ECO201 CH10

A transfer payment is

a form of government spending that is not made in exchange for a currently produced good or service.

Net exports equal

exports minus imports

Recessions are not associated with which of the following?

falling unemployment

Government purchases include spending on goods and services by

federal, state, and local governments.

GDP is defined as the

value of all final goods and services produced within a country in a given period of time.

In the base year, the GDP deflator is always

100.

In the United States in 2009, consumption represented approximately

70 percent of GDP.

In a simple circular-flow diagram, firms use the money they get from a sale to

All of the above are correct.

Which of the following is included in the investment component of GDP?

All of the above are included in the investment component of GDP.

Which of the following is included in the investment component of GDP?

Spending on new business equipment such as power tools but not spending on stocks and bonds

Spots, Inc. produces ink and sells it to Write on Target, which makes pens. The ink produced by Spots, Inc. is called

an intermediate good.

Expenditures on a nation's domestic production

are equal to its domestic production.

GDP per person tells us the income and expenditure of the

average person in the economy.

According to the circular-flow diagram GDP

can be computed as either the revenue firms receive from the sales of goods and services or the payments they make to factors of production.

According to the circular-flow diagram GDP

can be computed as the total income paid by firms or as expenditures on final goods and services.

The basic tools of supply and demand are

central to macroeconomic analysis as well as to microeconomic analysis.

Real GDP is the yearly production of final goods and services valued at

constant prices.

Macroeconomists study

economy-wide phenomena.

If total spending rises from one year to the next, then

either the economy must be producing a larger output of goods and services, or goods and services must be selling at higher prices, or both.

Disposable personal income is the income that

households and noncorporate businesses have left after paying taxes and non-tax payments to the government.

U.S. GDP

includes production of foreigners working in the U.S. but excludes production by U.S. residents working in foreign countries.

The term economists use to describe a situation in which the economy's overall price level is rising is

inflation.

What word do economists use to refer to the purchase of goods that will be used in the future to produce more goods and services?

investment

Income generated by a nation's domestic production

is equal to its domestic production.

GDP

is used to monitor the performance of the overall economy and is the single best measure of a society's economic well-being.

The GDP deflator is the ratio of

nominal GDP to real GDP multiplied by 100.

Changes in the GDP deflator reflect

only changes in prices.

When economists talk about growth in the economy, they measure that growth as the

percentage change in real GDP from one period to another.

The inflation rate is the

percentage change in the price level from one period to another.

The income that households and noncorporate businesses receive is called

personal income.

When studying changes in the economy over time, economists want a measure of the total quantity of goods and services the economy is producing that is not affected by changes in the prices of those goods and services. In other words, economists want to study

real GDP.

Which of the following is always measured in prices from a base-year?

real but not nominal GDP

Which of the following is included in the investment component of GDP?

spending on new business equipment such as power tools but not spending on stocks and bonds

Which of the following is included in the investment component of GDP?

spending on new residential construction but not spending on stocks and bonds

Total income from the domestic production of final goods and services equals

the expenditures for these goods whoever buys them.

The percentage change in the price level from one period to another is called

the inflation rate.

National income is defined as

the total income earned by a nation's permanent residents in the production of goods and services.