Chapter 5: GDP

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

To find GDP we have to use a ___ year

base

GDP Deflator =

(Nominal GDP / Real GDP ) x 100

What components of GDP (if any) would each of the following transactions affect? The Jackson family buys an old Victorian house from the Walker family.

GDP is not affected, nothing new is produced

What does the word investment mean in economics?

The purchase of capital to produce more goods

Formula for GDP

Y= C + I + G + NG

GDP Deflator Growth Rate=

(New Deflator - Old Deflator) / Old Delfator x 100

3 MacroEconomic Variables

1. GDP 2. Inflation Rate 3. Unemployment Rate

The GDP deflator in the base year will always equal ____

100

To Calculate growth of X rate over n years=

100- (X final - X beg) ^ 1/n - 1

If the price of a hot dog is $2 and the price of a ham- burger is $4, then 30 hot dogs contribute as much to GDP as _____ hamburgers.

15

Angus the sheep farmer sells wool to Barnaby the knitter for $20. Barnaby makes two sweaters, each of which has a market price of $40. Collette buys one of them, while the other remains on the shelf of Barna- by's store to be sold later. What is GDP here?

80

GDP Deflator

a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100

If all quantities produced rise by 10 percent and all prices fall by 10 percent, which of the following occurs? a. Real GDP rises by 10 percent, while nominal GDP falls by 10 percent. b. Real GDP rises by 10 percent, while nominal GDP is unchanged. c. Real GDP is unchanged, while nominal GDP rises by 10 percent. d. Real GDP is unchanged, while nominal GDP falls by 10 percent.

B

Why do we substract net imports?

Becasue they are already included in consuption

______: Alternating periods of economic expansion and contraction

Business Cycles

4 Components of GDP

C I G NE

An American buys a pair of shoes made in Italy. How do the U.S. national income accounts treat the transaction? a. Net exports and GDP both rise. b. Net exports and GDP both fall. c. Net exports fall, while GDP is unchanged. d. Net exports are unchanged, while GDP rises.

C.

_____: spending on new goods and services

Consumption

What does "C" stand for?

Consuption

Which is the largest component of GDP? a. consumption b. investment c. government purchases d. net exports

Consuption

____ Goods include durable goods, such as automo- biles and appliances, and nondurable goods, such as food and clothing. Services include such intangible items as haircuts and medical care. Household spending on education is also included in consumption of services

Consuption

____ is the biggest part of the economy

Consuption

What components of GDP (if any) would each of the following transactions affect? Uncle Henry buys a new refrigerator from a domestic manufacturer.

Consuption Increases

What components of GDP (if any) would each of the following transactions affect? You pay a hairdresser for a haircut.

Consuption increases

What components of GDP (if any) would each of the following transactions affect? Your parents buy a bottle of French wine.

Consuption increases NE decrease

Which of the following does NOT add to U.S. GDP? a. Air France buys a plane from Boeing, the U.S. air- craft manufacturer. b. General Motors builds a new auto factory in North Carolina. c. The city of New York pays a salary to a policeman. d. The federal government sends a Social Security check to your grandmother.

D

______: Total production and employment are rising

Expansion

T/F Govermental purchases include social security payments

FALSE

T/F Nominal GDP uses a base year

FALSE! only Real GDP

T/F Consumption includes houses

FALSE!!

T/F GDP includes illegal drugs

FALSE!! GDP can not keep track off ilicit items

T/F GDP Deflator = (Real GDP/Nominal GDP) x 100

FALSE!!! Nominal GDP/ Real GDP

T/F GDP also values intermideate goods

FALSE!!! intermediate goods are already included n the price of final goods

What does Y stand for?

GDP

___ Adds up many different kinds of products into a single measure of economic activity

GDP

_______ is the market value of all final goods and services produced within a country in a given period of time (usually a year)

GDP

_____: A price index that tracks the average prices of goods included in GDP

GDP Deflator

What components of GDP (if any) would each of the following transactions affect? California hires workers to repave Highway 101.

Goverment Expenditures increases

What does "G" mean?

Goverment Spending

______: government spending on goods and services

Government purchases

What does GDP sand for?

Gross Domestic Product

IF a US citizen own a factory in Haiti, anything produced there would be part of ___ GDP

Haiti

Foreing goods are ____

Imports

_____ ♣ Buying physical capital to get more goods and services ♣ Includes buying new homes

Invesment

What does "I" stand for?

Investment

______: spending on business capital, residential capital and inventories that will be later used to produce more goods and services

Investment

What components of GDP (if any) would each of the following transactions affect? Honda expands its factory in Ohio.

Investment Increases

What components of GDP (if any) would each of the following transactions affect? Aunt Jane buys a new house from a local builder.

Investment increase

What components of GDP (if any) would each of the following transactions affect? Ford manufactures a Focus and sells it to Avis, the car rental company.

Investment increases, a car is investment to a rental company

What components of GDP (if any) would each of the following transactions affect? Ford sells a Mustang from its inventory to the Martinez family.

Investmnet decreases Consuption increases

______ the study of economy-wide phenomena, including inflation, unemployment, and economic growth

Macroeconomics

What components of GDP (if any) would each of the following transactions affect? The federal government sends your grandmother a Social Security check.

NO GDP effect

Does GDP take into account the purchases of used items?

NO! that would be part of another yera's GDP

If Nominal GDP grew 20% does that mean that the economy also grew 20%?

NO! this value is inflated because of changing prices

What does "NX" mean?

Net Exports

____: spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)

Net Exports

Net Exports =

Net Exports - Net Imports

_____: GDP measured at current prices

Nominal GDP

We use ____ to obtain a measure of the amount produced that is not affected by changes in price

Real GDP

____: GDP measured at constant prices

Real GDP

If quantities rise over the years, but prices remain the same...

Real GDP = Nominal GDP

_____: Total production and employment are falling

Recession

T/F GDP Deflator = (Nominal GDP/Real GDP) x 100

TRUE

T/F GDP includes tangible and intangable goods

TRUE

T/F GDP measures all types of things, ie apples and organges

TRUE

T/F Government purchases includes goverment1al salaries

TRUE

T/F Investment is the spenidng of business capital to get more goods and services

TRUE

T/F Real GDP and Nominal GDP will be equal in the base year

TRUE! Just in the base year

____ is the good that has the bigest impact in GDP

The most expensive good

When NE is positive we _____ more

export

Domestic Produced Goods are _____

exports

GDP (or Gross Domestic Product), is the market value of all ____ goods and services produced within a country in a given period of time (usually a year)

final

The city of college station building a new school would be part of ____

goverment expenditure

Consumption includes spending on goods and services by households, with the exception of purchases of new ____

houses

When NE is negative we ____ more

import

Because every transaction has a buyer and a seller, the total expenditure in the economy must equal the total ____ in the economy.

income

GDP (or Gross Domestic Product), is the ______ of all final goods and services produced within a country in a given period of time (usually a year)

market value

GDP

the total market value of all final goods and services produced annually in an economy

GDP (or Gross Domestic Product), is the market value of all final goods and services produced ______ in a given period of time (usually a year)

within a country


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