Macro Chapter 12 Homework

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GDP minus depreciation.

National Income is

GDP minus depreciation.

National income is

households

The​ circular-flow diagram shows that all sources of income are owned by

total​ expenditure; total income

The​ circular-flow diagram shows that​ ________ should equal​ ________.

a decrease in total production.

A recession occurs when an economy experiences a period in which there is

Each measure of production and income gives a different value for total production and income.

Based on the above table and​ graph, which of the following statements regarding total production and total income is​ true?

personal income minus personal taxes.

Disposable personal income is

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

Gross Domestic Product​ (GDP) is

How does the price of corn change if the price of wheat​ increase? Microeconomics Identify the best measurement of total output in the US economy. Macroeconomics How will an increase in government spending impact the inflation​ rate? Macroeconomics The most efficient market structure is perfect competition. Microeconomics

Identify whether the following topics belong in microeconomics or​ macroeconomics:

Coffee beans purchased by a coffee shop Intermediate good One share of Google stock Neither A new​ pick-up truck purchased by a consumer Final good A new home purchased by a family Final good

Indicate whether each of the following is a final​ good, an intermediate​ good, or neither.

firms produce​ goods, however sometimes the goods may be unsold at the time GDP is computed.

Inventories are part of investment and therefore included in GDP because

net exports.

One major component of GDP that can be negative is

national income minus retained corporate earnings plus government transfer payments and interest on government bonds.

Personal income is

A. GDP does not include crime rates or income distribution. B. The costs of pollution are not included. C. The value of leisure is not included. answerD. All of the above.

Real GDP per capita LOADING... is often used as a measure of general​ well-being. While increases in real GDP often do lead to increases in the​ well-being of the​ population, why is real GDP not a perfect measure of​ well-being?

RGDP​ < NGDP because prices are rising.

Suppose the base year is 2001. Looking at GDP data from the United States from 2001 to the​ present, what would be true of the relationship between nominal GDP and real GDP LOADING... ​?

total production experiences periods of increases and periods of decreases.

The business cycle exists because

microeconomics studies smaller parts of the economy such as markets and​ individuals, while macroeconomics studies the economy as a whole.

The difference between microeconomics and macroeconomics is

Consumer spending on services is less than the sum of spending on durable and nondurable goods.

The figure above shows the values of the components of GDP for the year 20142014. Based on the data​ shown, which of the following statements regarding the components of GDP are​ false?

Firm Value of Product Value Added​ By: Value Added Equals Cotton farmer Raw Cotton​ = ​$11 The cotton farmer 11 Textile mill Cotton woven into cotton fabric​ = ​$33 The textile mill​ = ​$33minus−​$11 ​= 22 Shirt company Fabric made into a shirt​ = ​$1515 The shirt company​ = ​$1515minus−​$33 ​= 1212 L.L.Bean Shirt sold on​ L.L.Bean's website​ = ​$3535 L.L.Bean​ = ​$3535minus−​$1515 ​= 2020 Total Value Added​ = ​$11 ​+ ​$22 ​+ ​$1212 ​+ ​$2020 ​= 3535

The following table illustrates the value added LOADING... approach to calculating GDP. Please complete the table.

wages.

The largest component of gross domestic income LOADING... is

Gross domestic income is measured precisely.

The table and figure above show GDP measured in terms of the total income received by households. Use the table and figure to help determine which of the following statements about the division of income is false.

transfer payments are simply transfers of income from one group to another and not a purchase of a new good or service.

Transfer payments are not included in GDP calculations because

When nominal GDP​ increases, real GDP falls.

Use the graph to help determine which one of the following statements regarding nominal and real GDP is FALSE.

greater than

Wages earned by households make up greater than ​50% of the total income earned in the U.S. economy.

Wages, Interest,​ Rent, and Profit

What are the four categories of​ income?

Consumption, investment, government​ purchases, and net exports

What are the four major categories of​ expenditure?

households can use some of their income to purchase goods from foreigners as imports.

When examining the​ circular-flow diagram,

wages.

When looking at GDP as the amount of total​ income, the largest component of total income in the U.S. is

Y = C+I+G+NX

Which of the following equations sums up the components of Gross Domestic Product​ (GDP)?

Spending on services is smaller than the amount of consumption spending on durable and nondurable goods.

Which of the following statements about the consumption component of GDP is not​ correct? A. The consumption component of GDP in the U.S. is greater than all three of the other components​ (government, investment, and net​ exports) combined. B. Consumption as a fraction of total GDP in the U.S. is larger compared to all other high income nations in the world. C. Spending on services is smaller than the amount of consumption spending on durable and nondurable goods. D. Since​ 1960, the consumption component of GDP has generally increased as a fraction of GDP.

Production from a U.S. firm that operates in Mexico.

Which of the following would be included in the gross national product​ (GNP) of the United​ States?

GDP does not include household production or production from the underground economy.

Why is GDP an imperfect measurement of total production in the​ economy?


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