Question 1

In the year 2012,Pete Rich purchases a painting done by Rembrandt in 1,642 for $20 million.He also pays a one percent commission to the auction house that sold the painting.What is the contribution of this transaction to GDP in the year 2012?

Accepted Answer

The contribution to GDP is the commission paid to the auction house, which is $200,000 (1% of $20 million), as it represents the value of services provided in 2012. The purchase of the painting itself does not contribute to GDP because it is a transfer of ownership of an existing asset.

Question 2

A jar of orange marmalade,ultimately sold to a customer at The Corner Store,is produced by the following production process:
 
-What is the value added of The Corner Store?

Accepted Answer

The answer of A jar of orange marmalade,ultimately sold to...

Question 3

Goods and services that are consumed by the ultimate user are called ________ goods and services.

Accepted Answer

Final goods and services are those that are directly consumed by the end users. Intermediate goods, on the other hand, are used in the production of other goods and services, and are not meant for final consumption. Value added refers to the increase in the value of a product that occurs at each stage of production, while nominal and real refer to measures of prices or values adjusted for inflation.

Question 4

The value of final goods and services equals

Accepted Answer

The value of final goods and services is the sum of the value added by all firms involved in the production process. This means that it is the value of the final product after all intermediate inputs have been accounted for. Therefore, option B, which states that the value of final goods and services equals the sum of the value added by all firms, is the correct answer. The other options do not accurately describe the value of final goods and services.

Question 5

In the year 2012,Janice Quinn sells a five-year-old car to Used Car Inc.for $3,000.In the same year,Used Car Inc.resells the car to Ima Goner for $3,500.What is the contribution of this transaction to GDP in the year 2012?

Accepted Answer

The contribution to GDP is the value added by Used Car Inc., which is the difference between the resale price and the purchase price, i.e., $3,500 - $3,000 = $500.

Question 6

A jar of orange marmalade,ultimately sold to a customer at The Corner Store,is produced by the following production process:
 
-What is the value added of Florida Jam Company?

Accepted Answer

Value added is calculated by taking the final selling price of the product and subtracting the cost of all materials and inputs used in production. In this case, the selling price of the jar of marmalade is $4.50 and the cost of materials (oranges, sugar, jars, labels, labor, etc.) is $3.25. Therefore, the value added by Florida Jam Company is $1.25.

Question 7

Goods and services that are used up in the production of other goods and services are called _________ goods and services.

Accepted Answer

Intermediate goods and services refer to those used in the production of final goods and services. They are not intended for the end user and are usually sold to manufacturers to use in the production process. Final goods and services, on the other hand, are those that are sold to the end user and are not meant for further production. Choices C, D, and E are not relevant to the concept being described in the question.

Question 8

A jar of orange marmalade,ultimately sold to a customer at The Corner Store,is produced by the following production process:
 
-What is the sum of the value added of all the firms?

Accepted Answer

The answer of A jar of orange marmalade,ultimately sold to...

Question 9

A firm's revenue from selling its product minus the cost of inputs purchased from other firms is called

Accepted Answer

Value added is the difference between a firm's revenue and the cost of inputs purchased from other firms. It is a measure of the firm's contribution to the economy and its ability to generate profits. Profit (A) is the excess of revenue over all costs, including production costs and intermediate costs (E). Investment (B) refers to the allocation of resources to increase future production or income. Production costs (D) include all costs involved in the process of production, such as labor, materials, and overheads.

Question 10

Which of the following transactions would be included in the GDP of Canada?

Accepted Answer

Honda producing cars in Ontario counts as a contribution to Canada's GDP because the production occurs within the country's borders.

Answer: B 
 Bank of Nova Scotia operating a branch in the Bahamas does not count as a contribution to Canada's GDP because the economic activity is taking place in the Bahamas, not Canada.

Answer: C 
 Nortel Corporation producing telecommunications equipment in the United States does not count towards Canada's GDP because the production is taking place outside of Canada.

Answer: D 
 Microsoft Corporation producing Windows Vista in Redmond, Washington does not count towards Canada's GDP because the production is taking place outside of Canada.

Answer: E 
 Coca-Cola producing soft drinks in England does not count towards Canada's GDP because the production is taking place outside of Canada.

Question 11

A jar of DeLux popcorn,ultimately sold to a customer at Friendly Groceries,is produced by the following production process:
 
-What is the value added of Fulton Family Farm?

Accepted Answer

The answer of A jar of DeLux popcorn,ultimately sold to...

Question 12

Capital goods are treated as _______ goods and,therefore,_______ GDP.

Accepted Answer

Capital goods are the final goods that are used in the production of other goods, therefore they are included in the GDP calculation as a part of investment.

Question 13

The value added by any firm equals the firm's ______ from selling the product minus _______.

Accepted Answer

The value added by a firm is calculated as the firm's revenue from selling the product minus the cost of inputs purchased from other firms. This measures the firm's contribution to the economy.

Question 14

Three equivalent ways to measure GDP are total ___________,total __________,and total _________.

Accepted Answer

The three equivalent ways to measure GDP are production (the total value of all goods and services produced), income (the total income earned by all factors of production), and expenditure (the total amount spent on all goods and services). Choice A, B, C, and E include some correct terms, but not the three equivalent terms used to measure GDP.

Question 15

The sum of the value added by all firms equals total

Accepted Answer

The value added by all firms is the sum of the value of final goods and services produced by each firm. This is because value added is the difference between the value of a firm's output and the value of the intermediate inputs used in producing that output. Therefore, the sum of the value added by all firms equals the value of final goods and services produced in the economy.

Question 16

A jar of DeLux popcorn,ultimately sold to a customer at Friendly Groceries,is produced by the following production process:
 
-What is the value added of Friendly Groceries?

Accepted Answer

The answer of A jar of DeLux popcorn,ultimately sold to...

Question 17

A jar of DeLux popcorn,ultimately sold to a customer at Friendly Groceries,is produced by the following production process:
 
-What is the sum of the value added of all of the firms?

Accepted Answer

The sum of the value added of all of the firms is $4.00. This is because the value added of each firm is equal to the difference between its output and its inputs. The output of each firm is equal to the price of its product multiplied by the quantity of its product that it sells. The inputs of each firm are equal to the cost of its raw materials, labor, and capital. The value added of each firm is equal to the difference between its output and its inputs. The sum of the value added of all of the firms is equal to the total output of all of the firms minus the total inputs of all of the firms. The total output of all of the firms is equal to $7.00. The total inputs of all of the firms is equal to $3.00. The sum of the value added of all of the firms is equal to $4.00.

Question 18

A jar of orange marmalade,ultimately sold to a customer at The Corner Store,is produced by the following production process:
 
-What is the value added of Citrus Growers Inc.?

Accepted Answer

Citrus Growers Inc. adds $0.75 of value to each orange.

Question 19

A jar of DeLux popcorn,ultimately sold to a customer at Friendly Groceries,is produced by the following production process:
 
-What is the value added of DeLux Popcorn Co.?

Accepted Answer

The value added of a product is the difference between the selling price and the cost of inputs used in the production process. In this case, the selling price of the DeLux popcorn is $4.50, and the cost of inputs (corn, oil, salt, packaging) is $2.50. Therefore, the value added is $2.00.

Question 20

Which of the following would be included in Canada's GDP?

Accepted Answer

The production of the plane in Montreal is included in Canada's GDP because it was produced within the borders of Canada.

Answer: B
 The production of the car occurred in Germany and was sold in Canada, so it is not included in Canada's GDP.

Answer: C
 The production of the candy bar occurred in Switzerland and was sold in Canada, so it is not included in Canada's GDP.

Answer: D
 The operation of a branch in Nassau, Bahamas is not included in Canada's GDP because it is not a production of goods or services within Canada's borders.

Answer: E
 The provision of entertainment services in an amusement park in Japan is not included in Canada's GDP because it is not a production of goods or services within Canada's borders.

Quiz 5: Spending and Output in the Short Run

In the year 2012,Pete Rich purchases a painting done by Rembrandt in 1,642 for $20 million.He also pays a one percent commission to the auction house that sold the painting.What is the contribution of this transaction to GDP in the year 2012?

A jar of orange marmalade,ultimately sold to a customer at The Corner Store,is produced by the following production process: -What is the value added of The Corner Store?

Goods and services that are consumed by the ultimate user are called ________ goods and services.

The value of final goods and services equals

In the year 2012,Janice Quinn sells a five-year-old car to Used Car Inc.for $3,000.In the same year,Used Car Inc.resells the car to Ima Goner for $3,500.What is the contribution of this transaction to GDP in the year 2012?

A jar of orange marmalade,ultimately sold to a customer at The Corner Store,is produced by the following production process: -What is the value added of Florida Jam Company?

Goods and services that are used up in the production of other goods and services are called _________ goods and services.

A jar of orange marmalade,ultimately sold to a customer at The Corner Store,is produced by the following production process: -What is the sum of the value added of all the firms?

A firm's revenue from selling its product minus the cost of inputs purchased from other firms is called

Which of the following transactions would be included in the GDP of Canada?

A jar of DeLux popcorn,ultimately sold to a customer at Friendly Groceries,is produced by the following production process: -What is the value added of Fulton Family Farm?

Capital goods are treated as _ goods and,therefore,_ GDP.

The value added by any firm equals the firm's from selling the product minus _.

Three equivalent ways to measure GDP are total _,total ,and total _.

The sum of the value added by all firms equals total

A jar of DeLux popcorn,ultimately sold to a customer at Friendly Groceries,is produced by the following production process: -What is the value added of Friendly Groceries?

A jar of DeLux popcorn,ultimately sold to a customer at Friendly Groceries,is produced by the following production process: -What is the sum of the value added of all of the firms?

A jar of orange marmalade,ultimately sold to a customer at The Corner Store,is produced by the following production process: -What is the value added of Citrus Growers Inc.?

A jar of DeLux popcorn,ultimately sold to a customer at Friendly Groceries,is produced by the following production process: -What is the value added of DeLux Popcorn Co.?

Which of the following would be included in Canada's GDP?