Question

1. Which of the following would increase GDP?

A. Don paints his own bedroom

B. All of the choices are correct

C. Jill buys a used car

D. Mary pays a professional plumber to install a new shower

E. Anne trades Jill a candy bar in exchange for a bag of chips

2. Which of the following statements is true?

A. Mrs. Smith's purchase of Starbuck's stock is included in consumption

B. Consumption includes spending on durable goods but not spending on services

C. For purposes of computing GDP using the expenditure method, the purchase of new residential housing are considered investment

D. Transfer payments are included in Government Spending

E. All of the choices are correct

3. Real gross domestic product is the total value of all

A. goods and services without adjustment for inflation

B. final goods and services without adjustment for inflation

C. final goods and services adjusted for inflation

D. goods and services adjusted for inflation

4. Each of the following have an effect on Consumption(A), Investment(B), Government Spending(C) or Net Exports(D)

Spending on residential housing construction increases

Wealth decreases

The government cancels a purchase of weapons from FN Manufacturing

The dollar depreciates

Answer 1

1.D would be included because it is an economic transaction.

Answer-D

2.Purchase of residential houses is a part of domestic investment.

Answer-C

3.Real GDP is the final value of all goods and services produced in an economy adjusted for inflation.

Answer-C

4.Spending on construction of residential housing is investment.

Increase in wealth increases consumption.

Government cancelling purchase of weapons is part of government spending.

Fluctuations in dollar affect net exports.