macroeconomics
A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?
$1200
James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to GDP?
$22k because you add both together because they are both contributing to gdp
A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute
$250 to GDP
Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house that could be rented for $21,000 a year. How much do these housing services contribute to GDP?
$28k because both contribute so you add
Formula for the inflation rate using the GDP Deflator
(GDP def 2) - (GDP def 1) / (GDP def 1) x 100
GDP Deflator in base year
100
do we include sales of stocks and bonds in GDP
No
formula for GDP deflator
Nominal GDP/Real GDP x 100
Which of the following is not an example of a durable good
a business suit
A us publisher purchaser new computers that were manufactured in the US. This purchase by itself makes
a positive contribution both to investment and to GDP
GDP can be measured as the sum of
consumption, investment, government purchase, and net exports
the value of plant and equipment worn out in the process of manufacturing goods and services is measured by
depreciation
income=
expenditure
GDP is the sum of the market value of the
final goods and services
What do we consider a transfer payment and why do we include it or exclude it from the GDP
social, Medicare, unemployment insurance, welfare programs. exclude because not for goods or services
define study of macroeconomics
studies the behavior and performance of an economy as a whole
Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000. In 2014 she sold the house for $260,000. Which of the following statements is correct regarding the sale of the house?
the 2014 sale affected neither 2014 GDP nor 2011 GDP
which of the following items is counted as part of government purchases
the federal government pays the salary of a navy officer, the state of Nevada pays a private firm to repair a Nevada state highway, or the city of las Vegas, Nevada pays a private firm to collect garbage in that city
Do we include goods and services in the GDP produced outside the country? What about if they are produced by foreigners in the country?
the goods are counted as part of the foreign country's gdp
Purchases of newly constructed homes are included in what component of GDP
investment component
Gross domestic product includes all
legal final goods and services, but it excludes illegal final goods and services
An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?
the value of the goods and services produced by the restaurant is included in French GDP, but not in US GDP
what does gdp not reflect
the value of volunteer work or caring for one's own children
What variables do we change from year to year when we calculate Nominal GDP; what about real
prices and with real its quality
Consumption consists of spending by households on goods and services, with the exception of
purchases of new houses
how is your purchase of a $40k BMW automobile that was produced entirely in Germany recorded in the U.S GDP accounts
there is no impact because this transaction doesn't involve domestic transaction
define consumption
use of goods and services by households
Real GDP is measured in __ prices while nominal GDP is measured in ___ prices.
base year; current year
if a cobbler buys leather for $100 and thread for $50 and uses them to produce and sell $500 worth of shoes to consumers, the contribution of GDP is
500 (only final goods and services)
Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in
Mexican GDP, but not included in US GDP
Which of the following domestically produced items is not included in GDP?
bottle of shampoo, hairdryer, haircut
Remember if you buy a product that was produced in different country, which components of GDP are affected and what is the overall effect on GDP
buying from other countries decreases our GDP and selling things to other countries increases our gdp
GDP would include which of the following
consulting services
if your grandparents buy a new retirement home, this transaction would affect
consumption
Know how to calculate the GDP (Y= C+I+G+NX)
consumption + investment + government investment + net exports (exports - imports)
US GDP would exclude which of the following
cotton purchased by lee jeans
U.S GDP measures the production and income of
people and factories no matter where they are located in the world
Gasoline is considered a final good if it is sold by a
gasoline station to a bus company that operates a bus route between san Francisco and los Angeles
gdp per person
gdp of country / population
define investments
good or service not consumed today but used in the future
Education is included in what component of GDP?
goods and services
define government purchases
goods and services needed to operate the government
Which of the following items is included in U.S. GDP?
goods produced by foreign citizens working in the united states
which of the following would be excluded from 2009 GDP? The sale of
home built in 2008 and sold in 2009
which of the following is included in the consumption component of GDP
household purhases of applicances, medical care, food
which of the following is included in the investment component of GDP
households' purchases of newly constructed homes, net additions to firms' inventories, firms purchases of capital equipment
Changes in GDP Deflator reflect what?
how the economy changes
Grapes are considered intermediate goods
if the purchaser uses them to make wine to sell but not if she eats them
what does GDP per person tell you about
measure of country's economic output for its number of people
define net exports
measures of nation's total trade
examples of government expenditure
medicare, social security, health, income security, etc.
Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included
neither in German nor US
Formula for NX (Net Export)
net export=value of exports-value of imports
Illegally produced good and circulation towards GDP
no
What is an intermediate good and do we include or exclude it from GDP
no
do you include mortgage value or rental in GDP
no
is GDP a good measure of economic well-being
no
Are unemployment and Social Security payments a part of GDP? And why?
no because they aren't for goods or services
Know the difference between Nominal and Real GDP and the formulas
nominal gdp includes prices and growth, real gdp is pure growth
Know the difference between non market and market activities and whether we include or exclude it from GDP
non market is like child care. and its not included
If nominal GDP in 2010 exceeds nominal GDP in 2009, then the production of output must have
not enough info
GDP and currently produced goods and goods produced in the past
only newly produces goods
Which of the following transactions is not included in GDP?
oranges sold by the grocery store