Introduction to Macroeconomics
If Nike, an American corporation, produces sneakers in Thailand this would
add to Thailand's GDP but not to U.S. GDP.
The calculation of the final goods and services sold in an economy would NOT include
General Motors' purchases of tires for new automobiles.
________ is gross investment minus ________.
Net investment; depreciation
Of the following, which is correct?
Nominal GDP increases when the prices of goods and services increase.
Which one of the following transactions in a particular year is included in gross domestic product for that year?
The government pays a computer services company that assisted in the delivery of Social Security payments to retirees.
All of the following are components of the expenditure approach to measuring GDP EXCEPT
a Senator from Iowa being paid the monthly salary.
A common definition of a recession is a time with
a decrease in real GDP for two or more successive quarters.
An example of "investment" in computing real GDP using the expenditure approach is the purchase of
a new set of tools by an auto mechanic, for use in repairing cars.
The circular flow shows that
aggregate production equals aggregate expenditure. and GDP equals aggregate income.
On a time-series graph, time is typically shown
along the x-axis.
In the country of Darrowby, net domestic income at factor cost is $2.0 million. Gross domestic product is $3.0 million, and depreciation is $0.5 million. Indirect taxes less subsidies ________.
are $0.5 million
Purchasing power parity prices are used to construct GDP data that
can be used to make more valid comparisons between one country and another.
The expenditure approach measures GDP by adding
consumption expenditure, gross private domestic investment, net exports of goods and services, and government expenditure on goods and services.
Transfer payments are not part of government expenditure on goods and services because transfer payments
do not represent the purchase of a final good or service.
If Frito Lay, an American snack company, opens a new manufacturing facility in Mexico and produces snacks which are distributed in South America, then Mexico's GDP ________ and U.S. GDP ________.
increases; does not change
Double counting (counting the same thing twice) in GDP accounting is avoided by not including
intermediate goods.
An expansion
is defined as a period of real GDP increases.
Gross domestic product
measures the value of the aggregate production of goods and services in a country during a given time period.
In 2013, Ozzie purchased a 2010 Ford Escort from his neighbor for his son, purchased a 2009 "one owner" Camry from Larchmont Toyota for his wife, bought a 2013 new Ford for himself, and sold his 2002 Dodge Caravan to his teenage nephew. Which, if any, of these transactions will be included in GDP in 2013?
only the purchase of the Ford
Because pollution reduces economic welfare, on this count real GDP as measured
overstates economic welfare.
The largest component of GDP is
personal consumption expenditures.
A graph shows the wages of factory workers. The slope of the line is positive for periods when the wage rate is
rising.
Inflation climbed steadily from 1952 to 1972. A time-series graph with inflation on the vertical axis and time (in years) on the horizontal axis would show
that inflation had a positive trend.
Potential GDP is
the maximum amount of GDP that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation.
A time-series graph showing total production in Japan from 1960 to 2010 shows a positive trend. It is the case that total production
was higher in 2010 than in 1960.