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The national income accounting system employed by the United States had its origins in the
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True or false: Prices serve as a measure of value for calculating total output.
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Principles of Econ I
Week 2
| Question | Answer |
|---|---|
| The national income accounting system employed by the United States had its origins in the | 1930s |
| True or false: Prices serve as a measure of value for calculating total output. | True |
| What does a nation's gross domestic product (GDP) reflect? | The total market value of all final goods and services produced within an economy in a given year |
| The GDP for this economy is $? Price Output Pizzaz $15 50mil Laptops. $400. 10mil Yachts. $1mil 2000 | 6750 millions |
| The output of the German-owned BMW plant in South Carolina is included in Germany's _____ and in the United States' _____. | GNP; GDP |
| National income accounting is: | the measurement of aggregate economic activity, particularly national income and its components |
| Per capita GDP is: | GDP divided by population |
| serves as a measure of value for calculating total output of a product. | Price |
| If GDP included unreported income, GDP would: | Increase |
| The market value of all final goods and services produced within the borders of a given country during a given period of time is the definition of | gross domestic product |
| GDP excludes some market transactions (such as intermediate goods) because | including all transactions would overstate GDP |
| True or false: Intermediate goods are included in the calculation of GDP. | False |
| Gross______ product refers to output produced within a country's borders. | domestic |
| A final good is: | a good directly consumed by individuals or businesses, directly counted as part of GDP. |
| GDP per capita means: | GDP per person |
| Suppose the physical output produced by an economy falls, yet higher prices give rise to an increase in measured GDP. In this case we can say that _____ GDP is higher and _____ GDP is lower. | Nominal; Real |
| An example of unreported income is ______. | lawn care that is paid "off the books" |
| Nominal GDP measures the value of all goods and services: | in current prices |
| Including the value of_____ goods along with the value of final goods in the calculation of GDP would amount to multiple counting of goods and distort GDP. | intermediate |
| When GDP is measured using "adjustments for price changes," it is known as: | eal GDP |
| Goods and services that are purchased for resale or for further processing or manufacturing are called | intermediate |
| Consumption goods and services purchased by their end consumers are called ______ goods. | Final |
| Nominal GDP is not an accurate measure of the real level of economic activity in a country because: | inflation distorts the real value of all goods and services produced |
| An increase in the average level of prices of goods and services is | Inflation |
| Computing GDP using current prices gives us | Nominal GDP |
| _________ GDP uses current prices while __________ GDP uses prices ad- justed for inflation. | Nominal; Real |
| Instead of using the prices of a single base year to compute real GDP, the U.S. Department of Commerce uses price indexes that are said to be | chain-weighted. |
| The value of capital used up in the production of goods and services is called | depreciation or GDP |
| Net domestic product is ______. | GDP) − (depreciation) |
| Real gross domestic product (GDP) is a measure of GDP that _____. | accounts for prices changes |
| Gross investment is ______. | the total amount of investment purchases in a given time period |
| The chain-weighted price indexes employed by the U.S. Department of Commerce to compute real GDP use a _____ average of price levels in consecutive years as an inflation adjustment. | Moving |
| Net investment is: | what is left over from total new private investment after depreciation |
| Society's answer to the core issue of WHAT to produce is answered by ______. | GDP |
| Gross domestic product less depreciation equals ______. | net domestic product |
| Investment goods consist of ______. | newly produced plants, machinery, and equipment |
| rue or false: All final purchases of plant, machinery, and equipment in a given time period are included as gross investment. | True |
| At present, government spending on goods and services claims roughly _____ of total U.S. output. | one-fifth |
| Which of the following is equal to net investment? | Gross investment minus depreciation |
| The distinction of imports from domestic-made goods is _____ to establish. | difficult |
| The GDP identifies the mix of output a country has selected, which also answers the question of _______ to produce. | what |
| Foreign goods purchased by American consumers, firms, or governments should be _____ GDP because the goods were produced outside the United States. | subtracted from |
| Which of the following are components of the expenditure approach to measuring GDP? | Consumption, Government spending, Gross investment |
| Investment currently claims about _____ of U.S. output. | one-sixth |
| Suppose consumption is $40b, imports are $3b, exports are $8b, government spending is $14b, and investment is $20b. Given this, GDP = | 69 b Reason: C + I + G + (X − M) = $40 + $20 + $14 + $(3 − 8) = $69b. |
| Government ____ include all federal, state, and local government outlays on final goods and services. | purchases, consumption, spending, expenditures, purchase, or expenditure |
| GDP accounts have two sides. One side focuses on the demand side (called the ________ approach) and the other side focuses on the supply side (called the _______ approach). | expenditure, income |
| Goods and services purchased from international sources are: | imports |
| True or false: Calculating national income helps us understand FOR WHOM our output was produced. | true |
| Imports must be subtracted from GDP because they are goods and services _____ the borders of the United States. | produced outside but purchased inside |
| Depreciation charges _____ GDP to the level of net domestic product (NDP). | reduce |
| In order to determine GDP using the expenditures approach, all spending on _____ goods and services, not intermediate goods, is added up. | final |
| Suppose consumption is $100b, imports are $20b, exports are $10b, government spending is $40b, and investment is $60b. Given this, GDP = | 190 C+ I + G + (X − M) = $100 + $60 + $40 + ($10 − $20) = $190 billion. |
| American-owned factors of production employed in other nations creates an _____ of income for U.S. households. | Inflow |
| GDP can be measured using the _____ approach, which adds the items that make up national earnings on the supply side. | income |
| Which of the following is added to or subtracted from national income to arrive at personal income? | Transfer payments, Capital income, Indirect business taxes, Corporate profits |
| The income created when GDP is produced is called: | national income |
| If households have paid $1,400 billion in personal taxes from a personal income of $6,200 billion, then disposable income will be | 4800 |
| The reimbursement businesses receive for the wear and tear that occurs on the capital resources they own is called | depreciation |
| The flow of income illustrates that: | the dollar value of output will always equal the dollar value of income |
| The view of GDP as the sum of money spent on purchases is called: | the expenditure approach. |
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