15) Which, if any, of the following production? causes a country\'s reported GDP

Question

15) Which, if any, of the following production? causes a country's reported GDP to be less than its total economic 15)_ country's transfers expenditures A) the exclusi on of B) the exclusion of household production C) the inclusion of D) None of the above cause reported GDP to be less than total production 16) Last year in the country of Nerf imports equaled exports. Nerf's 16) GDP was $500 million, its consumer expenditure was $380 million, and its investment was $20 million. Nerf's government expenditure on goods and services were A) $900 million B) $100 million C) $500 million D) zero 17) 17) In 2013, Ozzie purchased a 2010 Jeep from his neighbor for his son, purchased a 2009"one owner Camry from Larchmont Toyota for his wife, bought a 2013 new Ford for himself, and sold his 2002 Dodge Caravan to his teenage nephew. Which, if any, of these transactions will be included in GDP in 2013? A) only the purchase of the Ford B) all four transactions C) all three purchases but not the sale D) the purchase of the Ford and the Caravan 18) Between 1982 and 2007, the market price of a PC fell and the quantity of PCs sold increased. A) The demand for PCs increased by more then the supply of PCs increased. B) Both the supply of PCs and the demand for PCs decreased C) The demand for PCs decreased by more than the supply of PCs increased. D) The supply of PCs increased by more than the demand for PCs increased. Which of the explanations below is consistent with these facts? 19) 19) Suppose a scientific breakthrough made free solar power available in unlimited quantities in the United States. The effect of this invention would be to move the A) United States inside its production possibilities frontier. B) U.S. production possibilities frontier inward. C) US. production possibilities frontier outward. D) United States beyond its production possibilities frontier 20) 20) Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts? A) gasoline purchases for government carpools B) Social Security expenditures C) new computer hardware for use by the IRS D) drapes to brighten up the president's office hich of the following is true? A) If the price of a substitute rises, the demand curve shifts leftward. ) An increase in population will cause the demand curve to shift leftward. If people expect the price of a good will rise in the future, the demand curve shifts leftward or an inferior good, when income increases, the demand curve shifts leftward

Explanation / Answer

1. D. None of the above causes the GDP to be less than its total economic production. This is because the govt. transfers are never included in GDP, neither is household production. Whereas the inclusion of govt. expenditure, which actually should be included, has already been included here and thus does not affect the GDP calculation.

2. $100 milllion. GDP here is $500 million, consumer expenditure is given as $380 million and $20 is the investment. Thus, 500 - (380+20) = $100 million is the expenditure.

3. A. Only the purchase of the new Ford.

4. D. The supply of the PC's increased by more than the demand for PC's increased.

5. D. Would move US's production frontier outwards. This is because US's productivity potential has increased by the introduction of new technology.

6. D. Drapes to brighten up the president's office. This is because the other is related to economic activity affecting the economy in some way, whereas the drapes do not benefit the Economy in any way.

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