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1. Gross domestic product is the total ________ produced within a country in a given time
period.
A) market value of all final and intermediate goods and services
B) market value of all goods and services
C) amount of final and intermediate goods and services
D) market value of all final goods and services
2. If Nike, an American corporation, produces sneakers in Thailand this would
A) count as part of U.S. GDP since it is a U.S. corporation.
B) count for both Thailand's GDP and U.S. GDP.
C) add to Thailand's GDP but not to U.S. GDP.
D) add to neither U.S. GDP nor Thailand's GDP.
3. A loaf of bread purchased by one of your instructors would be best described as
A) an intermediate good.
B) a financial asset.
C) a used good.
D) a final good.
4. Which of the following expenditures associated with the production of a new highperformance SUV will be directly included in GDP?
A) the sale of bonds to finance the construction of the assembly plant
B) the purchase of used welding robots to assemble to vehicles
C) the purchase of new tires to be installed on the new vehicles
D) the purchase of new machine tools to manufacture the engines
5. Intermediate goods are excluded from GDP because
A) their inclusion would involve double counting.
B) they represent goods that have never been purchased so they cannot be counted.
C) their inclusion would understate GDP
D) the premise of the question is incorrect because intermediate goods are directly included in
calculating GDP.
6. The calculation of the final goods and services sold in an economy would NOT include
A) the purchase of a lawnmower by a household.
B) General Motors' purchases of tires for new automobiles.
C) Ford Motor Company's purchase of a new industrial robot to be used to produce cars.
D) the purchase of a service by a household.
13. The four categories of expenditure used by the expenditure approach method to calculate
GDP are
A) consumption expenditure, taxes, saving and investment.
B) consumption expenditure, investment, net imports and saving.
C) saving, taxes, government expenditure and investment.
D) consumption expenditure, investment, government expenditure and net exports.
14. In the equation, GDP = C + I + G + NX, G refers to
A) federal government expenditures plus all transfer payments.
B) local, state, and federal government spending for all purposes.
C) the taxes and expenditures of all government units.
D) local, state, and federal government expenditure on goods and services, but does not include
transfer payments.
15. Let C represent consumption expenditure, S saving, I gross private domestic investment, G
government expenditure on goods and services, and NX net exports of goods and services. Then
GDP equals
A) C + S + G + NX.
B) C + S + G - NX.
C) C + I + G + NX.
D) C + I + G - NX.
16. Which of the following purchases is included in personal consumption expenditures when
determining gross domestic product?
A) purchase of a new house because of the arrival of a new baby
B) purchase of a new office building
C) vacation expenses for a spring trip to Fort Lauderdale
D) purchases of jeans to add to a store's inventory
17. Goods that are produced this year, stored in inventories, and then sold to consumers next
year
A) count in this year's GDP.
B) count in next year's GDP.
C) count in both this year's and next year's GDP.
D) are not counted as a part of GDP.
18. An example of "investment" in computing real GDP using the expenditure approach is the
purchase of
A) a new set of tools by an auto mechanic, for use in repairing cars.
B) 100 shares of IBM stock.
C) a 100 year old house by a married couple.
D) computer chips by Dell to put in their personal computers.
19. Which of the following is included in government expenditures when measuring GDP?
A) Social Security payments
B) unemployment compensation payments
C) pension payment made to past presidents
D) the current president's salary
20. Transfer payments
A) are included in the government expenditure category in gross domestic product.
B) refer to all payments made to households by governments.
C) refer to payments made by the government that are not made to purchase a good or service.
D) are made by households to firms in exchange for goods and services.
21. Transfer payments are not included in GDP because
A) their market value cannot be accurately determined.
B) they do not generate additional income.
C) they are not purchases of goods or services.
D) their value is included in government expenditure.
Item
Personal consumption
expenditure
Government expenditure on
goods and services
Net taxes
Gross private domestic
investment
Imports of goods and services
Exports of goods and services
Millions of
dollars
80
30
35
20
10
20
22. Using the information in the table above, calculate the value of GDP.
A) $185 million
B) $145 million
C) $195 million
D) $140 million
23. Use the information in the table above to calculate the value of net exports.
A) $10 million
B) $0
C) -$10 million
D) $30 million