ECON Module 7

Gross domestic product

market value of all final goods and services produced in a country during a period of time.

Inflation

the average level of prices is increasing

Lower; Higher

People who lend large sums of money prefer the inflation rate to be _______ to earn a ______ real interest rate.

A

The calculation of gross domestic product would include the purchase of a: A. New Automobile B. Used Automobile

Prices are 3 Times higher than base year

If the CPI in a given year is 300, this means that

A new computer purchased by a college student

In the calculation of GDP, which of the following purchases is included as household consumption expenditure?

it would be double counting since the value of the home is already counted in GDP

The value of the bricks purchased by a contractor to build a fireplace in a new home is not counted in GDP because:

Intermediate Goods

Which of the following are not counted as final goods and used in the GDP calculation?

A

Suppose the price level (as measured by the CPI) in successive years is 100, 90, 85, and 80. The country is experiencing: A. Deflation B. Inflation C. Expansion D. No Change

Real GDP/Population

The GDP per capita is computed by dividing a country's:

protection against inflation

Which of the following is not a function of money?

220.2-217.2=3 3/220.2=.0136 .0136x100=1.36 Therefore, your income has RISEN

Your income was $25,000 in 2009 and $25,500 in 2010. The CPI was 217.2 in 2009 and 220.2 in 2010. This means that:

Measures the cost of an unchanging basket of goods and services.

consumer price index

Consumption

Which is the largest component of GDP?

new machines, factories & houses.

Which of the following is included in the economist's definition of investment? The purchase of:

Deflation

A period of declining prices of goods and services is:

Expansion

A period of real economic growth, where production and employment are both moving higher is known as:

-real interest rate -wage -living allowances -value of income -real return on investments

Inflation is important because it affects:

investment goods consumption government spending not included net exports

Determine if the following transactions are included in consumption, investment, government spending, net exports or not included. A.Farmer purchases tractor B. Individual buys milk at a grocery store C. Supplies purchased for public school D. Individual buys used car E. Individual purchases car from South Korea

Nominal; Real

Economic variables that are calculated in the current year prices are referred to as ___________ variables, while variables that have been corrected to account for the effects of inflation are __________ variables.

US exports exceeded US imports by $190 billion

If a newspaper headline indicates that US net exports were $190 billion in 2011, it likely means that: