Question 1 A Japanese firm manufactures cars in the US. Assume that each car sells for...

Question 1

A Japanese firm manufactures cars in the US. Assume that each car sells for $20,000 to a consumer in the US. Also assume that on each car the Japanese manufacturer earns $2000 in profits and remits those to the holding company in Japan. Assume that the car is manufactured with US made parts only.

What is the contribution of each car to the US GNP?

$ 18,000
$20,000
$22,000
$2,000

Question 2

What is the contribution of each car to the US GDP?

$20,000
$18,000
$22,000

Question 3

A nation that has been a net receipient of foreing investment is likely to have its GDP exceed its GNP.

True
False

Question 4

How would the following activity get counted in the GDP?

I purchase a used car from another individual (the car's current owner) for $2000. There are no other parties involved.

Since I am a consumer, the entire $2000 will count in the consumption spending of the GDP.
Since a car is a good that can be used for several years, the entire $2000 will count in the consumption spending component of the GDP
Since a car is an investment, the entire $2000 will count in the investment component of the GDP
Since this is a used car, none of the $2000 will count in the GDP.

Question 5

Consider the following scenario:

I purchase a used car from a used car dealer. The car's price is $2000. Out of that $2000, $400 constitutes the profits of the dealer. How would this trade enter the GDP?

The entire $2000 gets included in the consumption spending of the GDP.
Only the $400 dollar profit of the dealer will enter the GDP in the consumption account.
Only the $1600 difference will enter the GDP, the consumption account.
Nothing will enter into the GDP

Solutions

Expert Solution

answer is option A

Rahul Sunny answered 9 months ago

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