Chapter 2: The Data of Macroeconomics
If GDP (measured in billions of current dollars) is $5,465, consumption is $3,657, investment is $741, and net exports are -$1,910, then government purchases are
$2,977
Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $1.50 in 2009. If 4 apples were produced in 2002 and 5 in 2009, whereas 3 oranges were produced in 2002 and 4 in 2009, then real GDP (in 2002 prices) in 2009 was
$6.50
Assume that the adult population of the United States is 191.6 million, total employment is 117.6 million, and 9.4 million are unemployed. Then the unemployment rate, as normally computed, is approximately ______ percent
7.4
Gross National Product (GNP) Formula
GDP + Factor Payments from Abroad - Factor Payment to Abroad
National Income Formula
NNP - Statistical Discrepancy
GDP deflator
reflects what is happening to the overall level of prices in the economy
When prices of different goods are increasing by different amounts, the price index that will rise the fastest is
the CPI
An increase in the price of imported goods will show up in
the CPI but not in the GDP deflator
An example of an imputed value in the GDP is the
housing services enjoyed by homeowners
Which of the following is a flow variable?
income
Real GDP is a better measure of economic well-being than nominal GDP, because real GDP
measures changes in the quantity of goods and services produced by holding prices constant
National income
measures how much everyone in the economy has earned
GNP equals GDP ______ income earned domestically by foreigners ______ income that nationals earn abroad
minus; plus
Stock
quantity measured at a given point in time
Flow
quantity measured per unit of time
GDP deflator allows separation of GDP into two parts:
quantity measures (real GDP) and price measures (GDP deflator)
PCE deflator
ratio of nominal consumer spending to real consumer spending
GDP deflator formula
(Nominal GDP/Real GDP) x 100
Assume that apples cost $0.50 in 2002 and $1 in 2009, whereas oranges cost $1 in 2002 and $0.50 in 2009. If 10 apples and 5 oranges were purchased in 2002, and 5 apples and 10 oranges were purchased in 2009, the CPI for 2009, using 2002 as the base year, is
1.25
Examples of flow variables
GDP, number of people losing their jobs, amount of investment in an economy, the government deficit
Net National Product
GNP - Depreciation
Nominal GDP formula
Real GDP x GDP deflator
national income accounts identity (in an open economy)
Y = C + I + G + NX
When a firm sells a product out of inventory, investment expenditures ______ and consumption expenditures ______
decrease; increase
In the circular flow model, the flow of dollars from firms to households is paid _____ and the flow of dollars from households to firms is paid _____
a wages for profits; for goods and services
Six parts of national income
compensation of employees, corporate profits, proprietor's income, net interest, rental income, taxes on production and imports
In the national income accounts, the purchase of durables, nondurables, and services by households are classified as
consumption
All of the following are measures of GDP except
expenditures of all businesses in the economy
An estimate of the number of unemployed workers in the economy can be obtained from
from the household survey, but not from the establishment survey
The market value of all final goods and services produced within an economy in a given period of time is called
gross domestic product
When bread is baked but put away for later sale, this is called
investment in inventory
When a firm sells a product out of inventory, GDP
is not changed
A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner). She earns $1,000,000 per year both before and after her marriage. If GDP were changed so that it truly measured the sum of all final economic activity, the marriage would
leave GDP unchanged
real GDP
value of all final goods and services measured at a constant price level using a base year
nominal GDP
value of all final goods and services measured at current price levels
Examples of stock variables
wealth, number of people unemployed, amount of capital in an economy, the government debt
If the number of employed increases while the number of unemployed does not change, the unemployment rate
will decrease