Chapter 6 (6.1)

Question 1

GDP is a measure of the value of

all goods and services produced by the nation’s citizens during some period of time.

all goods and services produced by the nation’s citizens during some period of time, corrected for inflation.

all goods and services sold in a country during some period of time.

all newly produced final goods and services in a country during some period of time.

all goods and services produced in a country during some period of time, corrected for inflation.

Answer 1

all newly produced final goods and services in a country during some period of time.

Question 2

Which of the following is most likely a final good?

steel
crude oil
wheat
a laptop computer
cotton

Answer 2

a laptop computer

Question 3

GDP can be calculated by adding the value of

all intermediate and final goods produced in a country within a given period.

all final goods produced in a country within a given period minus the value of all intermediate goods produced.

all intermediate goods produced in a country within a given period.

all final goods produced in a country within a given period.

all final goods or the value of all intermediate goods produced in a country within a given period, whichever is smaller.

Answer 3

all final goods produced in a country within a given period.

Question 4

All of the following are approaches for calculating GDP except:

income
All of the above can be used to calculate GDP.
cost
production
spending

Answer 4

cost

Question 5

Intermediate goods are part of final goods and so the value of intermediate goods is included in the calculation of GDP in addition to the value of final goods.

true
false

Answer 5

false

Question 6

Total spending in the economy is divided into

consumption, investment, government purchases, and net exports.

consumption, investment, government budget, and net exports.

consumption, investment, government budget, and exports.

consumption, investment, government purchases, and exports.

consumption, investment, government expenditures, and exports.

Answer 6

consumption, investment, government purchases, and net exports.

Question 7

Government purchases are defined as

purchases of goods and services by the federal government.

purchases of new goods and services and transfer payments by the federal government.

purchases of new goods and services by federal, state, and local governments.

purchases of new goods and services and transfer payments by federal, state, and local governments.

purchases of goods and services by federal and foreign governments.

Answer 7

purchases of new goods and services by federal, state, and local governments.

Question 8

If inventories increase in a given year, they should be added in when calculating GDP.

true
false

Answer 8

true

Question 9

To measure GDP using the production approach, it is necessary to add up the total value of the new goods and services produced in the economy for the given time period.

true
false

Answer 9

false