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5eco.pdf - Chapter 5 GDP A Measure of Total Production and...

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Chapter 5 GDP: A Measure of Total Production and Income 1) The total production within an economy is measured as A) Gross Home Product. B) Total Domestic Output. C) Annual Production Value. D) Gross Domestic Product. E) Total Annual Output. 2) Gross Domestic Product is equal to the market value of all the final goods and services ________ in a given period of time. A) produced within a country B) consumed within a country C) consumed by the citizens of a country D) produced by the citizens of a country E) produced and consumed within a country 3) Wobet is a small country that produces only steak and potatoes. Steaks have a price of $10 each and potatoes have a price of $1 each. Suppose that Wobet produces 10 steaks and 20 potatoes in 2010. Using ________, Wobet has GDP equal to ________. A) market value; 30 units B) a market basket; 30 units C) market value; $120 ( 10× 10 + 20 ×1) D) real value; $120 E) a price index; $120 4) To calculate GDP it is necessary to add up the market value of all the ________ produced within a country during a year. A) goods but not services produced B) goods and services produced C) intermediate goods and services produced D) final goods and services produced E) intermediate goods and services produced and all the final goods and services produced 5) If you make dinner for yourself A) the market value of your dinner is added to GDP. B) your service in preparing the meal is valued at a cook's wage and added to GDP. C) none of what you bought to prepare for dinner is included in GDP. D) only the market value of ingredients that you purchased this year is added to GDP. E) the difference between the cost of the ingredients that you purchased this year and the market value of the dinner is added to GDP.
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6) Consumption expenditure includes spending A) on intermediate goods and services by firms. B) on office supplies by firms. C) by households. D) by households and spending on office supplies by firms. E) by governments when they are buying goods and services that consumers also buy. 7) Investment is the expenditure done by A) savers. B) firms. C) governments. D) the rest of the world. E) Both answers A and B are correct. 8) Investment is defined as the purchase of A) any financial asset only. B) additions to inventories only. C) financial assets and inventories only. D) the purchase of new capital goods and additions to inventories. E) the purchase of new capital goods but not additions to inventories. 9) In measuring GDP, which of the following is included? A) the value of preparing meals at home B) the value of stocks and bonds bought and sold C) the value of used goods when they are sold D) the value of increases in business inventories E) the value of durable consumption goods but not the value of nondurable consumption goods. 10) In calculating GDP, we must A) add the market value of imports and subtract the market value of exports.
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