Macro chapter 6
B. personal tax payments
Disposable personal income is equal to personal income minus: A. social security payments B. personal tax payments C. government transfer payments
Per Capita = Real GDP / Population *1000
Per Capita GDP
C = GDP−I−G−(EX−IM)
Personal Consumption Expenditure
(Population 2019 - Population 2018) / Population 2018 * 100
Population growth
C. disposable personal income
The best measure of the income households actually have available to spend is: A. gross domestic product B. national income C. disposable personal income
(Per Capita GDP 2019 -Per Capita GDP 2018) / Per Capita GDP 2018 * 100
per-capita GDP growth rate
Final Sales= GDP- Business inventories - if business inventories is negative GDP- (- Business inventories)= GDP +
Calculate Final Sales
GDP = Compensation of Employees+ Profits + Depreciation
Calculate using the income approach
C. market value of all final goods and services produced in a country during a period of time
Gross domestic product is best defined as the: A. total quantity of goods and services produced in a country during a period of time B. total value of all goods that can be found in a country C. market value of all final goods and services produced in a country during a period of time
Net Investment = Gross Investment - Depreciation
Net Investment calculation
A. It will increase gross private domestic investment.
Over the course of the year business inventories increased. How is this change reflected in the GDP? A. It will increase gross private domestic investment. B. It will increase personal consumption. C. It will decrease net exports.
C. $1,640.
PC Bell, a computer manufacturer that sells computer systems directly to customers, buys a computer chip for $150, software for $350, and a printer for $40. If the value added by PC Bell from selling this system (including the printer and the software) is $1,100, what is the price at which the system is sold? A. $950. B. $560. C. $1,640. D. $1,100.
A. total dollar value of all goods and services produced within the borders of a country
The GDP is a measure of the: A. total dollar value of all goods and services produced within the borders of a country B. total dollar value of all goods and services produced by the citizens of a country C. welfare or well-being of the people in a country
B. smaller than the value of GDP
The total national income actually received by a country's residents is: A. exactly equal to the value of GDP B. smaller than the value of GDP C. larger than the value of GDP
C. Add government transfer payments
To calculate personal income from national income, which of the following must be done by the BEA? A. Add corporate retained earnings B. Add profits C. Add government transfer payments
GDP in 2009 = 120x8+60x40-> 960+2400=3360 GDP in 2009 with 2010 price= 120x9.20+60x42-> 1104+2520=3624 GDP in 2010 with 2009 price= 144x8+75x40 -> 1152+3000= 4152 GDP in 2010= 144x9.20+75x42 -> 1324.8+3150=4474.8 2009%= 3624-3360/3360x100->264/3360x100 -> .0785 x100= 7.86% 2010%= 4474.8-4152/4152x100-> 322.8/4152x100->.07777x100=7.77% geometric average = (7.86x7.77)^1/2=7.81%
calculated values for 2009 and 2010 example
B. Depreciation
is the amount an asset falls in value for a given year. A. Reduction B. Depreciation C. Depreciation
GDP = Consumption + Government Purchases + Gross Investment + Net Export Net Exports = Exports - Imports
Calculate using the expenditure approach
Gross private domestic investment = Nonresidential Investment + Residential Investment + Change in Inventories.
Gross private domestic investment. Calculation
B. By adding the value in dollar terms of all the final goods and services produced domestically.
How does the Bureau of Economic Analysis of the U.S. Department of Commerce measure GDP? A. By adding the quantities of every goods and service produced in the economy. B. By adding the value in dollar terms of all the final goods and services produced domestically. C. By ascribing a historic value to all of the quantities produced in the economy.
C. the GDP would be much higher than it is but the well-being of the typical person would not necessarily be higher
If Americans still worked sixty hour weeks, as they did in 1890, __________. A. both the GDP and the well-being of the typical person would be higher B. both the GDP and the well-being of the typical person would be lower than current levels C. the GDP would be much higher than it is but the well-being of the typical person would not necessarily be higher
Net Investment = GDP - Consumption - Government Purchases - Exports + Imports - Depreciation
The relationship between net investment and GDP is given by,
A. Real GDP
Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant? A. Real GDP B. Nominal GDP C. Net national product
C. Intermediate goods
Which of the following are not counted as final goods and used in the GDP calculation? A. Exports B. Consumption goods C. Intermediate goods
B. Oven
Which of these is an example of a durable good? A. Gasoline B. Oven C. Steak
C. It only counts final goods and services and not intermediate goods.
Which of these is not a shortcoming of GDP as a measure of welfare? A. It is not adjusted for crime and other problems. B. It does not include the value of leisure. C. It only counts final goods and services and not intermediate goods.
B. not included in GDP calculation, since books bought by the bookstore are intermediate goods
Your college bookstore receives a shipment of new economics texts for $60,000. This transaction is A. included in GDP calculation under consumption. B. not included in GDP calculation, since books bought by the bookstore are intermediate goods. C. not included in GDP since books are exempt from GDP calculation. D. included in GDP under investment since the bookstore earns a profit by selling these books to students.
D. U.S. GDP under exports.
Toyota, a Japan-based company manufactures a Camry automobile in Kentucky, USA and sells it in Japan. This transaction is included in A. Japan's GDP under consumer durables. B. U.S. GDP under imports. C. GDP of both Japan and the U.S. with fifty percent in Japan's GDP under consumer durables and fifty percent under U.S. GDP under exports. D. U.S. GDP under exports.
GDP = Personal consumption expenditure + Residential investment + Non-residential investment + Change in business inventories + Government purchases + Net exports
calculate GDP
A. value of leisure.
One reason why GDP is not a good measure of national well-being is that it fails to take into account A. value of leisure. B. transfer payments. C. consumption of services such as health care. D. profits of businesses.
National income + Statistical Discrepancy
NNP
National Income=Compensation of Employees+proprietors income+rental income+corporate profits+net interest + indirect taxes minus. subsidies+net business transfer payments+surplus of gov. enterprises
National Income calculation
C. cannot capture the changes in relative prices and quantities of different goods produced in the economy.
One disadvantage of using the fixed weight approach to calculate real GDP is that, it A. allows for price to vary but not quantities. B. does not include prices of imports. C. cannot capture the changes in relative prices and quantities of different goods produced in the economy. D. includes only consumer prices.
C. GDP will be much larger than GNP
When a significant fraction of the domestic production takes place in foreign-owned facilities, a country's difference between GDP and GNP is as follows: A. GNP will be much larger than GDP B. GDP will be almost identical to GNP C. GDP will be much larger than GNP
B. Consumption
Which is the largest component of GDP? A. Investment B. Consumption C. Government spending
A. A new house
Which of the following goods and services would be excluded from personal consumption expenditures in the Bureau of Economic Analysis (BEA) statistics? A. A new house B. Education C. A haircut
B. nominal, real
Economic variables that are calculated in current year prices are referred to as __________ variables, while variables that have been corrected to account for the effects of inflation are __________ variables. A. nominal, deflated B. nominal, real C. real, nominal
GDP= GNP - [factor income form the rest of the world - factor income to the rest of the world]
GDP
(Real GDP in year2019 - Real GDP in year2018) / Real GDP in year 2018
GDP growth rate-
NNP + Depreciation
GNP
A. Lower GDP
If the total dollar value of U.S. imports exceeds U.S. exports it will result in a: A. Lower GDP B. higher GDP C. positive value for net exports.
A. consumption, investment, and government spending are overstated as these include expenditures on both domestic and foreign goods.
Imports are subtracted in the expenditure approach to calculatingGDP, because A. consumption, investment, and government spending are overstated as these include expenditures on both domestic and foreign goods. B. the U.S. economy is not open to foreign trade. C. consumption, investment, and government spending are understated as these include expenditures on both domestic and foreign goods. D. U.S. has a negative balance of trade.
C. is always equal to real GDP.
In the base year, nominal GDP A. is always greater than real GDP. B. may be higher or lower than real GDP. C. is always equal to real GDP.
A. informal economy
The portion of the economy that should be counted in the GDP but is not is called the: A. informal economy B. GNP economy C. Illegal economy
C. The purchase of new machines, factories, or houses
Which of the following is included in the economist's definition of investment? A. The purchase of a rare coin or a deposit in a savings account B. The purchase of a share of stock C. The purchase of new machines, factories, or houses
B. Depreciation
Which of these do we subtract from GNP to obtain NNP? A. Investment B. Depreciation C. Consumption
A. An increase in government expenditures
Which of these fiscal policy actions will increase real GDP in the short run? A. An increase in government expenditures B. An increase in the Social Security tax C. An increase in the individual income tax
B. $19 million are added to 2006's GDP with $15 million as consumption and $4 million as private investment.
During 2006 a leading auto manufacturer produced $19 million worth of mini-vans. However, due to soaring gas prices, the sale of mini-vans became sluggish and by the end of 2006 only $15 million worth of mini-vans were sold. As for the contribution of the mini-vans to GDP, A. $15 million are added to 2006's GDP, all as private investment. B. $19 million are added to 2006's GDP with $15 million as consumption and $4 million as private investment. C. $15 million are added to 2006's GDP, all as consumption. D. $19 million are added to 2006's GDP, all as consumption.
A. because the sum total of real investment, government purchases, and net exports grew while consumption, which is measured by retail sales, fell in real terms.
During 2002, real GDP in Japan rose about 1.3 percent, but during the same time period, retail sales fell 1.8 percent in real terms. This was made possible A. because the sum total of real investment, government purchases, and net exports grew while consumption, which is measured by retail sales, fell in real terms. B. because of inflation, which lowered consumption and retail sales, but increased the value of GDP. C. due to statistical error. Retail sales and GDP always move in the same direction. D. because only inventories increased.
D. German GDP under exports
Ford Motor Co. produces a Focus automobile in its factory in Germany and sells it in India. This transaction is added to A. both German and U.S. GDP, with fifty percent of the value in each country's exports. B. Indian GDP under imports. C. U.S. GDP under exports. D. German GDP under exports
C. final sales ignores changes in inventory, which are included in GDP calculation.
GDP is different from final sales since A. measurements of GDP and final sales are subject to statistical errors. B. final sales measures only domestic sales, but GDP considers exports as well. C. final sales ignores changes in inventory, which are included in GDP calculation. D. final sales measures only what the consumers buy, but GDP is the sum total of consumption, investment, government purchases and net exports.
Blank- Equal to C. the dollar value of the expenditure on new goods and services in a year must be equal to the dollar value of the income generated in that year.
GDP calculated by the expenditure approach will be __________ the GDP calculated by the income approach, because A. the dollar value of the expenditure on new goods and services in a year is always less than the dollar value of the income generated in that year, since imports are subtracted from the expenditure value. B. of net business transfer payments, indirect taxes minus subsidies and surplus of government enterprises. C. the dollar value of the expenditure on new goods and services in a year must be equal to the dollar value of the income generated in that year. D. the national income and the gross domestic product are two different measurements.
D. All of the above.
GDP calculations do not directly include the economic costs of environmental damage—for example, global warming and acid rain. Which of the following is a reason why these are not included in GDP? A. There is no accurate measurement to account for the costs of environmental damage. B. There is no consensus that the costs should be included in GDP and there is no consensus on the measurement of environmental damage. C. GDP is a measure of how much output the economy is producing. Global warming is not output and should not be included in GDP. D. All of the above.
C. the value of goods and services evaluated at base year prices
Real GDP is: A. the value of goods and services evaluated at current year prices B. a measure of output that was replaced by nominal GDP some years ago C. the value of goods and services evaluated at base year prices
D. the geometric average of fixed weights indexes and uses two base years to calculate the growth rate of real GDP between two consecutive years.
The U.S. Bureau of Economic Analysis (BEA) has recently adopted a new approach to calculate real GDP and real GDP growth to correct the problems of the fixed weights approach. One of the features of the new approach is that, now BEA uses A. the arithmetic average of fixed weights indexes, allowing prices to vary but not quantities. B. a simple average method instead of the weighted average method. C. only the prices of consumer goods. D. the geometric average of fixed weights indexes and uses two base years to calculate the growth rate of real GDP between two consecutive years.
A. Value Added
The difference between. the value of production inputs and outputs is known as: A. Value added B. Retail price C. Final goods
Blank- 800 12,800-12,000=800
The following data on capital stock (plant, equipment, housing and inventory) are available for the Republic of Capika for the year of 2009. Stock of capital on January 1, 2009: $12,000 billion. Stock of capital on December 31, 2009: $12,800 billion. From this one can conclude that in 2009, the level of net investment = ______ billion.