Ch231In Order To Include Many Different

Ch.23
1. In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,
a.
values of goods and services based on surveys of consumers.
b.
market prices.
c.
consumer and producer surpluses.
d.
costs of producing goods and services.
ANS: B
2. 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
ANS: D
3 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 farmer’s 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.
ANS: A
4. Anna, a U.S. citizen, 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.
ANS: B
5. U.S. GDP and U.S. GNP are related as follows:
a.
GNP = GDP + Value of exported goods - Value of imported goods.
b.
GNP = GDP - Value of exported goods + Value of imported goods.
c.
GNP = GDP + Income earned by foreigners in the U.S. - Income earned by U.S. citizens abroad.
d.
GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad.
ANS: D
6 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 remains in Tasty Cereal Company’s inventory at the end of 2007. The transactions just