ECON 201 Chapter 7 HW

A designer company buys $400 of silk, $30 of accessories, and adds $200 of value. According to the value-added approach, the price of the dress should be

$630

Which of the following transactions is included in the nation's gross domestic product?

A college student buys a pizza and has it delivered to her dorm room.

The equation that breaks GDP down by the four sources of aggregate spending is

GDP = C + I + G + X - IM

The circular flow-diagram illustrates all of the following in the US economy EXCEPT -flows of $ -growing income inequality -the purchase and sale of factors of production -flows of goods and services

Growing income inequality

A country's exports minus imports during a period are

gross exports

The dollar value of final goods and services only is counted in GDP because

if we counted the value of all goods, we would count inputs, like the value of steel in a new automobile, more than once.

A country's GNP

is the total factor income earned by residents of a country

An example of a government transfer is

a Social Security payment (government to household)

According to the circular-flow model, if there is an increase in government spending, what is likely to happen?

an increase in the nominal GDP

Economists frequently use GDP per capita to reflect

differences in living standards across countries

The total income of households after taxes and government transfers is called

disposable income

Goods that are produced in a particular period but NOT sold in that period

end up in inventory and are included in investment

Investment spending is spending on

productive physical capital