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Computing GDP and Its Definition
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Computing GDP and Its Definition

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Questions and Answers

What is used to compute the total value of different goods and services in the national income accounts?

  • Wholesale prices
  • Production costs
  • Market prices (correct)
  • Retail prices

    • Why is the sale of a rare Mickey Mantle card not included as part of GDP?

  • It represents the transfer of an asset, not an addition to the economy’s income. (correct)
  • It is a used good.
  • It is not valued at market price.
  • It is not a currently produced good.

    • What happens to GDP if a bakery hires workers to produce more bread, pays their wages, but fails to sell the additional bread which later spoils?

  • GDP increases due to the wages paid.
  • GDP decreases due to the spoilage of bread.
  • GDP remains unchanged as the transaction does not alter GDP. (correct)
  • GDP increases due to the additional bread produced.

    • Why is the sale of bread out of inventory similar to the sale of a used good in terms of affecting GDP?

    <p>It increases total expenditure and total income.</p> Signup and view all the answers

    Why are wholesale prices not used to compute the total value of different goods and services in the national income accounts?

    <p>They do not accurately reflect consumer willingness to pay.</p> Signup and view all the answers

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