REF23-3 NAT AnalyticLOCThe study of economics and definitions of economics TOPGDPMSCDefinitional 36. In 2007, government purchases was the largest component of U. S. GDP. ANSFDIF2REF23-3NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCinterpretive 37. If jibe spending rises from one socio-economic class to the next, then the economy must be producing a big output of goods and service. ANSFDIF2REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 38. An increase in noun phrase U. S. GDP of necessity implies that the United States is producing a larger output of goods and work. ANSFDIF2REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOP nominative GDPMSCInterpretive 39.Nominal GDP uses constant base-year prices to place a repute on the economys production of goods and function, while real GDP uses menstruation prices to place a nurture on the economys production of goods and services. ANSFDIF1R EF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPNominal GDP factual GDPMSCDefinitional 40. veridical GDP evaluates live production using prices that are fixed at past levels and therefore shows how the economys overall production of goods and services changes over time. ANSTDIF1REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOP unfeigned GDPMSCDefinitional 1. The term real GDP refers to a bucolics actual GDP as opposed to its estimated GDP. ANSFDIF2REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPReal GDPMSCInterpretive 42. Changes in real GDP reflect notwithstanding changes in the amounts being produced. ANSTDIF1REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPReal GDPMSCDefinitional 43. Real GDP is a better gauge of economic well-being than is nominal phrase phrase GDP. ANSTDIF1REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPNominal GD P Real GDPMSCDefinitional 44.Changes in the GDP deflator reflect only changes in the prices of goods and services. ANSTDIF2REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP deflatorMSCInterpretive 45. If nominal GDP is $10,000 and real GDP is $8,000, then the GDP deflator is 125. ANSTDIF2REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP deflatorMSCApplicative 46. If nominal GDP is $12,000 and the GDP deflator is 80, then real GDP is $15,000. ANSTDIF2REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPReal GDPMSCApplicative 7. Economists use the term inflation to key a situation in which the economys overall production level is rising. ANSFDIF1REF23-4 NATAnalyticLOCUnemployment and inflationTOPInflation MSCDefinitional 48. If the GDP deflator in 2006 was one hundred sixty and the GDP deflator in 2007 was 180, then the inflation rate in 2007 was 12. 5%. ANSTDIF2REF23-4 NATAnalyticLOCUnemployment and inflationTOPInflation rate MSCApplicative 49. If the GDP deflator in 2004 was 150 and the GDP deflator in 2005 was 120, then the inflation rate in 2005 was 25%. ANSFDIF2REF23-4NATAnalyticLOCUnemployment and inflationTOPInflation rate MSCApplicative 50. The GDP deflator can be used to take inflation out of nominal GDP. ANSTDIF1REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP deflatorMSCDefinitional 51. In 2004, the level of U. S. real GDP was close to four times its 1965 level. ANSTDIF1REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPReal GDPMSCDefinitional 52. The output of goods and services produced in the United States has grown on bonnie 3. 2 component per year. ANSTDIF1REF23-4NATAnalyticLOCProductivity and growthTOPGrowth MSCDefinitional 53. Periods during which real GDP rises are called recessions. ANSFDIF1REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPRecessionsMSCDefinitional 54. Recessions are associated with displace incomes, rising unemployment, and falling make headways. ANSTDIF1REF23-4 NATAnalyticLOCThe study of economics and definitions of economics TOPRecessionsMSCDefinitional 55. If real GDP is higher(prenominal)(prenominal) in one country than in another, then we can be sure that the standard of living is higher in the country with the higher real GDP. ANSFDIF2REF23-5NATAnalyticLOCThe study of economics and definitions of economics TOPReal GDP Standard of livingMSCInterpretive 56. Real GDP per person tells us the income and expenditure of the average person in the economy. ANSTDIF1REF23-5 NATAnalyticLOCThe study of economics and definitions of economics TOPReal GDP per personMSCDefinitional 57. GDP does not straight measure those things that make life story pricewhile, further it does measure our ability to obtain many of the inputs into a chargewhile life. ANSTDIF1REF23-5 NATAnalyticLOCThe study of economics and definitions of economics TO PGDPMSCDefinitional 58.GDP does not make adjustments for blank time, environmental quality, or volunteer work. ANSTDIF2REF23-5 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 59. Other things exist, in countries with higher levels of real GDP per person, life expectancy and literacy rates are higher than in countries with raze levels of real GDP per person. ANSTDIF2REF23-5 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive SHORT ANSWER 1. GDP is de declinationate as the market appraise of all utmost goods and services produced within a country in a given plosive of time.In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included. ANS GDP excludes some products because they are so difficult to measure. These products include services performed by individuals for themselves and their families, and most goods that are produced and consumed at home and, therefore, never enter the marketplace. In addition, immoral products are not included in GDP even if they can be thrifty because, by societys definition, they are bads, not goods.DIF2REF23-2NATAnalytic LOCThe study of economics and definitions of economicsTOPGDP MSCInterpretive 2. Explain why it is the expression that the rate of intercede goods produced and sell during the year is not included directly as part of GDP, just now the mensurate of middling goods produced and not exchange is included directly as part of GDP. ANS intercede goods produced and sold during the year are not included separately as part of GDP because the value of those goods is included in the value of the final goods produced from them.If the intermediate good is produced but not sold during the year, its value is included as inventory investment for the year in which it was produced. If inventory investment was not included as part of GDP, true production would be underestimated for the year the intermediate good went into inventory, and overestimated for the year the intermediate good is used or sold. DIF2REF23-2NATAnalytic LOCThe study of economics and definitions of economicsTOPGDP median(a) goods MSCInterpretive 3. Since it is counted as investment, why doesnt the purchase of earthmoving equipment from China by a U. S. orporation increase U. S. GDP? ANS The purchase of foreign equipment is counted as investment, but GDP measures only the value of production within the geographic borders of the United States. In order to keep down including the value of the imported equipment, imports are subtracted from GDP. Hence, the value of the equipment in investment is canceled by subtracting its value as an import. DIF2REF23-3NATAnalytic LOCThe study of economics and definitions of economicsTOPGDP Investment Imports MSCApplicative 4. Identify the immediate effect of each of the by-line events on U. S. GDP and its components. a. James receives a Social Security check. b. stern buys an Italian sports car. c. Henry buys domestically produced tools for his construction keep company. ANS a. Since this is a slay payment, there is no change to GDP or to any of its components. b. Consumption and imports bequeath rise and cancel each other out so that there is no change in U. S. GDP. c. This increases the investment component of GDP and so increases GDP. DIF2REF23-3NATAnalytic LOCThe study of economics and definitions of economics TOPGDP Transfer payments Net exports InvestmentMSCApplicative . Between 1929 and 1933, NNP measured in current prices fell from $96 billion to $48 billion. Over the same period, the applicable price index fell from 100 to 75. a. What was the percentage decline in nominal NNP from 1929 to1933? b. What was the percentage decline in real NNP from 1929 to 1933? Show your work. ANS a. NNP measured in current prices is nominal NNP. Nominal NNP fell from $96 billion to $48 billion, a decline of 50 percent. b. R eal NNP is nominal NNP divided by the price index and multiplied by 100. Real NNP in 1929 was ($96 b/100) pic 100 = $96 b.Real NNP in 1933 was ($48 b/75) pic 100 = $64 b. Real NNP fell from $96 billion to $64 billion, a decline of 33 percent. DIF2REF23-4NATAnalytic LOCThe study of economics and definitions of economicsTOPNominal NNP Real NNP MSCApplicative 6. You find that your payroll check for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully. ANS Real income is nominal income adjusted for general increase in prices. If my paycheck is higher this year than last, my nominal income has increased.Whether my real income has increased or not depends on what has happened since last year to the level of prices of things I buy with my income. If the percentage increase in prices is less than the percentage increase in my nominal income, then my real income has increased. Otherwise, my real income has not increased. DIF2REF 23-4NATAnalytic LOCThe study of economics and definitions of economics TOPNominal income Real incomeMSCInterpretive 7. U. S. real GDP is substantially higher today than it was 60 years ago. What does this tell us, and what does it not tell us, about the well-being of U.S. residents? ANS Since this is in real terms, it tells us that the U. S. is able to make a lot more stuff than in the past. Some of the increase in real GDP is probably referable to an increase in population, so we could say more if we k newly what had happened to real GDP per person. Supposing that there was also an increase in real GDP per person, we can say that the standard of living has risen. Material things are an important part of well-being. Having sufficient amounts of things such as food, shelter, and clothing are fundamental to well-being.Other things such as security, a safe environment, access to safe water, access to medical examination exam care, justice, and freedom also matter. However, many of these things are more easily obtained by being able to produce more using fewer resources. Countries with higher real GDP per person tend to have longer life spans, less discrimination towards women, less child tote, and a higher rate of literacy. DIF2REF23-5NATAnalytic LOCThe study of economics and definitions of economics TOPReal GDP Economic welfareMSCInterpretive Sec00 Measuring a Nations Income MULTIPLE CHOICE 1.Statistics that are of particular interest to macroeconomists a. are largely ignored by the media. b. are widely reported by the media. c. include the equilibrium prices of individual goods and services. d. tell us about a particular household, firm, or market. ANSBDIF2REF23-0 NATAnalyticLOCThe study of economics and definitions of economics TOPMacroeconomicsMSCInterpretive 2. Macroeconomists study a. the decisions of households and firms. b. the interaction betwixt households and firms. c. economy-wide phenomena. d. regulations on firms and unions. ANSCDIF1 REF23-0NATAnalyticLOCThe study of economics and definitions of economics TOPMacroeconomicsMSCDefinitional 3. Which of the quest newspaper headlines is more closely related to what microeconomists study than to what macroeconomists study? a. Unemployment rate rises from 5 percent to 5. 5 percent. b. Real GDP grows by 3. 1 percent in the third quarter. c. Retail sales at retentions show large gains. d. The price of oranges rises after an early frost. ANSDDIF2REF23-0 NATAnalyticLOCThe study of economics and definitions of economics TOPMicroeconomics MacroeconomicsMSCInterpretive 4.Which of the pastime questions is more likely to be studied by a microeconomist than a macroeconomist? a. why do prices in general rise by more in some countries than in others? b. wherefore do wages differ across industries? c. Why do production and income increase in some periods and not in others? d. How promptly is GDP currently increasing? ANSBDIF2REF23-0 NATAnalyticLOCThe study of economi cs and definitions of economics TOPMicroeconomics MacroeconomicsMSCInterpretive 5. Which of the following topics are more likely to be studied by a macroeconomist than by a microeconomist? a. the effect of taxes on the prices of airline tickets, the profitability of automobile-manufacturing firms, and employment trends in the food-service industry b. the price of beef, wage deflections in the midst of genders, and antitrust laws c. how consumers maximise utility, and how prices are established in markets for agricultural products d. the percentage of the labor phalanx that is out of work, and differences in average income from country to country ANSDDIF2REF23-0 NATAnalyticLOCThe study of economics and definitions of economics TOPMicroeconomics MacroeconomicsMSCInterpretive 6. We would expect a macroeconomist, as opposed to a microeconomist, to be particularly interested in a. explaining how economic changes affect prices of particular goods. b. devising policies to deal with market failures such as externalities and market power. c. devising policies to promote low inflation. d. identifying those markets that are competitive and those that are not competitive. ANSCDIF2REF23-0NATAnalyticLOCThe study of economics and definitions of economics TOPMicroeconomics MacroeconomicsMSCInterpretive 7. Which of the following is not a question that macroeconomists address? a. Why is average income high in some countries while it is low in others? b. Why does the price of oil rise when war erupts in the Middle vitamin E? c. Why do production and employment expand in some years and contract in others? d. Why do prices rise rapidly in some periods of time while they are more invariable in other periods? ANSBDIF2REF23-0NATAnalyticLOCThe study of economics and definitions of economics TOPMacroeconomicsMSCInterpretive 8. The basic tools of supply and demand are a. useful only in the analysis of economic behavior in individual markets. b. useful in analyzi ng the overall economy, but not in analyzing individual markets. c. primordial to microeconomic analysis, but seldom used in macroeconomic analysis. d. central to macroeconomic analysis as well as to microeconomic analysis. ANSDDIF1REF23-0 NATAnalyticLOCThe study of economics and definitions of economics TOPDemand SupplyMSCDefinitional . Which of the following statistic is usually regarded as the best single measure of a societys economic well-being? a. the unemployment rate b. the inflation rate c. gross domestic product d. the trade deficit ANSCDIF1REF23-0 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCDefinitionalSec01 Measuring a Nations Income The Economys Income and Expenditure MULTIPLE CHOICE 1. Which of the following statements about GDP is make up? a. GDP measures deuce things at in one case the lend income of everyone in the economy and the unemployment rate of the economys labor force. b. Money forever decreases from household s to government and then back to households, and GDP measures this flow of money. c. GDP is to a nations economy as household income is to a household. d. each(prenominal) of the supra are correct. ANSCDIF2REF23-1NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 2. Gross domestic product measures two things at once a. the total spending of everyone in the economy and the total economic system of everyone in the economy. b. the total income of everyone in the economy and the total expenditure on the economys output of goods and services. c. the value of the economys output of goods and services for domestic citizens and the value of the economys output of goods and services for the rest of the world. d. the total income of households in the economy and the total profit of firms in the economy. ANSBDIF1REF23-1 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCDefinitional 3. For an economy as a whole, a. wages m ust equal profit. b. consumption must equal saving. c. income must equal expenditure. d. the number of buyers must equal the number of sellers. ANSCDIF2REF23-1 NATAnalyticLOCThe study of economics and definitions of economics TOPIncome ExpenditureMSCInterpretive 4. For an economy as a whole, income must equal expenditure because a. the number of firms is equal to the number of households in an economy. b. international law requires that income equal expenditure. c. every one dollar bill of spending by some buyer is a dollar of income for some seller. d. every dollar of saving by some consumer is a dollar of spending by some other consumer. ANSCDIF2REF23-1 NATAnalyticLOCThe study of economics and definitions of economics TOPIncome ExpenditureMSCInterpretive 5. If an economys GDP rises, then it must be the case that the economys a. income rises and saving locomote. b. income and saving both rise. c. income rises and expenditure falls. d. income and expenditure both rise. ANSDDIF2REF23-1 NATAnalyticLOCThe study of economics and definitions of economics TOPIncome ExpenditureMSCInterpretive 6. If an economys GDP falls, then it must be the case that the economys a. income falls and saving rises. b. income and saving both fall. c. income falls and expenditure rises. d. income and expenditure both fall. ANSDDIF2REF23-1 NATAnalyticLOCThe study of economics and definitions of economics TOPIncome ExpenditureMSCInterpretive . Because every transaction has a buyer and a seller, a. GDP is more closely associated with an economys income than it is with an economys expenditure. b. every transaction contributes equally to an economys income and to its expenditure. c. the number of firms must be equal to the number of households in a simple circular-flow diagram. d. firms profits are necessarily nought in a simple circular-flow diagram. ANSBDIF2REF23-1 NATAnalyticLOCThe study of economics and definitions of economics TOPIncome ExpenditureMSCInterpret ive 8.Which of the following statements about GDP is correct? a. GDP measures two things at once the total income of everyone in the economy and the total expenditure on the economys output of goods and services. b. Money continuously flows from households to firms and then back to households, and GDP measures this flow of money. c. GDP is generally regarded as the best single measure of a societys economic well-being. d. entirely of the higher up are correct. ANSDDIF2REF23-1 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 9.In a simple circular-flow diagram, total income and total expenditure are a. never equal because total income unceasingly exceeds total expenditure. b. seldom equal because of the ongoing changes in an economys unemployment rate. c. equal only when one dollar is fatigued on goods for every dollar that is spent on services. d. always equal because every transaction has a buyer and a seller. ANSDDIF2REF23-1 NAT AnalyticLOCUnderstanding and applying economic models TOPCircular-flow diagramMSCInterpretive 10. In a simple circular-flow diagram, a. households spend all of their income. b. all goods and services are bought by households. c. expenditures flow through the markets for goods and services, while income flows through the markets for the factors of production. d. All of the to a higher place are correct. ANSDDIF2REF23-1 NATAnalyticLOCUnderstanding and applying economic models TOPCircular-flow diagramMSCInterpretive 11. In a simple circular-flow diagram, firms use the money they get from a sale to a. pay wages to workers. b. pay rent to landlords. c. pay profit to the firms owners. d. All of the to a higher place are correct. ANSDDIF1REF23-1NATAnalyticLOCUnderstanding and applying economic models TOPCircular-flow diagramMSCDefinitional 12. In the actual economy, households a. spend all of their income. b. divide their income among spending, taxes, and saving. c. buy all go ods and services produced in the economy. d. Both (a) and (c) are correct. ANSBDIF2REF23-1 NATAnalyticLOCUnderstanding and applying economic models TOPCircular-flow diagramMSCInterpretive 13. In the actual economy, goods and services are purchased by a. households, but not firms or the government. b. households and firms, but not the government. c. households and the government, but not firms. d. households, firms, and the government. ANSDDIF2REF23-1 NATAnalyticLOCUnderstanding and applying economic models TOPCircular-flow diagramMSCInterpretive Sec02 Measuring a Nations Income The amount of Gross Domestic Product MULTIPLE CHOICE 1. GDP is defined as a. the market value of all goods and services produced within a country in a given period of time. b. the market value of all goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. c. the market value of all final goods and services produced within a country in a given period of time. d. the market value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time. ANSCDIF1REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCDefinitional 2. Gross domestic product is defined as a. the quantity of all final goods and services demanded within a country in a given period of time. b. the quantity of all final goods and services supplied within a country in a given period of time. c. the market value of all final goods and services produced within a country in a given period of time. d. Both (a) and (b) are correct. ANSCDIF1REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCDefinitional 3. To compute GDP, we a. add up the wages compensable to all workers. b. add up the be of producing all final goods and services. c. add up the market values of all final goods and services. d. take the difference b etween the market values of all final goods and services and the costs of producing those final goods and services. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 4. GDP adds together many different kinds of products into a single measure of the value of economic activity by using prices determined by a. banks. b. economists. c. the government. d. markets. ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 5. In order to include many different goods and services in an entireness measure, GDP is computed using, primarily, a. values of goods and services based on surveys of consumers. b. market prices. c. consumer and manufacturing business surpluses. d. costs of producing goods and services. ANSBDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 6. Gross domestic product adds together many different kinds of goods an d services into a single measure of the value of economic activity. To do this, GDP makes use of a. market prices. b. prices that government economists believe reflect the true value of goods and services to society. c. the precondition that quantities of goods and services produced are unchanged from year to year. d. the assumption that prices of goods and services are unchanged from year to year. ANSADIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 7. In figure GDP, market prices are used to value final goods and services because a. market prices do not change over untold over time, so it is easy to make comparisons between years. b. market prices reflect the values of goods and services. c. if market prices are out of line with how concourse value goods, the government sets price ceilings and price floors. d. none of the above is correct market prices are not used in computing GDP. ANSBDIF2REF23-2 NATAnalyticLOCThe st udy of economics and definitions of economics TOPGDPMSCInterpretive 8. If the price of a DVD player is three times the price of a CD player, then a DVD player contributes a. more than three times as much to GDP as does a CD player. b. less than three times as much to GDP as does a CD player. c. exactly three times as much to GDP as does a CD player. d. to GDP but a CD player does not contribute to GDP. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 9. Which of the following is correct? a. The market value of rental admit services is included in GDP, but the market value of owner-occupied hold services is not. b. The market value of owner-occupied housing services is included in GDP, but the market value of rental housing services is not. c. The market values of both owner-occupied housing services and rental housing services are included in GDP. d. neither the market value of owner-occupied housing services nor the market value of rental housing services is included in GDP. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 10. The value of the housing services provided by the economys owner-occupied houses is a. included in GDP, and the estimated rental values of the houses are used to place a value on these housing services. b. included in GDP, and the actual mortgage payments made on the houses are used to estimate the value of these rental services. c. excluded from GDP since these services are not sold in any market. d. excluded from GDP since the value of these housing services cannot be estimated with any degree of precision. ANSADIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 11. contemplate an flatcar confused converts to a condominium, so that the former renters are now owners of their housing units. Suppose further that a current estimate of the value of the condomin ium owners housing services is the same as the rent they previously give. What happens to GDP as a result of this conversion? a. GDP necessarily increases. b. GDP necessarily decreases. c. GDP is un touch on because neither the rent nor the estimate of the value of housing services is included in GDP. d. GDP is unaffected because previously the rent payments were included in GDP and now the rent payments are replaced in GDP by the estimate of the value of housing services. ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 12. James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house.If he were to rent the house in which he lives, he could earn $12,000 per year in rent by doing so. How much do the housing services provided by the two houses contribute to GDP? a. $0 b. $10,000 c. $12,000 d. $22,000 ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 3. GDP excludes most items that are produced and sold il healthyly and most items that are produced and consumed at home because a. the quality of these items is not high large to contribute value to GDP. b. measuring them is so difficult. c. the government wants to discourage the production and consumption of these items. d. these items are not reported on income tax forms. ANSBDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 14. Estimates of the values of which of the following non-market goods or services are included in GDP? a. the value of unpaid housework b. the value of vegetables and other foods that peck grow in their gardens c. the estimated rental value of owner-occupied homes d. All of the above are included in GDP. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 15. Over the last few decades, Americans have chosen to cook less at home and eat more at eating houses. This change in behavior, by itself, has a. reduced measured GDP. b. not affected measured GDP. c. increased measured GDP only to the extent that the value of the restaurant meals exceeded the value of meals previously cooked at home. d. increased measured GDP by the full value of the restaurant meals. ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 16. Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. For example, sprightly people with high incomes, rather than cleaning their own houses, hire people to clean their houses.By itself, this change has a. caused measured GDP to fall. b. not caused any change in measured GDP. c. caused measured GDP to rise. d. probably changed measured GDP, but in an uncertain direction the direction of the change depends on the difference in the quality of the cleaning that has resulted. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 17. Ralph pays someone to mow his lawn, while microphone mows his own lawn. Regarding these two practices, which of the following statements is correct? a. Only Ralphs payments are included in GDP. b. Ralphs payments as well as the estimated value of Mikes mowing services are included in GDP. c. Neither Ralphs payments nor the estimated value of Mikes mowing services is included in GDP. d. Ralphs payments are emphatically included in GDP, while the estimated value of Mikes mowing services is included in GDP only if Mike voluntarily provides his estimate of that value to the government. ANSADIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 18.If Susan switches from going to Speedy Lube for an oil change to changing the oil in her car herself, then GDP a. necessarily rises. b. necessarily falls. c. go out be unaff ected because the same service is produced in either case. d. will be unaffected because car maintenance is not included in GDP. ANSBDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 19. Which of the following is not included in GDP? a. carrots grown in your garden and eaten by your family b. carrots purchased at a farmers market and eaten by your family c. carrots purchased at a grocery store and eaten by your family d. More than one of the above is not included in GDP. ANSADIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 20. A professional gambler moves from a state where gambling is illegal to a state where gambling is legal. Most of his income was, and continues to be, from gambling.His move a. necessarily raises GDP. b. necessarily decreases GDP. c. doesnt change GDP because gambling is never included in GDP. d. doesnt change GDP because in either case his income is inclu ded. ANSADIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 21. If a state made a previously-illegal activity, such as gambling or prostitution, legal, then, other things equal, GDP a. necessarily decreases. b. necessarily increases. c. doesnt change because both legal and illegal production are included in GDP. d. doesnt change because these activities are never included in GDP. ANSBDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 22. Which of the following is included in GDP? a. medical marijuana purchased from a government-run pharmacy by a glaucoma patient b. unpaid marijuana purchased from a drug dealer by a college schoolchild c. recreational marijuana produced and consumed by a man in his Attic d. All of the above are included in GDP. ANSADIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 23. Marijuana is an illegal good and broccoli is a legal good. Which of the following statements is true? a. Darin grows and sells marijuana to Lisa. When Darin and Lisa get married, GDP falls. b. Darin grows and sells marijuana to Lisa. When Darin and Lisa get married, GDP rises. c. Darin grows and sells broccoli to Lisa. When Darin and Lisa get married, GDP falls. d. Darin grows and sells broccoli to Lisa. When Darin and Lisa get married, GDP rises. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 24. Spots, Inc. produces ink and sells it to Write on Target, which makes pens. The ink produced by Spots, Inc. is called a. an inventory good. b. a transitory good. c. a preliminary good. d. an intermediate good. ANSDDIF1REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPIntermediate goodsMSCDefinitional 25. Which of the following statements is correct? a. The value of intermediate goods is always included in GDP. b. The value of i ntermediate goods is included in GDP only if those goods were produced in the previous year. c. The value of intermediate goods is included in GDP only if those goods are added to firms inventories to be used or sold at a later date. d. The value of intermediate goods is never included in GDP. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP Intermediate goodsMSCInterpretive 26. Grapes are a. always counted as an intermediate good. b. counted as an intermediate good only if they are used to produce another good, such as wine. c. counted as an intermediate good only if they are consumed. d. counted as an intermediate good, whether they are used to produce another good or consumed. ANSBDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPIntermediate goodsMSCApplicative 27. Gasoline is considered a final good if it is sold by a a. gasoline site to a bus company that operates a bus route between San Francisc o and Los Angeles. b. railway line operator to a gasoline station in San Francisco. c. gasoline station to a motorist in Los Angeles. d. All of the above are correct. ANSCDIF2REF23-2NATAnalyticLOCThe study of economics and definitions of economics TOPIntermediate goodsMSCApplicative 28. A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two minutes contribute a. $150 to GDP. b. $250 to GDP. c. between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle. d. $400 to GDP. ANSBDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP Intermediate goodsMSCApplicative 9. Als Aluminum caller sells $1 one thousand one million million worth of aluminum to sheeny Foil Company, which uses the aluminum to make aluminum hamper. Shiny Foil Company sells $4 million worth of aluminum foil to h ouseholds. The transactions just described contribute how much to GDP? a. $1 million b. $3 million c. $4 million d. $5 million ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP Intermediate goodsMSCApplicative 30. One bag of flour is sold for $1. 00 to a bakery, which uses the flour to bake bread that is sold for $3. 00 to consumers. A flash bag of flour is sold to a consumer in a grocery store for $2. 00. victorious these three transactions into account, what is the effect on GDP? a. GDP increases by $2. 00. b. GDP increases by $3. 00. c. GDP increases by $5. 00. d. GDP increases by $6. 00. ANSCDIF3REF23-2NATAnalyticLOCThe study of economics and definitions of economics TOPGDP Intermediate goodsMSC analytic 31. Suppose there are only two firms in an economy Cowhide, Inc. produces leather and sells it to Couches, Inc. , which produces and sells leather furniture. With each $1,000 of leather that it buys from Cowhide, Inc. , Couches, Inc. produces a couch and sells it for $3,000. Neither firm had any inventory at the beginning of 2006. During that year, Cowhide produced enough leather for 20 couches. Couches, Inc. bought 80% of that leather for $16,000 and promised to buy the remaining 20% for $4,000 in 2007.Couches, Inc. produced 16 couches during 2006 and sold each one during that year for $3,000. What was the economys GDP for the 2006? a. $48,000 b. $52,000 c. $64,000 d. $68,000 ANSBDIF3REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP Intermediate goodsMSC uninflected 32.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 $2 of rawhide that it buys from Rolling Rawhide, Chewy Chomp, Inc. produces a dog chew and sells it for $5. Neither firm had any inventory at the beginning of 2007. During that year, Rolling Rawhide produced enough rawhide for 1 000 dog chews. Chewy Chomp, Inc. bought 75% of that rawhide for $1500 and promised to buy the remaining 25% for $500 in 2008. Chewy Chomp, Inc. produced 750 dog chews during 2007 and sold each one during that year for $5.What was the economys GDP for 2007? a. $3750 b. $4250 c. $5250 d. $5750 ANSBDIF3REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP Intermediate goodsMSCanalytical 33.In 2007, Corny Company grows and sells $2 million worth of corn to Tasty Cereal Company, which makes corn flakes. Tasty Cereal Company produces $6 million worth of corn flakes in 2007, with sales to households during the year of $4. 5 million. The unsold $1. 5 million worth of corn flakes the Great Compromiser in Tasty Cereal Companys inventory at the end of 2007. The transactions just described contribute how much to GDP for 2007? a. $4. 5 million b. $6 million c. $6. million d. $8 million ANSBDIF3REF23-2 NATAnalyticLOCThe study of economics and definitions of ec onomics TOPGDP Intermediate goodsMSCAnalytical 34. The total sales of all firms in the economy for a year a. equals GDP for the year. b. is larger than GDP for the year. c. is smaller than GDP for the year. d. any(prenominal) of the above is possible. ANSBDIF3REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDP Intermediate goodsMSCAnalytical 35.Which of the following domestically produced items is not included in GDP? a. a bottle of shampoo b. a hairdryer c. a haircut d. All of the above are included in GDP. ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 36. Which of the following is not included in GDP? a. a can of bug spray b. the services of an exterminator c. the honey produced and sold by a beekeeper d. All of the above are included in GDP. ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 37. Gross domestic product includes al l a. legal and illegal goods, but it excludes all legal and illegal services. b. legal and illegal goods and all legal and illegal services. c. legal goods and services, but it excludes illegal goods and services. d. legal and illegal goods and legal services, but it excludes illegal services. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 38. Transactions involving items produced in the past, such as the sale of a 5-year-old automobile by a used car dealership or the purchase of an antique rocking chair by a person at a yard sale, are a. included in current GDP because GDP measures the value of all goods and services sold in the current year. b. included in current GDP but valued at their original prices. c. not included in current GDP because GDP only measures the value of goods and services produced in the current year. d. not included in current GDP because these items have no current value. ANSCDIF2REF23-2 NATAnaly ticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 39. Which of the following events would cause GDP for 2007 to increase? a. In February 2007, Amanda sells a 1996 Honda ossification to Isabella. b. In February 2007, Amanda buys a ticket to visit a zoo in Florida. She visits the zoo in April 2007. c. In December 2007, Isabella eats onions that she harvested from her backyard garden in October 2007. d. All of the above are correct. ANSBDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 40. Until recently, George lived in a home that was newly constructed in 2005. In 2005, he paid $200,000 for the brand new house. He sold the house in 2006 for $225,000. Which of the following statements is correct regarding the sale of the house? a. The 2006 sale increased 2006 GDP by $225,000 and had no effect on 2005 GDP. b. The 2006 sale increased 2006 GDP by $25,000 and had no effect on 2005 GDP. c. The 2006 sale inc reased 2006 GDP by $225,000 furthermore, the 2006 sale caused 2005 GDP to be revise upward by $25,000. d. The 2006 sale affected neither 2005 GDP nor 2006 GDP. ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 41. Tyler and Camille both live in Oklahoma. A new-car dealer in Oklahoma bought a new car from the manufacturer for $18,000 and sold it to Tyler for $22,000. Later that year, Tyler sold the car to Camille for $17,000.By how much did these transactions contribute to U. S. GDP for the year? a. $18,000 b. $22,000 c. $39,000 d. $57,000 ANSBDIF3REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCAnalytical 42.Consider two cars manufactured by Chevrolet in 2007. During 2007, Chevrolet sells one of the two cars to Sean for $24,000. Later in the same year, Sean sells the car to Kati for $19,000. The second automobile, with a market value of $30,000, is unsold at the end of 2007 and it stiff i n Chevrolets inventory. The transactions just described contribute how much to GDP for 2007? a. $24,000 b. $43,000 c. $54,000 d. $73,000 ANSCDIF3REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCAnalytical 43. Which of the following is included in U. S. GDP? a. the value of production by an American works in Morocco b. the value of production by a Moroccan working in the U. S. c. Both (a) and (b) are correct. d. Neither (a) nor (b) is correct. ANSBDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 44. Anna, a U. S. citizen, whole works only in Germany. The value she adds to production in Germany is included a. in both German GDP and U. S. GDP. b. in German GDP, but it is not included in U. S. GDP. c. in U. S. GDP, but it is not included in German GDP. d. in neither German GDP nor U. S. GDP. ANSBDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 45. An American company operates a fast food restaurant in Romania.Which of the following statements is accurate? a. The value of the goods and services produced by the restaurant is included in both Rumanian GDP and U. S. GDP. b. One-half of the value of the goods and services produced by the restaurant is included in Rumanian GDP, and the other one-half of the value is included in U. S. GDP. c. The value of the goods and services produced by the restaurant is included in Romanian GDP, but not in U. S. GDP. d. The value of the goods and services produced by the restaurant is included in U. S. GDP, but not in Romanian GDP. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 46. theatrical role Motors is a Japanese-owned company that produces automobiles all of its automobiles are produced in American plants. In 2007, Quality Motors produced $20 million worth of automobiles, with $12 million in sales to Americans, $6 million in sales to Canadians, and $2 million worth of automobiles added to Quality Motors inventory. The transactions just described contribute how much to U. S. GDP for 2007? a. $12 million b. $14 million c. $20 million d. $34 million ANSCDIF3REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCAnalytical 47. Which of the following items is included in U. S. GDP? a. goods produced by foreign citizens working in the United States b. the difference in the price of the sale of an exist home and its original purchase price c. known illegal activities d. None of the above is included in U. S. GDP. ANSADIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 48. Which of the following items is included in U. S. GDP? a. final goods and services that are purchased by the U. S. federal government b. intermediate goods that are produced in the U. S. ut that are unsold at the end of the GDP accounting period c. good s and services produced by foreign citizens working in the U. S. d. All of the above are included in U. S. GDP. ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCInterpretive 49. Which of the following items is included in U. S. GDP? a. the estimated value of production accomplished at home, such as backyard production of fruits and vegetables b. the value of illegally-produced goods and services c. the value of cars and trucks produced in foreign countries and sold in the U. S. d. None of the above is included in U. S. GDP. ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 50. Which of the following is not included in U. S. GDP? a. unpaid cleaning and maintenance of houses b. services such as those provided by lawyers and hair stylists c. the estimated rental value of owner-occupied housing d. production of foreign citizens living in the United States ANSADIF2REF23-2 NATAnalyticL OCThe study of economics and definitions of economics TOPGDPMSCApplicative 51. Which of the following values would be included in U. S. GDP for 2006? a. the rent that John, an American citizen, would have paid on his home in New York in 2006 had he not owned that home b. the rent that Sarah, an American citizen, paid on her apartment in San Francisco in 2006 c. the value of the legal services provided by Carlos, an attorney and a Mexican citizen, who lived in Houston and practiced law there in 2006 d. All of the above would be included in U. S. GDP for 2006. ANSDDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 52.Which of the following examples of production of goods and services would be included in U. S. GDP? a. Samantha, a Canadian citizen, grows sweet corn in Minnesota and sells it to a grocery store in Canada. b. Ian, an American citizen, grows peaches for his family in the back yard of their Atlanta home. c. Leo, an Am erican citizen, grows marijuana in his Seattle home and sells it to his friends and neighbors. d. None of the above examples of production would be included in U. S. GDP. ANSADIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 3. Which of the following transactions adds to U. S. GDP for 2006? a. In 2006, Ashley sells a car that she bought in 2002 to William for $5,000. b. An American management consultant works in Mexico during the summer of 2006 and earns the equivalent of $30,000 during that time. c. When John and Jennifer were both single, they lived in separate apartments and each paid $750 in rent. John and Jennifer got married in 2006 and they bought a house that, jibe to reliable estimates, could be rented for $1,600 per month. d. None of the above transactions adds to U.S. GDP for 2006. ANSCDIF2REF23-2 NATAnalyticLOCThe study of economics and definitions of economics TOPGDPMSCApplicative 54. Which of the following transactions adds to U. S. GDP for 2006? a. In 2006, Marvin Windows manufactures 20 windows that will eventually be installed in an office building in Minneapolis. The windows remain in Marvins inventory at the end of 2006. b. An Irish marketing consultant works in Boston during the summer of 2006 and earns $30,000 during that time. c.

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