The total production within an economy is measured as |
GDP |
A measure of a country's production is its |
GDP |
Gross domestic product is equal to the market value of all the final goods and services ________ in a given period of time. |
produced within a country |
To calculate GDP it is necessary to |
B) use the market price to place a dollar value on each good produced. |
How are final goods and services valued when measuring nominal GDP? |
at current market prices |
Measuring total production by valuing items at their market value allows us to |
add together the value of different goods that have different prices. |
To calculate GDP it is necessary to add up the market value of all the ________ produced within a country during a year. |
final goods and services produced |
If you make dinner for yourself, what would be included in the GDP? |
only the market value of the ingreidients |
18) Which of the following is classified as a final good or service? |
only 3 |
20) Which of the following is a final good or service? |
B |
21) Which of the following is a final good or service? |
B |
22) A restaurant buys fish to offer as a daily menu special. The purchase of the fish by the restaurant is |
C |
23) Which of the following is classified as an intermediate good? |
2 |
24) Which of the following would NOT be directly included in the U.S. GDP in 2010? |
B |
Consumption expenditure includes spending |
by households |
Consumption goods and services include |
washing machines and tickets to football games |
Expenditures on U.S. produced steaks, shoes, and doctor visits are most likely classified as |
consumption expenditure |
Investment is the expenditure done by |
firms |
Investment is defined as the purchase of |
the purchase of new capital goods and additions to inventories. |
Which of the following is included as investment in GDP? |
i and ii |
Economists define investment to include purchases of |
capital goods and inventories |
Investment includes |
A |
33) In measuring GDP, which of the following is included? |
the value of increase in business inventories |
If a firm does not sell all of the goods that it produces in a given time period, then the goods |
count positively in GDP as inventory investment |
When measuring GDP |
the expenditure on goods and services by all levels of government are included |
Government expenditures on goods and services include |
all |
Net exports of goods and services is equal to the value of |
exports minus the value of imports |
Net exports of goods and service are defined as the |
value of exports minus the value of imports |
U.S. Net exports include |
sales of Hollywood movies to the rest of the world |
In calculating GDP, we must |
add the market value of exports and subtract the market value of exports |
Which of the following expenditure components of GDP can be negative or positive? |
Nets exports of goods and services |
Last year U.S. net exports of goods and services was negative. This fact means that last year |
the value of U.S. exports was less than the value of U.S. imports. |
The purchase of a new Boeing fighter jet by Israel is classified in the U.S. GDP accounts as |
export expenditure |
GDP = |
Y = C + I + G + NX |
Total expenditure equals total income |
because firms pay out everything they receive as income to the factors of production |
The circular flow shows that GDP measures |
i and ii |
Because of the circular flows of expenditure and income in the economy, total ________ equals total ________ equals total ________. |
expenditure; income; value of production |
In the circular flow, how are the "value of production", "income", and "expenditures" related? |
Expenditures on GDP equals the value of production which equal income |
In a circular flow diagram, which of the following is true? |
all |
GDP stands for... |
Gross Domestic Product |
GDP is equal to the ________ value of all the final goods and services produced within a country in a given period of time. |
market |
The following are all final goods EXCEPT |
A |
Which of the following is directly included in the U.S. GDP for 2013? |
I |
59) Production by Honda, a Japanese firm, in the United States is included in ________ GDP and production by Nike Corporation, a U.S. firm, in Vietnam is included in ________ GDP. |
B) U.S.; Vietnamese |
Investment is defined as |
the purchase of new capital goods by firms |
Total Expenditure = |
C + I + G + NX |
Total expenditure in the United States is equal to consumption expenditure plus investment |
plus government expenditure on goods and services plus exports of goods and services minus imports of goods and services. |
In order to measure gross domestic product, we can follow |
two approaches: the expenditure approach and the income approach. |
In 2011, U.S. GDP was |
E |
3) The expenditure approach to measuring GDP is done by using data on only |
C |
4) In comparing the magnitudes of the components of GDP according to the expenditure approach, we see that in the United States |
D |
5) The largest expenditure category in the United States is |
A |
6) If consumption was 70 percent of GDP and investment and government expenditure were both 18 percent each, then we see that |
C |
7) In recent years, which of the following has been negative? |
D |
8) In 2009 in the United States, consumption expenditure was $9,996 billion, investment was $1,559 billion, government expenditures on goods and services were $2,927 billion, and total exports were $1,492 billion. GDP equaled |
E |
9) Based on the data in the table above, what does GDP equal? |
C |
12) The value of used goods ________ counted as part of GDP ________. |
C |
13) If the purchase of used goods was to be incorporated into measuring GDP using the expenditure approach, then |
C |
14) When calculating GDP, purchases of used goods are |
D |
When Jamie purchases a classic 1968 Plymouth Cuda convertible from Shane, GDP |
A |
Spending on financial assets ________ counted as part of GDP ________. |
B |
The purchase of 500 shares of Honda stock by the California State Employees' Pension fund |
B |
The income approach to measuring GDP is based on summing |
B |
According to the income approach to measuring GDP, the largest income category is |
wages |
Which of the following would be included in Germany's GNP? |
E |
Real GDP measures the value of goods and services produced in a given year valued using |
base year prices |
Real GDP is the value of final goods and services produced in a year |
EXPRESSED IN THE PRICES OF A BASE YEAR |
Real GDP can increase if the |
C |
________ is most likely to contribute to an improvement in our living standard. |
An increase in real GDP |
Nominal GDP measures the value of goods and services produced in a given year valued using |
prices of the same year |
Nominal GDP is GDP |
using current market values |
An increase in nominal GDP could result from an increase in |
C |
Nominal GDP increases |
C |
When the value of nominal GDP increases from one year to the next, we know that one or two things must have happened during that time: |
D |
If nominal GDP increases from one year to the next, then |
B |
Which of the following statement is correct? |
D |
If nominal GDP increases this year, then real GDP |
could increase, decrease, or not change |
If real GDP is greater than nominal GDP for a particular year then, |
prices must have fallen between the current year and base yeasr |
When calculating real GDP, the reference base year |
allows us to calculate the value of the goods and services in terms of prices of that base year. |
In calculating GDP, economists |
can measure either total expenditure or total income |
The expenditure approach to measuring GDP is based on summing |
consumption expenditure, investment, government expenditure on goods and services, and net exports of goods and services. |
Which of the following is NOT included in the expenditure approach to calculating GDP? |
wages |
Suppose GDP is $10 billion, consumption expenditure is $7 billion, investment is $2 billion, and government expenditure on goods and services is $2 billion. Net exports of goods and services must be |
-1 billion |
According to the expenditure approach to measuring GDP, in the United States, the largest component of GDP i |
consumer expenditure |
Expenditures in GDP do not include ________. |
used goods or financial assets |
Which of the following is NOT part of the income used in the income approach to measuring GDP? |
taxes paid by persons |
Which of the following is NOT included in the income approach to calculating GDP? |
net exports of goods and services |
Nominal GDP can change |
if either prices or the quantities of goods and services change |
The difference between nominal GDP and real GDP is |
the prices used in their calculations. |
GDP is |
an imperfect measure of the standard of living |
Even though it is not a perfect measure, economists can use real GDP to |
B |
Although imperfect, which of the following is used as a measure of the standard of living? |
real GDP/population |
In the United States, between 1961 and 2011, there has been D) ii and iii |
D |
If we use GDP to measure our standard of living, then our procedure is |
inaccurate because our standard of living does not depend on only goods and services |
The business cycle describes |
the behavior of real GDP over time |
The business cycle is defined |
irregular ups and down in production and jobs |
The relationship between real GDP and potential GDP over the business cycle can be best summarized by which of the following statements? |
real GDP fluctuates around potential GDP |
Over the business cycle, |
real GDP fluctuates around its trend |
During the business cycle, |
real GDP fluctuates around its trend |
A business cycle has two turning points, which are |
trough and peak |
The business cycle has 2 phases |
recession and expansion |
A standard definition of recession is |
a decrease in GDP that lasts for 6 months |
In order to be classified as a recession, a contraction of general economic activity must last at least |
six months |
A recesion conventionally defined as a decrease in |
real GDP that last for 6 months |
A recession runs from the |
peak of business cycle to its trough |
The U.S. economy is experiencing falling output, falling employment, falling incomes and rising unemployment. These conditions best describe a business cycle ________. |
recession |
The U.S. economy is experiencing rising output, rising employment, rising incomes and falling unemployment. These conditions best describe a business cycle ________. |
expansion |
The NBER describers a recession as |
a period of significant decline in total output, income, employment, and trade usually last more than 6 months |
Which of the following describe the US economy in 2008 and start of 09 |
Recession |
US real GDP |
excludes the value of underground production and leisure time |
As measured, GDP omits which of the following? |
E |
Excluding household and underground production leads to |
underestimation of both real and nominal GDP |
Goods and services such as environmental quality, leisure time, and household production are not included in GDP because they are not |
bought in market |
Household production, such as baking bread at home, is not included in GDP because it |
does not involve a market transaction |
The calculation of GDP excludes the value of |
a family member painting the family home |
An example of household production excluded from GDP is |
tree trimming you provide at your parents home |
Babysitting services the eldest son provides for his parents |
does not count as real GDP or nominal GDP |
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 |
the value of the output produced by the newly working women plus the value of any household work they are now hiring someone the perform. |
Instead of taking dirty laundry to your parents, you take it to the laundromat. Your use of the the laundromat means that |
what you paid for use of the laundromat will be included in the GDP |
If you mow the lawn yourself, the lawn mowing is considered a household production. If you pay LArrys Lawn service to mow your lawn, the lawn mowing is considered |
a service, that will be counted as part of GDP |
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 |
55,000 |
The measurement of GDP handles underground production by |
omitting it because underground production is unreported to the government by the people involved |
Leisure time is ignored in GDP because |
its not bought in a market |
Which of the following is NOT included in measured U.S. GDP? |
B |
Mexico City is notorious for its excessive pollution. Mexico's measure of GDP is |
not affected by the estimated value of pollutions harm |
A new technology is discovered which results in all new cars producing 50 % less pollution. Which of the following is true? |
B |
The Human Development Index was proposed because |
of the limitations of real GDP as a measure comparing the standard of living in different nations. |
In the years after 1998, the most severe recession ocurred during |
2008-2009 |
Which of the following is NOT part of the business cycle? |
inflation |
In the business cycle, what immediately preceedes the time when real GDP is falling? |
peak |
Which of the following goods and services are omitted from GDP? |
household production |
GDP handles household production by |
ignoring it |
The underground economy __________ |
includes production that uses illegal workers who are paid less than min wage |
The value of leisure time is |
excluded from GDP |
Leisure time ________ |
is not valued as part of GDP |
Real GDP measures the value of goods services produced in a given year using |
base year prices |