Question

Which of the following is included in the expenditure approach to the calculation of GDP?

A. Intermediate goods

B. All of the above are included in the calculation of GDP using the expenditure approach.

	C. Wages
	D. Consumption

Which of the following is the term used to describe an addition to a nation's capital stock (when firms purchase resources they use over and over in production, like machines)?

A. Net Exports

B. Investment

C. Government Spending

D. Consumption

Which of the following would be included in Gross Domestic Product? (Choose 4)

A. The broccoli I buy at the local farmers market.

B. The frozen broccoli I buy that is imported from Mexico.

	C. The value of the meal you made at home for dinner last night.
	D. You buy a Vitamix blender to use at home (Vitamix blenders are 100% made in the USA).
	E. A local cafe buys a Vitamix blender in order to make blended coffee drinks (Vitamix blenders are 100% made in the USA).
	F. A local cafe purchases USA made paper cups in order to serve its coffee to its customers.
	G. You purchase USA made paper cups to use at a party you are throwing.
	H. You purchase an unopened iPad off of e-bay.

There is a country with a population of 100 million people. Of those 100 million people 40 million are employed and 10 million are unemployed. Therefor the labor force participation rate is ____________ and the unemployment rate is______________.

A. 40%; 10%

B. 40%; 20%

C. 50%; 20%

D. 50%; 10%

Use the following table about the economy's labor force to fill in the blanks below. Only fill in whole numbers (no words or symbols).

Labor Force (in millions)
Employed	180
Unemployed: Can’t find job that matches skills	4
Unemployed: In between jobs	4
Unemployed: Due to recession	12

The unemployment rate for this economy is [A]% and the natural rate of unemployment is [B]%.

Specified Answer for: A =	--------------
Specified Answer for: B =	----------------

Answer 1

Question 1

Expenditure approach includes expenditure on final goods and services while calculating GDP.

So,

Consumption is included in the expenditure approach to the calculation of GDP.

Hence, the correct answer is the option (D).

Question 2

Addition to nation's capital stock is termed as investment.

So, when firms purchase machines and equipment then it is said that firms are undertaking investment spending.

Hence, the correct answer is the option (B).

Question 4

Labor force = Employed + Unemployed = 40 million + 10 million = 50 million

Labor force participation rate = [Labor force/population] * 100 = [50 million/100 milllion] * 100 = 50%

Unemployment rate = [unemployed/labor force] * 100 = [10 million/50 million] * 100 = 20%

Hence, the correct answer is the option (C).