macro95ex2 - Chapter 2 The Measurement and Structure of the...

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Chapter 2 The Measurement and Structure of the National Economy T Multiple Choice Questions 1. The three approaches to measuring economic activity are the (a) cost, income, and expenditure approaches. (b) product, income, and expenditure approaches. (c) consumer, business, and government approaches. (d) private, public, and international approaches. Answer: B Level of difficulty: 1 Section: 2.1 2. The value of a producer’s output minus the value of the inputs it purchases from other producers is called the producer’s 3. The Bigdrill company drills for oil, which it sells for $200 million to the Bigoil company to be made into gas. The Bigoil company’s gas is sold for a total of $600 million. What is the total contribution to the country’s GDP from companies Bigdrill and Bigoil?
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Chapter 2 The Measurement and Structure of the National Economy 15 4. Sam’s Semiconductors produces computer chips, which it sells for $10 million to Carl’s Computer Company (CCC). CCC’s computers are sold for a total of $16 million. What is the value added to CCC? 5. The Compagnie Naturelle sells mounted butterflies, using butterfly bait it buys from another firm for $20,000. It pays its workers $35,000, pays $1000 in taxes, and has profits of $3,000. What is its value added? (a) $3000 (b) $19,000 (c) $39,000 (d) $59,000 Answer: C Level of difficulty: 2 Section: 2.1 6. To ensure that the fundamental identity of national income accounting holds, changes in inventories are 7. To what extent are homemaking and child-rearing accounted for in the government’s GDP accounts?
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16 Abel/Bernanke • Macroeconomics, Fifth Edition 8. The measurement of GDP includes
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