Question

1. Which of the following is NOT included in U.S. GDP?

Multiple Choice

• toys produced by a U.S. firm located in China

• beer brewed in Colorado and purchased by a German tourist

• a car made by a Japanese auto producer in Kansas

  Incorrect

• corn grown in Iowa and exported to Africa

2. Which of the following is an example of investment, as a component of GDP?

Multiple Choice

• the purchase of a truck by a delivery company

• the purchase of Ford stock by an individual saving for retirement

  Incorrect

• the purchase of land by an individual

• the purchase of bridges and dams by the government

3. Which of the following situations is sufficient to represent current demand for a car?

Multiple Choice

• You have plenty of money to buy it, but you can't decide if you want a motorcycle or a car.

• You have enough money to buy it and you are willing to spend the money on the car.

• You've decided you want a car and you can possibly borrow the money from a bank.

  Incorrect

• You want to buy a motorcycle and a car and you'll have enough money for both in two years.

4. A market shortage occurs when

Multiple Choice

• the quantity demanded is less than the quantity supplied at a given price.

• the market price is below equilibrium.

• sellers produce a lot of the product and consumers like it a lot.

• a new product is introduced at the equilibrium price.

  Incorrect

Answer 1

1. Toys produced by a U.S. firm located in China.

Explanation: This transaction would be included in the GDP of China as the production takes place in China.

2. The purchase of a truck by a delivery company

Explanation: The truck is an investment by the company.

3. You have enough money to buy it and you are willing to spend the money on the car.

Explanation: Demand constitutes ability as well as willingness.

4. The market price is below equilibrium.

Explanation: When the market price is below equilibrium, quantity demanded is higher than the quantity supplied.