Question

Q1. Which of the following is directly included in the U.S. GDP for 2020?

i. 2020 Cadillac Escalade produced and sold as a new car in the United States in 2020

ii. tires produced in the United States, purchased by General Motors, and installed on a new Cadillac Escalade sold in 2020

iii. General Motors cars produced in Canada because General Motors is an American corporation.

Q2. As more women decide to work outside the home and therefore hire others to work around their home, GDP will increase by

a. only the value of the output produced by the newly working women.

b. only the value of the household work they are now hiring someone to perform.

c. the value of the output produced by the newly working women plus the value of any household work they are now hiring someone to perform.

d. the value of the output produced by the newly working women minus the value of the household work they were previously performing.

Q3. The base year is 2018. A country only produces Blu-ray players. The price of a Blu-ray player in 2018 was $100. The price of a Blu-ray player was $90 in 2019. The quantity of Blu-ray players produced in 2018 was 10,000 units and in 2019 was 10,500 units. Nominal GDP in 2018 was____, real GDP in 2018 was, nominal GDP in 2019 was _____and real GDP in 2019 equals_____.

Group of answer choices

a. $1,000,000; $1,000,000; $945,000; $1,050,000

b. $1,050,000; $1,000,000; $900,000; $945,000

c. $945,000; $900,000; $1,000,000; $1,050,000

d. $900,000; $945,000; $1,050,000; $1,000,000

Answer 1

Q1. GDP is defined as the total value of final goods and services produced in an economy in a given year.

i. 2020 Cadillac Escalade produced and sold as a new car in the United States in 2020 is a final good produced in the United States. Included in GDP

ii. Tires are intermediate goods which are a part of a new Cadillac Escalade. Intermediate goods are not included in GDP

iii. GM car produced in Canada - Not included in GDP of the USA as the car is not produced within the boundaries of the USA.

Ans: i. 2020 Cadillac Escalade produced and sold as a new car in the United States in 2020

Q2. The household work done by people within their respective households (and without getting paid for the same) is not included in GDP.

However, as more women decide to work outside, household work will be performed by someone who is hired for the same. The GDP, therefore, will increase by the value of output produced by the newly working women plus the value of any household work that is done by the people hired for the same.

Ans: c. the value of the output produced by the newly working women plus the value of any household work they are now hiring someone to perform.

Q3. Given,

Base year = 2018

Nominal GDP in 2018 = Price of Blu-ray player in 2018* Quantity of Blu-ray player in 2018 = $100*10,000 = $1,000,000

As 2018 is the base year, Real GDP in 2018 = Nominal GDP in 2018 = $1,000,000

Nominal GDP in 2019 = Price of Blu-ray player in 2019* Quantity of Blu-ray player in 2019 = $90*10,500 = $945,000

Real GDP in 2019 = Price of Blu-ray player in 2018* Quantity of Blu-ray player in 2019 = $100*10,500 = $1,050,000

Ans: a. $1,000,000; $1,000,000; $945,000; $1,050,000