If We Included the Purchases of Used Goods in GDP

question 17

Multiple Choice

If we included the purchases of used goods in GDP,

• A) we would be overestimating GDP
• B) we would be underestimating GDP
• C) we would be accurately measuring GDP
• D) the effect on GDP would vary depending on what year the goods were sold new
• E) we could offset any measurement problems by also including purchases of stocks and bonds

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Definitions:

Supply Curve

A graph showing the relationship between the price of a good and the amount that suppliers are willing and able to sell at different prices.

Corn Crop Yield

The total production of corn measured in units (such as bushels per acre) harvested from a given area.

Complements

Products or services that complement each other, such that a rise in the demand for one results in a rise in the demand for its counterpart.

Price of Yogurt

The amount of money required to purchase a unit or quantity of yogurt in the market.