Which of the following components of GDP accounts for the bulk of national expenditures in the United States?
a. Government purchases
b. Imports
c. Consumption
d. Investment
e. Exports
Question 2Consider a hypothetical economy, whose GDP was 10,000 . consumption equaled 9,800, investment equaled 125, goods exported equaled 255, and goods imported equaled 500, in 2010 . Calculate the government spending in this economy during the year.
a. 120
b. 380
c. 245
d. 200
e. 320
Question 3Consider GDP calculated according to the expenditures approach. Which of the following components of GDP would need to decrease for GDP to increase?
a. Imports
b. Consumption
c. Exports
d. Investment
e. Government spending
Question 4What is the approximate percent of GDP produced by private firms in the United States?
a. 4 percent
b. 11 percent
c. 25 percent
d. 57 percent
e. 75 percent
Question 5Which of the following accounts for the largest percentage of output in the United States?
a. The government
b. Business firms
c. Households
d. Banks
e. The rest of the world
Question 6When estimating GDP, changes in the level of inventory are calculated because:
a. it indicates the level of employment in the economy.
b. it provides information about a firm's expectations.
c. it is a good indicator of the competitiveness of the economy.
d. it shows the level of business spending by firms.
e. it determines the value of goods produced in a year but not sold in that year.
Question 7Identify the impact of an increase in the inventory stock during a year.
a. Consumption spending will decrease thereby reducing the GDP.
b. The GDP of a country should decrease by the amount of the increase in inventory.
c. The capital investment in a country will increase.
d. Neither the capital investment nor the GDP will change.
e. The GDP of a country should increase by the amount of the increase in inventory.
Question 8A soft-drink bottling company supplies six-packs of orange flavored soda to retailers for a price of 2 each. If the components in each six-pack costs the bottling company 1.50, the value added, to each six-pack, by the bottling company is:
a. 2.00.
b. 1.50.
c. 1.25.
d. 1.00.
e. 0.50.
Question 9The term value added is used to describe:
a. the increase in the value of a product that occurs at each stage of production.
b. the amount subtracted from the value of goods because of inflation.
c. the total value of all intermediate goods used in the production of the final good.
d. the amount paid in the final sale of a product or service.
e. the amount subtracted from the value of resources because of depreciation.
Question 10To avoid double counting in the calculation of GDP,
a. net exports should be excluded.
b. the value of intermediate goods and services should be excluded.
c. the capital consumption allowance should be excluded.
d. business investment should be excluded.
e. government purchases should be excluded.
Question 11Which of the following will be categorized as an intermediate good in national income accounting?
a. The value of oregano used as a seasoning for pizzas
b. The crops consumed by a farmer's family members
c. The present value of a car produced a couple of years ago
d. A clunker sold during the current year
e. The value of an antique piece of jewelry handed down over generations in a family
Question 12If the value of intermediate goods and services are included in GDP, then:
a. GDP would be understated.
b. GDP would act as a true indicator of economic welfare.
c. there would be double-counting.
d. it would lead to depreciation.
e. GDP would be able to give an exact estimate of the inventory in an economy.
Quick Reply
