Question

In a certain small country, the unit of currency is the huck. That country's government recently announced that "GDP amounted to 400 million hucks in the quarter that just ended." Assuming this country has adopted American GDP accounting conventions, this statement means that GDP,

Select one:

a. a.without seasonal adjustment, amounted to 100 million hucks in the quarter that just ended.

b. b.with seasonal adjustment, amounted to 100 million hucks in the quarter that just ended.

c. c.without seasonal adjustment, amounted to 400 million hucks in the quarter that just ended.

d. d.with seasonal adjustment, amounted to 400 million hucks in the quarter that just ended.

Answer 1

Ans. b. with seasonal adjustment, amounted to 100 million hucks in the quarter that just ended.

$ 400/4 = $ 100 million

GDP measures the value of production that takes place in the economy within specific time period, generally a year or a quarter.

When Government reports GDP for a quarter that means GDP at an annual rate. This means that the figure reported, i.e., $ 400 million for the quarterly GDP is the amount of income and expenditure during the quarter multiplied by four. Government use this convention to compare quarterly and yearly figures easily. Thus, it will be divided by 4 to get the amount of a quarter.

As the country is following American GDP Accounting Conventions, so when the government reports quarterly GDP, the Data has been modified for seasonal adjustment. The government statisticians adjust the quarterly data to take out the seasonal cycle. In short, the reported data for GDP in the news (That country's government recently announced that "GDP amounted to 400 million hucks in the quarter that just ended.") are always seasonally adjusted.