Assignment: Gross National Product and Gross Domestic Product

Topics: Gross domestic product, National accounts, Final goods Pages: 2 (379 words) Published: April 17, 2011
6. Durrant Manufacturers, Inc. spent $8 million on plant expansion, $1.5 million on new capital equipment, and $0.5 million on replacement capital in 1980. At the beginning of 1980, Durrant had $2.5 million of goods in its inventory; at the beginning of 1981, they had $1.5 million in their inventory, with sales during the year running $20 million. During 1980, their gross investment expenditures were: a. $9.0 million. c. $8.0 million.

b. $9.5 million. d. $10 million.
7. Which of the following is included in computing the nominal gross domestic product? a. $1,000 worth of marijuana sales by a lawyer.
b. $15,000 spent by drug dealers for a new car.
c. $25,00 worth of recently issued corporate bonds.
d. $8,000 worth of dental services provided to a plumber in exchange for a similar amount of plumbing services. e. $10,000 saved by a family by growing their own food.
8. Excluding household and underground production leads to:
a. underestimation of real GDP but not nominal GDP.
b. overestimation of real GDP but not nominal GDP.
c. overestimation of both real GDP and nominal GDP
d. underestimation of both real GDP and nominal GDP
9. Nominal GDP tends to increase at a greater rate than real GDP because: a. nominal GDP includes net exports, while real GDP does not. b. nominal GDP includes government purchases and investment expenditures, while real GDP includes only investment expenditures. c. nominal GDP includes output and price increases, while real GDP includes only output changes. d. nominal GDP includes the value of ¡°off©\the©\books¡± production, while real GDP does not. e. none of the above.

10. Even a constant©\dollar measure of gross national product cannot fully reflect the well©\being of an economy because it cannot take into account: a. the value of only final goods and services.

b. the value of changing inventories in the economy.
c. new and improved goods and services in the economy.
d. all of the above.
11. To measure GDP by using the...
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