Question

Which of the following will be categorized as an intermediate good in national income accounting?

a. The value of an antique piece of jewelry handed down over generations in a family

b. The value of oregano used as a seasoning for pizzas

c. The crops consumed by a farmer’s family members

d. The present value of a car produced a couple of years ago

e.

A clunker sold during the current year

Which of the following will cause net exports to rise?

a. Higher foreign tariffs on domestic goods

b. Inflation in domestic economy

c. A depreciation of the domestic currency

d. A depreciation of the foreign currency

e. A fall in foreign income

Answer 1

Answer) The value of oregano used as a seasoning for pizzas is considered as an intermediate goods in national income accounting because intermediate goods are those goods which are used in the production of final good and here pizza is the final good.

Hence option B is the correct answer.

2) A depreciation in the domestic currency would leads to increase in net exports because depreciation of home currency would make the goods cheaper to foreign countries so net exports rises. Net exports are the difference between a country's total value of exports and total value of imports. When a country exports more goods, net exports can be a positive.

Hence option C is the correct answer.