Question

1. GDP uses the market value of goods and services because it:

A. provides a common valuation that allows us to compare one economy to another.

B. provides the opportunity to compare lists of outputs to see who produced more.

C. is the only data that can be gathered about goods and services.

D. markets are the only way to value goods and services.

2. GDP counts:

A. only final goods and services, because otherwise certain things would be double-counted and the GDP would be overestimated.

B. only intermediate goods and services, because those are easier to track.

C. both intermediate and final goods and services because it is important to capture all values, regardless of which market they take place in.

D. all values that are reported to the government.

3. U.S. Gross National Product includes goods produced by:

A. foreign firms on U.S. soil.

B. U.S. firms on foreign soil.

C. foreign firms on foreign soil.

D. None of these statements is true.

4. John is a U.S. citizen who works for Walmart located in France. John's work contributes to:

A. U.S. GDP, but not U.S. GNP.

B. U.S. GNP, but not U.S. GDP.

C. both U.S. GDP and U.S. GNP.

D. neither U.S. GDP nor U.S. GNP.

5. The market value of a good or service is the:

A. price at which it is bought and solD.

B. government's valuation using the CPI.

C. price at which producers are willing to sell an output.

D. None of these statements is true.

6. The circular flow model illustrates the crucially important idea of macroeconomics, which is that:

A. every expenditure of someone in the economy is exactly equal to the income of another.

B. only two markets exist in every economy—input and output.

C. income is lower when there is more spending on goods and services.

D. the flow of two things in the economy—"stuff" and "money"—travel in the same direction.

7. Using the expenditure method to estimate GDP, we would include:

A. consumption, investment, government purchases, and net exports.

B. consumption, government revenues, durable goods, and net exports.

C. consumption, investment, government purchases, and exports.

D. consumption, investment, government purchases, and imports.

8. Investment, as a part of GDP, includes:

A. spending on productive inputs such as stocks, bonds, and other types of financial instruments.

B. any goods that are bought by firms who plan to use those purchases to produce other goods and services in the future, rather than consuming them.

C. consumption goods that are purchased by households.

D. any item you buy that you are looking for a return on over time.

Answer 1

1)A. GDP is the financial measurement which mainly involves the market value of all final goods and services which are produced in a specific time period and it Provides a common valuation that allows us to compare one economy to another

2)A.The GDP counts only the final goods and services,because otherwise certain things would be double-counted and the GDP would be overestimated.

3)A.U.S gross Domestic product involves the goods provided by the foreign firms in the U.S soil.

4)B.His work contributes to U.S GNP,but not U.S GDP(GDP:gross domestic product,GNP:gross national product)

5)A.The market value of goods and services can be defined as the price at which it is bought and sold.

6)A. The circular flow model is an important term in the macroeconomics in which every expenditure of someone in the economy is exactly equal to the income of another

7)A.The expenditure method of GDP helps to estimate the consumption,investment,government and net exports.

8)A.investment in gross domestic product involves the spending on productive inputs such as stocks ,bonds, and other type of financial instruments.