ECON 102 Quiz: Chapter 20 Summary

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9 Feb 2017

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Total output = value it is sold to public for. You can"t just add up companies output to get national income/gdp. Because some firms output is another ones input. Farmer"s output of wheat mill"s output of flour bakery"s output of. If you added up every companies outputs, you would add wheat 3 times, flour twice and bread once (double counting) Goods that aren"t used as inputs by other firms. Ready for consumption, export or investment in time period. Outputs that are used as inputs for another firm. You can"t be sure though if it is a final good. Bakery doesn"t know if bread bought is a final good or will be used at a restaurant. Correct way to avoid double counting = value added approach. Value added = sales revenue - cost of intermediate goods (all inputs) Amount of value firms add to their products after the cost of intermediate goods.

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51. Gross national product equals:
A) the aggregate output of the citizens & businesses of aneconomy in a 1-year period.
B) the aggregate final output of the citizens & businesses ofan economy in a 1-year period.
C) the total market value of all goods & services produced inan economy in a 1-year period.
D) the total market value of all final goods & servicesproduced in an economy in a 1-year period.

52. Which of the following is not included in GNP but is includedin GDP?
A) The value of a Portuguese company's production in the UnitedStates.
B) The income of a U.S. citizen working in Portugal.
C) The value of a U.S. company's production in Portugal.
D) The sales of a U.S. company to U.S. citizens.

53. To calculate GDP, multiply the __________ of each final goodand service produced in an economy in a year by its __________ andthen sum the result.
A) quantity; share in total output C) price, share in totaloutput
B) quantity; price D) price, quality

54. Counting both the value of the flour used to make a loaf ofbread and the value of the loaf of bread as part of GDP:
A) is necessary to accurately compute GDP.
B) is incorrect because bread is an intermediate product.
C) is incorrect because flour is an intermediate good.
D) is incorrect because flour is a final good.

55. Suppose the value of your home increases from $100,000 to$125,000. If you continue to live in your home, the increase in itsvalue:
A) adds nothing to GDP. C) increases GDP by $100,000.
B) increases GDP by $25,000. D) increases GDP by $125,000.

56. If a used car dealer buys a car for $6000 and resells it for$6500, how much has been added to GDP?
A) nothing. B) $500. C) $6000. D) $6500

57. Which of the following is not a part of this year's GDP?
A) The value of a product produced last year but sold thisyear.
B) The value of a haircut.
C) The value of a new car produced and purchased during theyear.
D) The value of new homes built this year, regardless of whetherthey are sold.

58. Which of the following would not increase this year'sGDP?
A) Home repairs performed by the owner.
B) A commission charged by your broker when you sold 100 shares ofBorden stock.
C) The sales of a corporation.
D) The value of a doctor's services to his or her patients.

59. The circular flow model shows:
A) the movement of expenditures and factor payments through theeconomy.
B) how national income is distributed to individuals.
C) how national income changes over time.
D) the movement of goods from one business to another.

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ECON 102 Quiz: Chapter 20 Summary

ECON 102 Full Course Notes

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