contemp econ final

Question 1

What is is included in the calculation of GDP?

Answer 1

Y=C+I+G+(X-M)
consumer spending (C), business investment (I), government spending (G), and net exports, which is total exports minus total imports (X – M).

Question 2

True Or False: Most goods and services produced at home are included in GDP while most goods and services produced illegally are excluded.

Answer 2

True

Question 3

Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his backyard. Regarding these two practices, which of the following statements is correct?:

A: Only Joe’s grocery store purchases are included in GDP.

B: Only Joe’s and Jim’s grocery store purchases are included in GDP.

C: Joe’s and Jim’s grocery store purchases are included in GDP. The vegetables from Jim’s backyard garden are included at their market value.

D: Joe’s and Jim’s grocery store purchases are included in GDP. The vegetables from Jim’s backyard garden are included at their market value, if Jim provides this information.

Question 4

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 transactions contribute what to GDP

Answer 4

GDP is the total value of all goods and services produced within a country’s borders in a given period of time.

In this case, the steel and bicycle companies produced a bicycle worth $250.

This means that the total contribution to GDP from these two transactions is $250.

Question 5

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

Answer 5

Mexican GDP, but it is not included in U.S. GDP.