Chapter 8 Quiz
To calculate GDP by the expenditure method one must add...
consumption spending, investment spending, government spending and net exports.
The best measure of the income households actually have available to spend is...
disposable personal income.
Which of the following could cause nominal GDP to decrease, but real GDP to increase?
The price level falls and the quantity of final goods and services produced rises.
Total income in an economy is equal to...
the sum of wages, interest, rent, and profit.
Gross domestic product understates the total production of final goods and services because of the omission of...
the underground economy.
Real GDP is GDP in a given year...
valued in the prices of the base year.
In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA...
values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up.
Which of the following statements is true?
GDP accounting rules do not adjust for production that pollutes the economy.
Which of the following transactions represents the purchase of a final good?
Your father buys a new John Deere riding lawn mower.
The purchase of a new house is included in...
investment expenditures.
National income equals gross domestic product...
minus the consumption of fixed capital.
Personal income is defined as...
national income less retained earnings plus transfer payments and plus interest on government bonds.
Real GDP will increase...
only if the quantity of final goods and services produced rises.
If real GDP increases we know for sure that...
output has risen.
Gross national product, GNP, of the U.S. is the market value of all final goods and services...
produced by residents of the United States anywhere in the world.
The measure of production that values output using base- year prices is called...
real GDP.
Gross Domestic Product is calculated by summing up...
the total market value of final goods and services produced in the economy during a period of time.
