Econ - Chapter 5
A U.S. automaker produces $1 million worth of automobiles in its factory in Japan. How much of that is added into the GNP of the United States?
$1 million The entire $1 million is added into the GNP of the United States because GNP includes all goods produced with resources supplied by U.S. residents.
A U.S. automaker produces $1 million worth of automobiles in Japan and $2 million worth of automobiles in the United States. How much of that is added into the GDP of the United States?
$2 million $2 million is added to the GDP of the United States because the products produced in Japan are not counted toward GDP.
is/are a country's GDP divided by its population.
GDP per capita
For a good or service to be counted in a given year's gross domestic product (GDP), what four criteria must be met?
have a market value be a final good or service be produced within a given country be produced within a certain time frame
Which of these is a macroeconomics topic?
what causes prices to increase Macroeconomics studies economic activity that focuses on the entire economy. Recessions and their effect on unemployment fall into this category.
GDP is the total market value of all final goods and services produced in an economy in a given year. Used items, intermediate goods, second-hand goods, and black market items are not included in the calculation. The commission paid on the sale of a used item is included because the sales service is new. Goods that are sold on a street corner are, presumably, a resale and do not get included in GDP.
sed items, intermediate goods, second-hand goods, and black market items are not included in the calculation. The commission paid on the sale of a used item is included because the sales service is new. Goods that are sold on a street corner are, presumably, a resale and do not get included in GDP.
Use the following data to calculate GDP: consumption = $9.5 billion, investment = $3 billion, government spending = $2.5 billion, exports = $2 billion, imports = $1 billion.
GDP = $16 billion The equation is GDP = C + I + G + (X − M) = $9.5 billion + $3 billion + $2.5 billion + ($2 billion − $1 billion) = $16 billion.
Which of the statements is the best description of a business cycle?
alternating periods of increasing and decreasing economic output
Which of these is a macroeconomic topic?
how best to foster economic growth Macroeconomics studies economic activity that focuses on the entire economy. Economic growth and its determinants fall into this category.
A Japanese automaker produces $1 million worth of automobiles in Japan and $2 million worth of automobiles in the United States. How much of that is added into the GNP of the United States?
none GNP reflects the market value of all final goods and services produced by resources supplied by U.S. residents, whether the goods were produced domestically or abroad.
The headline "Bailout Plan Rejected, Markets Plunge, Forcing New Scramble to Solve Crisis" appeared in the Wall Street Journal on September 30, 2008. What phase of the business cycle does this headline suggest the economy was in at that time?
recession Downturns, or recessions, can happen because an economic boom has run out of steam, after which business investments begin to decline. Once a recession is under way, businesses react by curtailing hiring and perhaps even laying off workers, thus adding to the recession's depth.
What phase of the business cycle does the headline "Consumer Confidence Continues Upward Trend for a Third Year Consecutive Year" suggest?
recovery This means prior to this period, consumer confidence was lower. When consumers continue to gain more confidence, an economy is in a recovery phase. A recovery begins after an economy has reached the trough of a recession, as businesses and consumers become more enthusiastic about the economy
a line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates
yield curve simplest, and surprisingly accurate, predictor of changes in the business cycle.