CH.19 REVIEW

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

Which of the following is true about the consumption component of U.S. GDP in​ 2016?

Consumer spending on services was greater than the sum of spending on durable and nondurable goods.

When a significant fraction of domestic production takes place in​ foreign-owned facilities, a​ country's difference between GDP and GNP is as​ follows:

GDP will be much larger than GNP

If Americans still worked​ 60-hour weeks, as they did in​ 1890,

GDP would be much higher than it​ is, but the​ well-being of the typical person would not necessarily be higher.

According to most​ economists, is it a serious shortcoming of GDP that it does not count household production or production in the underground​ economy?

Most economists would answer​ "no" because these types of production do not affect the most important use of the GDP​ measure, which is to measure changes in total production over short periods of time.

In the​ circular-flow diagram, who supplies factors of production in exchange for​ income?

households

In an economy with rising​ prices, compared to the base​ year,

nominal GDP is larger than real GDP in years after the base year.

Disposable personal income is equal to

personal income minus personal tax payments.

If the GDP deflator in 2012 has a value of​ 98.0, then

prices have decreased 2 percent between the base year and 2012.

Over​ time, prices may change relative to each other. To take this change into​ account, the Bureau of Economic Analysis calculates

real GDP using chain weights.

In calculating​ GDP, which levels of government spending are included in government​ purchases?

spending by​ federal, state, and local governments

Gross domestic product is best defined as

the market value of all final goods and services produced in a country during a period of​ time, typically one year.

Which of the following is included in the​ economist's definition of​ investment?

the purchase of new​ machines, factories, or houses

Real GDP is

the value of goods and services evaluated at base year prices

The difference between the price the firm sells a good for and the price the firm paid other firms for intermediate goods is called

value added.

An important conclusion to draw from the​ circular-flow diagram is that

we can measure GDP by calculating the total value of expenditures on final goods and​ services, or we can measure GDP by calculating the value of total income.

Which of the following is not a shortcoming of GDP as a measure of​ well-being?

GDP only counts final goods and services and not intermediate goods.

Ireland is one of the few countries where GDP and GNP differ dramatically. Using GDP per​ person, Ireland has the third highest income per person in Europe. An article on the Financial Times website states​ that: ​"With GDP being about 20 percent larger than​ GNP, Irish people appear​ (when using GDP per​ person) to be richer than what they feel they​ are." ​Source: Valentina​ Romei, "Ireland Is the Wealthiest Economy in Europe...or​ Not," ft.com, May​ 13, 2015. Briefly explain the​ author's reasoning.

A significant portion of production in Ireland is by​ foreign-owned firms, which makes the Irish people appear to be richer than they feel they are.

What happens if we measure GDP by adding up the value of every good and service produced in the​ economy?

GDP is overestimated because of double counting.

Which of the following is true about the government purchases component of U.S. GDP in​ 2016?

Purchases by state and local governments were greater than purchases by the federal government.

To calculate personal income from national​ income, which of the following must the BEA​ do?

add government transfer payments

Household production and the underground economy

are not accounted for in the Bureau of Economic​ Analysis' estimates of GDP.

Which of the following do we subtract from GDP to obtain national​ income?

depreciation


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