12. Which of the following statements is (are) correct? (x) The local oak table producer has...

12. Which of the following statements is (are) correct?
(x) The local oak table producer has an increase in inventory of 25 tables in 2012. In 2013 it sells all 25 tables to consumers. The value of increased inventory will be counted as part of GDP in 2012 and the value of the tables sold in 2013 will not increase GDP in 2013.
(y) A wheat farmer in Montana buys a new tractor made during the current period that was produced by a German company in the U.S. state of Iowa. As a result, U.S. investment and U.S. GDP increase, but German GDP is unaffected.
(z) A U.S. firm produces sweatshirts in the first quarter of 2010 and adds them to its inventory. In the second quarter of 2010 the firm sells the sweatshirts to consumers. If the firm does not add additional sweatshirts to inventory in the second quarter then investment, for the firm, decreases in the second quarter.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

13. Michigan Tea Company sold $18 million worth of tea it produced. In producing this tea it purchased $6 million worth of ingredients from foreign countries and paid $1 million to workers who reside in Canada but commute to the United States. How much did these transactions add to GDP of the United States?
A. $24 million
B. $18 million
C. $17 million
D. $12 million

14. Which of the following statements about nominal GDP is (are) correct?
(x) Betsy works at her home to produce goods and services for her family. Unpaid production of goods and services, by Betsy at her home, is not included in the calculation of gross domestic product (GDP).
(y) The value of illegally produced goods are included in GDP because the goods are traded in a market.
(z) Ross, a United States citizen, works only in Canada. The value added to production from his employment is included in Canadian GDP but not the GDP of the United States.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only

E. $11 million

Expert Solution

Rahul Sunny answered 1 year ago

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