1. GDP excludes the value of intermediate goods because their value is included

Question

1. GDP excludes the value of intermediate goods because their value is included in the value of final goods.

True of False

2. In 2009, government purchases was the largest component of U.S. GDP.

True of False

3. Suppose a basket of goods and services has been selected to calculate the consumer price index. In 2005, the basket of goods cost $108.00; in 2006, it cost $135.00; and in 2007, it cost $168.75. Which of the following statements is correct?

Explanation / Answer

1. GDP excludes the value of intermediate goods because their value is included in the value of final goods.

True

2. In 2009, government purchases was the largest component of U.S. GDP.

False

3. Suppose a basket of goods and services has been selected to calculate the consumer price index. In 2005, the basket of goods cost $108.00; in 2006, it cost $135.00; and in 2007, it cost $168.75. Which of the following statements is correct?

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