Question :
31) Household production, such as baking bread at home, not : 1228216
31) Household production, such as baking bread at home, is not included in GDP because it
A) has better quality than the bread in the store.
B) has lower quality than the bread in the store.
C) does not add anything of value to GDP.
D) does not involve a market transaction.
E) is not really production.
32) The calculation of GDP excludes the value of
A) government expenditure on office supplies.
B) households’ purchases of shampoo.
C) businesses’ purchase of new machine tools.
D) a family member painting the family home.
E) expenditure on durable goods.
33) An example of household production excluded from GDP is
A) household cleaning services provided by Merry Maids Incorporated.
B) child care provided by a certified nanny.
C) tree trimming you provide at your parents’ home.
D) plumbing work completed by Joe Fix-it.
E) lawn care provided by a local lawn care company.
34) Babysitting services the oldest son provides his parents
A) counts as nominal GDP but not real GDP.
B) counts as real GDP but not nominal GDP.
C) counts as real GDP and nominal GDP.
D) does not count as real GDP nor nominal GDP.
E) counts in both real and nominal GDP only if the son is not paid.
35) As more women decide to work outside the home and therefore hire others to work around their home, GDP will increase by the value of
A) only the value of the output produced by the newly working women.
B) the value of the output produced by the newly working women minus the value of the household work they were previously performing.
C) the value of the output produced by the newly working women plus the value of any household work they are now hiring someone to perform.
D) only the value of the household work they are now hiring someone to perform.
E) the value of the household work they were previously performing minus the value of the output produced by the newly working women.
36) Instead of taking the dirty laundry with you when you go back to visit your parents, you use a Laundromat. Your use of the Laundromat means that
A) GDP will decrease and the country’s standard of living will fall.
B) your parents’ contribution to GDP will increase.
C) GDP will remain the same.
D) what you paid for use of the Laundromat will be included in GDP.
E) real GDP does not change because the clothes are still being laundered but nominal GDP rises since you are now paying for the service.
37) If you mow the lawn yourself, the lawn mowing is considered household production. If you pay Larry’s Lawn Service to mow your lawn, the lawn mowing is considered
A) a leisure time activity.
B) a service, that will be counted as part of GDP.
C) a service, but is not counted as part of GDP because it simply replaces a service you used to perform.
D) rent, and therefore is counted as part of GDP.
E) underground production because it replaces the underground production of you mowing your lawn.
38) Pat gives up a $40,000 per year job to stay at home and take care of the house. By so doing, Pat saves $15,000 in child care and house cleaning services which he now performs himself. The direct effect on GDP from Pat’s decision is a decrease of
A) $40,000.
B) $55,000.
C) $25,000.
D) $15,000.
E) $30,000.
39) Which of the following is likely to be an unreported economic activity?
A) a $250,000 bonus paid to the CEO of a company
B) tips paid to a taxi driver
C) the minimum wage paid to a teenager working at a McDonald’s
D) the brokerage fees paid to a broker at Merrill Lynch
E) the purchase of shares of stock in Walgreen’s Pharmacy
40) The measurement of GDP handles underground production by
A) including the amount produced in this sector of the economy in exactly the same way that all other production is included.
B) omitting it because underground production is unreported to the government by the people involved.
C) adding it at fixed prices that change only infrequently.
D) adding an estimate of it because it is difficult to precisely measure underground production.
E) omitting it because, being illegal, it has no effect on the nation’s total production.
