18. An economy produces only 1,000,000 computers valued at $2,000 each. Of these 200,000 are sold to consumers, 300,000 are sold to businesses, 300,000 are sold to the government, and 100,000 are sold abroad. No computers are imported. The unsold computers at the end of the year are held in inventory by the computer manufacturers. What is the value of GDP?
A. $0.9 billion
B. $1.0 billion
C. $1.8 billion
D. $2.0 billion
19. Three equivalent ways to measure GDP are total _____, total _____, and total ______.
A. profits; production; saving.
B. expenditure; income; profits
C. investment; consumption; saving
D. production; income; expenditure
20. Wages and salaries are examples of:
A. consumption.
B. labor income.
C. capital income.
D. profits.
21. Capital income includes:
A. profits, rent, and interest.
B. wages and salaries.
C. earnings of the self-employed.
D. capital gains from stock sales.
22. A measure of GDP in which quantities produced are valued at the prices of a fixed base year is called:
A. real GDP.
B. nominal GDP.
C. base GDP.
D. current GDP.
23. To compare the change in physical production (GDP) between 2000 and 2006, we should compare _____ GDP in 2000 with _____ GDP in 2006.
A. real; real
B. real; nominal
C. nominal; nominal
D. current dollar; current dollar
Question 18
GDP of a year constitutes the market value of final goods and services produced in the economy in that year.
In the given case, final good produced is computer.
Total computers produced = 1,000,000 computers
Market price of each computer = $2,000
Calculate the value of GDP -
GDP = Total computers produced * Market price
GDP = 1,000,000 * $2,000 = $2,000,000,000 or $2 billion
The value of GDP is $2 billion.
Hence, the correct answer is the option (D).
Question 19
GDP can be measured through three different approaches.
These are as follows 0
1. Product approach or Value added approach
2. Income approach
3. Expenditure approach
Thus, three equivalent ways to measure GDP are total production, total income, and total expenditure.
Hence, the correct answer is the option (D).
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