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21) A farmer buys seed for 20 cents that is used to grow wheat. The farmer sells the wheat to the miller for 35 cents, and the miller makes flour, which is then sold to the baker for 55 cents. The baker makes bread and sells it to the grocer for 80 cents, and the grocer sells the bread to a family for $1. What is the value added of the baker and what is the sum of the value added at each stage of production?

A) 80 cents; $1

B) 80 cents; $2.90

C) 25 cents; $2.90

D) 25 cents; $1

22) The term "value added" refers to the dollar value of

A) an industry's sales plus profits.

B) the intermediate goods and services purchased by an industry.

C) an industry's sales less the dollar value of the intermediate goods purchased by the industry.

D) the intermediate goods purchased by an industry plus the profits of the industry.

23) The owner of an oil well in Texas sells 1000 barrels of oil to a refinery in Mexico for $12,000 for refining. This transaction

A) will increase Gross Domestic Product (GDP) by $12,000.

B) has no effect on Gross Domestic Product (GDP) because the refinery is in Mexico.

C) decreases Gross Domestic Product (GDP) because oil reserves have fallen by 1000 barrels.

D) has no effect on Gross Domestic Product (GDP) because this is the sale of an intermediate product.

24) Intermediate goods are goods that are used up entirely in the production of final goods. As such, intermediate goods

A) are excluded in calculating Gross Domestic Product (GDP) because they are not valuable.

B) are excluded in calculating Gross Domestic Product (GDP) because to do so would be to double count them.

C) make up only a small portion of Gross Domestic Product (GDP).

D) are included in Gross Domestic Product (GDP) only if produced within the borders of the United States.

25) Why might a homemaker be upset with the way Gross Domestic Product (GDP) is calculated?

A) Because the government always underestimates the dollar value of the household services produced at home and outside the market that are included in the Gross Domestic Product (GDP) statistic

B) Because household services produced at home and outside the market are only included in Gross Domestic Product (GDP) if the homemaker is a man

C) Because household services produced at home and outside the market that are sold to others are not included in Gross Domestic Product (GDP)

D) Because none of the household services produced for at home and outside the market are included in Gross Domestic Product (GDP) even though they contribute greatly to the welfare of the family

26) Social Security payments are

A) included in Gross Domestic Product (GDP).

B) not included in Gross Domestic Product (GDP), but are included in Gross Domestic Income accounts.

C) not included in Gross Domestic Product (GDP).

D) not included in Gross Domestic Product (GDP), but are included in Net Domestic Product.

27) Which of the following statements is FALSE?

A) Gross Domestic Product (GDP) measures the market value of final goods and services produced during a particular time period.

B) Transfers of used goods are not included in Gross Domestic Product (GDP).

C) Private transfer payments, such as an inheritance, are included in the Gross Domestic Product (GDP).

D) If statisticians counted intermediate goods, the estimate of Gross Domestic Product (GDP) would be too high.

28) A car sold from a used car lot

A) would be counted in Gross Domestic Product (GDP).

B) would fall under net exports, and would then be counted in Gross Domestic Product (GDP).

C) would not be counted in Gross Domestic Product (GDP).

D) would only be counted in Gross Domestic Product (GDP) if it was a foreign made car.

29) Which of the following is included in Gross Domestic Product (GDP)?

A) The buying and selling of securities

B) Government transfer payments

C) Private transfer payments

D) The sale of used goods

E) None of the above

30) A valid rationale for the decision NOT to include non-compensated housework in Gross Domestic Product (GDP) calculations is that

A) it would decrease the employment rate for domestic work.

B) there is some difficulty in measuring quality and quantity.

C) it is not a product or service.

D) it would understate the value of production in the economy.

 

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