Macro-Week1

Which of the following newspaper headlines is more closely related to what microeconomists study than to what macroeconomists study?

• The effect of taxes on the prices of airline tickets, the profitability of automobile-manufacturing firms, and employment trends in the food-service industry

• Real GDP grows by 3.1 percent in the third quarter the price of beef, wage differences between genders, and antitrust laws

• How consumers maximize utility, and how prices are established in markets for agricultural products

• The percentage of the labor force that is out of work, and differences in average income from country to country

If an intermediate good is added to a firm's inventory for future sale or use, is its value included in GDP for that year?

• YES

• NO

Which of the following transactions would NOT be included in official GDP calculations?

• A customer buying groceries from a supermarket

• A student paying tuition fees at a university

• A factory exporting goods through legal trade channels

• A mechanic repairing cars for cash without reporting the income

Which of the following statements about GDP is correct?

• GDP measures two things at once: the total income of everyone in the economy and the unemployment rate of the economy’s labor force.

• Money continuously flows from households to government and then back to households, and GDP measures this flow of money.

• GDP measures the market value of all final goods and services produced within a country in a given period of time.

• GDP measures the market value of all final goods and services produced by the citizens of a country, regardless of where they are living, in a given period of time.

Gross domestic product measures two things at once:

• The total spending of everyone in the economy and the total saving of everyone in the economy.

• The total income of everyone in the economy and the total expenditure on the economy's output of goods and services.

• the value of the economy's output of goods and services for domestic citizens and the value of the economy's output of goods and services for the rest of the world.

• the total income of households in the economy and the total profit of firms in the economy.

A textbook was printed in January 2025 and sold to you in February for $100. After the semester, you sold it to another student for $50. How is this transaction counted in 2025 GDP?

• Both the original purchase and the resale are included, totaling $150 in GDP

• Only the resale of $50 is included in GDP

• Only the original purchase of $100 is included in GDP

• Neither the original purchase nor the resale is counted in GDP

In a Macroeconomics course, students must buy a coursework book, fill in the answers themselves, and submit it for part of their grade.

You bought 5 new copies of the coursework book printed in 2025 at $10 each. After completing the answers, you sold the filled-in books to other students for a total of $15 each. How is this transaction counted in GDP?

• Only your purchase of $50 is included in GDP

• Only your resale of $75 is included in GDP, because you added value by writing the answers. The new book you bought is considered an intermediate good.

• Only the value added by you, 5($15-$10) = $25 is counted in GDP.

Apple produce iPhones in a factory in China, and sells them to customers in the U.S

• The market value of iPhones is counted in China's GDP

• The market value of iPhones is counted in the US's GDP

• The market value of iPhones is counted in the GDP of both countries

Last year, you tutored your younger sibling in math for free. This year, your parents start paying you $20 each session. Does this affect official GDP?

• Yes, because it's now a paid service

• No, because the payment is informal, and part of the underground economy

• No, because it's still within the household

You officially register as a tutor and receive $20 for tutoring your younger brother (paid in cash by your parents). You then spend the entire $20 at a local grocery store to buy food. By how much does official GDP increase as a result of these activities?

• $0

• $20

• $40