Chapter 5 Modules

When a significant fraction of the 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

The flow of funds from __________ into the financial system makes it possible for government and firms to borrow.

households

Which of the following are not counted as final goods and used in the GDP calculation?

intermediate goods

Which of these covers the study of topics such as inflation and unemployment?

macroeconomics

Disposable personal income is equal to personal income minus:

personal tax payments

Which of these terms are the "flip" sides of macroeconomic activity?

production and income

The total national income actually received by a country's residents is:

smaller than the value of GDP

Real GDP is:

the value of good and service evaluated at base year prices

Macroeconomics focuses on which of the following topics?

unemployment, inflation, growth, and trade

A trade surplus occurs when:

exports are greater than imports

Which of the following goods and services would be excluded from personal consumption expenditures in the Bureau of Economic Analysis (BEA) statistics?

A new house

In the circular flow model, who supplies factors of production in exchange for income?

Households

Which of these is not a shortcoming of GDP as a measure of welfare?

It only counts final goods and services and not intermediate goods

Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?

Real GDP

To calculate personal income from national income, which of the following must be done by the BEA?

add government transfer payments

According to the graph, at what point does the economy begin a period of recession?

after the peak

Which letter best represents the demand for factors of production in this circular flow model?

c : firm to factor market

Which is the largest component of GDP?

consumption

Which phase of the business cycle is characterized by increasing levels of unemployment?

recessions

The cycle of short-term ups and downs in the economy is called:

the business cycle

Gross domestic product is best defined as the:

the market value of all final goods and services produced in a country during a period of time

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

the purchase of new machines, factories, or house

The point where economic activity bottoms out in a full business cycle is known as:

the trough

The GDP is a measure of the:

total dollar value of all goods and services produced within the borders of a country