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Which of the following statements about GDP is correct

A) Money continuously flows from households to firms and then back to households, and GDP measures this flow of money

B) GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy’s output of goods and services.

C) While not perfect, GDP is generally regarded as the best single measure of a society’s economic well-being.

D) All of the above are correct.

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Kristelle Balando
Kristelle BalandoLv10
4 Jan 2021
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Related questions

What is the market for factors of production?

  1. What is the market for factors of production?

    1. The market for factors of production is where households and firms interact to trade factors of production for factor payments. For example this is where people provide firms with labor and firms pay them with wages. 

  2. What is the money market?

    1. The money market is where households, firms, and the government may save and/or invest their money to earn interests. Money market includes banks, stock market, bonds market, and other financial institutions where economic actors can buy and sell financial assets to earn interests and/or dividends.

  3. Who are the three economic actors in the circular flow model?

    1. In a circular flow model, the three main economic actors are the households, firms, and the government. Households include the typical individual consumers. Firms include businesses and similar producers in the economy. Finally, the government refers to the whole government system from federal to local level.

  4. How is the national income of an economy determined?

    1. The national income of an economy is determined by measuring the total value of the output produced in an economy or the total income earned by the actors in the economy. In a circular flow model, we can see that the value of total output produced should equal the total value of income generated and earned in the economy. This is because every dollar spent by someone in the economy is received by another person in the economy as income.

  5. What is GDP?

    1. The gross domestic product or GDP represents the sum total of the value of the final goods and services produced within the economy for a given year. It is the most commonly used measure of its economy’s productivity and income.

6)
 
An improvement in technology causes the production possibilities frontier (PPF) to
 
  shift to the right.
  pivot upward.
  shift to the left.
  pivot downward.

 

 

 
(7)
 
Which of the following is not shown by the circular flow model?
 
  The flow of resources in one direction and money in the other
  The equality of aggregate spending and aggregate income
  The interaction of households, firms, and the government
  The total amount of goods and services the economy can produce

 

 

 
(8)
 
Gross domestic product (GDP) is defined as
 
  the market value of all final goods and services produced in an economy in a given period of time.
  the market value of all consumption goods and services produced in an economy in a given period of time.
  the market value of all investment goods and services produced in an economy in a given period of time.
  the real value of all investment goods and services produced in an economy in a given period of time.

 

 

 
(9)
 
Real GDP
 
  includes all domestic and foreign transactions.
  includes the dollar value of domestic transactions only.
  tries to isolate the effect of changing output, holding prices constant.
  measures GDP in terms of prices of goods and services produced.

 

 

 
(10)
 
When economists talk about economic growth, they are usually referring to
 
  the percentage change in nominal GDP.
  the percentage change in real GDP.
  the percentage change in nominal investment.
  the percentage change in real investment.

j

1. In the actual economy, households

a. spend all of their income.

b. divide their income among spending, taxes, and saving.

c. buy all goods and services produced in the economy.

d. Both (a) and (c) are correct.

 

2. Gross domestic product is defined as

a. the quantity of all final goods and services demanded within a country in a given period of time.

b. the quantity of all final goods and services supplied within a country in a given period of time.

c. the market value of all final goods and services produced within a country in a given period of time.

d. Both (a) and (b) are correct.

 

3. GDP adds together many different kinds of products into a single measure of the value of economic activity by using prices determined by

a. banks.

b. economists.

c. the government.

d. markets.

 

4. Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. For example, busy people with high incomes, rather than cleaning their own houses, hire people to clean their houses. By itself, this change has

a. caused measured GDP to fall.

b. not caused any change in measured GDP.

c. caused measured GDP to rise.

d. probably changed measured GDP, but in an uncertain direction; the direction of the change depends on the difference in the quality of the cleaning that has resulted.

 

5. A steel company sells some steel to a bicycle company for $150. The bicycle company uses steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

a. $150 to GDP.

b. $250 to GDP.

c. between $250 and $400 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle.

d. $400 to GDP.

 

6. The total sales of all firms in the economy for a year

a. equals GDP for the year.

b. is larger than GDP for the year.

c. is smaller than GDP for the year.

d. Any of the above is possible.

 

7. GDP is equal to

a. the market value of all final goods and services produced within a country in a given period of time.

b. Y.

c. C + I + G + NX.

d. All of the above are correct.

 

8. The consumption component of GDP includes spending on

a. durable goods and nondurable goods, but not spending on services.

b. durable goods and services, but not spending on nondurable goods.

c. nondurable goods and services, but not spending on durable goods.

d. durable goods, nondurable goods, and services.

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