Calculating GDP by the expenditure approach requires summing the value of
A) all income paid to individuals.
B) all transactions in the economy.
C) all final goods and services produced in the economy.
D) all expenditures by individuals.
42) The two principle methods of measuring GDP are
A) the flow approach and the stock approach.
B) the expenditures approach and the income approach.
C) the intermediate approach and the value-added approach.
D) the domestic approach and the international approach.
43) An example of an increase in gross private domestic investment spending that also increases GDP is when
A) a family sells its home because of a transfer.
B) a farmer buys a used tractor.
C) inventories of new cars accumulate on the lots of car dealers.
D) government increases spending on infrastructure.
44) An increase in investment spending that increases GDP occurs when
A) a family purchases a new car.
B) a business buys a new computer.
C) inventories of new cars are drawn down on the lots of car dealers.
D) the government builds a new office building.
45) When the total quantity of unsold new Chevrolets increases from 50,000 to 75,000
A) the economy experiences a period of disinvestment.
B) the economy's level of competition increases.
C) there is an increase in the rate of aggregate output.
D) the producer undergoes an inventory investment.
46) Inventory investment occurs when
A) grocers sell stocks of canned goods off their shelves.
B) individuals invest in an invention.
C) shopkeepers check their inventories.
D) automobile dealers add to their stocks of unsold cars.
47) Which of the following is included in GDP?
A) total exports
B) total imports minus total exports
C) total imports
D) total exports minus total imports
48) A capital good is
A) one produced by the government.
B) part of investment spending when purchased by either private businesses or by the federal government.
C) one that is purchased in order to make other goods and services.
D) not part of GDP because it is an intermediate product.
49) Suppose the government changed the law so that the employer had to pay the entire amount of the social security tax. Furthermore, government interest payments increased and other changes in the law induced many sole proprietorships to incorporate. The net effect of these changes on gross domestic income would be
A) zero because none of the changes affect the measure of gross domestic income.
B) zero because the changes with positive effects exactly offset the changes with negative effects.
C) positive because of the change in interest payments.
D) positive because profits are part of gross domestic investment while proprietors' income is not; and the social security tax paid by employers is part of gross domestic income while the part paid by employees is not.
50) If C = consumption, G = government expenditures, and I = investment expenditures, the mathematical representation of GDP using the expenditure approach is
A) GDP = C + I + G + Transfers.
B) GDP = C + I + G + Imports.
C) GDP = C + Imports.
D) GDP = C + I + G + Net exports.
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