Daily quiz-9 (01/31): Print your name and ID in BLOCK letters. 1. Walmart buys a certain brand of shoes for $10 and sells it for $20. Which price is used to measure GDP? Ans: $20 price because it is the market price. 2. Individual X marries his/her housekeeper and (obviously) stops paying her/him a salary. What happens to the GDP as a result? Ans: Measured GDP actually falls because the services provided by the housekeeper/spouse is no longer a market good/service. Of, course the actual level of production of goods and services has not changed! 3. Mary bought a house for 200,000 five years back. She sold it this year for 250,000. How does the last transaction affect this year’s GDP? Ans: the 50, 000 capital gain is not included in GDP, so GDP is not affected by this transaction. 4. Toyota (a Japanese firm) has manufacturing facilities in Indiana. Are the cars produced there part of US’s or Japan’s GDP? Ans: The cars are part of US’s GDP not Japan’s.