Question

1. A new tractor is considered a ____________ good while food is considered a _______________ good.

1. disposable; durable
2. durable; nondurable
3. nondurable; durable
4. durable; recyclable

2. Which type of expenditure is NOT counted in GDP?

1. Exports
2. New car sales
3. Farmland purchases
4. Equipment purchases

3. John used to work at a factory but was fired because his job can now be done with a machine. Now he cannot find a similar job. What type of unemployment is John experiencing?

1. Fictional
2. Cyclical
3. Seasonal
4. Structural

Answer 1

1. Option B.

• Durable goods are those goods that provides utility to the consumer's for a longer time period as they do not wear out easily with just one time use.
• While non durable goods are those goods that provides utility only for a shorter time period after which they become useless or wear out easily.
• Tractors are considered as durable goods as they can be used for a longer time while food is non durable as it has to be consumed soon other wise it can go wasted.

2. Option D.

• GDP refers to the value of all the final goods and services that are produced within an economy in a particular time period.
• It does not include intermediate goods or used goods.
• Equipments are intermediate goods and hence their purchases are not included in the GDP.

3. Option D.

• John is losing his job as his work can be performed by a machine.
• This shows that he is facing technological unemployment as technology is replacing the labour.
• Technological unemployment is a part of structural unemployment. Hence John is experiencing Structural unemployment.