Macro-Measuring Output and Income
Roughly, how much of gross domestic product is used for investment?
1/5 or less
Consider the information provided in the table about the economy of casto. The value of consumption in Casto is $___
650
If an economy exports $15 billion worth of goods and services and imports $8 billion worth, the amount of its net exports is $ ___ billion.
7
Suppose that last year a total of $15 billion in goods and services was exported to other countries, while $6 billion was imported. Net exports equals $___ billion.
9
Which of the following statement(s) is true?
After 1975 imports have exceeded exports. Exports generally exceeded imports before 1975.
Which of the following statements is true?
Capital wears out and needs to be replaced. In general, having more capital is desirable.
___ are added to GDP, whereas ___ are subtracted from GDP
Exports Imports
___ sales do not represent new production, just the reallocation of past production that was already counted as part of the GDP in another year.
Secondhand
Nominal gross domestic product measure the dollar value of
all the final goods and services that are produced during a fixed period of time.
Services now constitute two-thirds of what households buy, because:
as incomes have increased over time, people are more willing to pay others to do things for them.
The more ___ that is available to its workers, the more productive a nation will be.
capital
In economics, depreciation refers to:
capital that is worn out or obsolete
In economics, consumption is classified into one of three categories:
consumer nondurables, consumer durables, services
Gross domestic product equals the total sum of four categories
consumption, gross investment, government purchases, and next exports
Because ___ are produced domestically, they must be included in gross domestic product.
exports
Counting expenditures for only ___ goods and services provides a good estimate of the dollar value of output produced in an economy, or nominal GDP.
final
If a transaction happens in a ____ market - that is sold by a licensed seller - it will be included in GDP; if the transaction happens instead in an ____ market - one that is either illegal or otherwise untraceable - it will not be included in GDP.
formal, informal
Consumption includes purchases made by
households
Gross investment tells:
how much capital is being created.
An ___ good or service is used to build or make another product that will be subsequently sold.
intermediate
In economics, ___ does not solely refer to saving money, or buying stocks or bonds.
investment
Imports constitute:
less than 20% of nominal GDP
More gross investment today means we will have:
more capital in our economy to use for production tomorrow, potentially leading to higher GDP in the future.
Net exports are ___ when imports exceed exports.
negative
To determine whether the stock of capital is growing or shrinking, we need to calculate ___ investment.
net
Investment can be:
positive, negative, or zero
Secondhand sales represent the
reallocation of past production that was already counted as part of GDP in another year
Gross investment falls into one of three categories:
residential investment, business fixed investment, and changes in inventory
Because informal-market transactions result in increased output produced, GDP________ estimates the actual amount of output produced in an economy
under-estimates
Although consumption is the largest component of GDP, investment is the most ___ component of GDP.
volatile
When measuring GDP, we classify expenditures into four categories because:
we like to know who is consuming what