Chapter 6 Macro
True or False Value added is the difference between the value of good as they leave a stage of production and cost of the goods as they entered that stage of production.
False
What should be subtracted from GDP to calculate national income?
depreciation
The total value of all capital goods newly produced in a given period is
gross investment.
Which of the following would be counted in 2003's GDP? A. the value of a loan you take in 2003 .B. the value of a TV that was produced in 2002 but not sold until 2003 C. the bonus check a stockbroker gets from his/her company in 2003 D. the value of a bond sold by the federal government
the bonus check a stockbroker gets from his/her company in 2003
The value of what KFC produces in Japan is included in the U.S. ________ and in the Japanese ________.
GNP; GDP
Which of the following is NOT counted in the GNP of the United States? A. The wage of a U.S. citizen who works in a foreign country for a foreign firm. B. The interest earned by a U.S. bank on loans to a business firm located in Brazil. C. The profit earned by a restaurant located in the United States but owned by a Mexican company. D. The value of services that are produced by state and local governments in the United States.
The profit earned by a restaurant located in the United States but owned by a Mexican company.
Gross national product is the total market value of
all final goods and services produced by resources owned by a country, regardless of where production takes place.
Gross domestic product measures: A. the total spending of everyone in the economy B. the value of all output in the economy. C. the total income of everyone in the economy. D. all of the above
all of the above
True or False Final sales plus changes in inventories equals GDP.
True
True or False New houses count as consumer durables.
True
True or false Depreciation is included in GDP, but excluded from NNP.
True
A farmer buys a new tractor from John Deere to use on her cotton farm. This tractor is included in GDP as
part of gross private domestic investment.
Which of the following is NOT included in 2008's GDP? A. the value of a motorcycle produced in the United States and exported to Japan B. the profit earned in 2008 from selling a stock that you purchased in 2005 C. the value of a motor that is used in the production of a lawn mower D. the commission earned by a headhunter when she locates a job for a client
the profit earned in 2008 from selling a stock that you purchased in 2005
Net national product is
A measure of all goods and services produced by a country in a year, including production from its investments abroad, minus the loss or degradation of natural resource capital as a result of productivity.
The change in business inventories is measured as
GDP minus final sales.
The GDP deflator is the
The ratio of nominal GDP to real GDP multiplied by 100
Which of the following is included in both the U.S. GDP and GNP? A. The value of all cars produced by Ford in Mexico. B. The value of all cars produced by General Motors in the U.S. C. The value of all cars produced by Toyota in the U.S. D. The value of cars produced by Nissan in Japan and the U.S.
The value of all cars produced by General Motors in the U.S
True or False Consumers can spend their entire personal income.
True
In 2008 the change in business inventories is -$70 billion and GDP is $200 billion. Final sales in 2008
are $270 billion.
If in a year there is a positive inventory investment, then final sales
are less than GDP.
Net interest is the interest on loans paid by
businesses.
The largest income component of GDP is
compensation of employees
The single largest expenditure component in GDP is
consumption.
Nominal GDP is gross domestic product measured
current dollars
If the change in business inventories is zero, then final sales are
equal to GDP.
Saving rates tend to ________ during boom times and ________ during recession periods
fall; rise
The total market value of all final goods and services produced within a given period by factors of production located within a country is
gross domestic product.
If net investment is zero, then
gross investment equals depreciation
Net investment is
gross investment minus depreciation
Net investment equals
gross investment minus depreciation.
If the value of net exports is negative, then
imports exceed exports.
Nominal GDP measures the value of all goods and services
in current dollars.
In 2007 final sales equal $200 billion, and the change in business inventories is $50 billion. GDP in 2007
is $250 billion
In 2006 final sales equal $350 billion and the change in business inventories is -$60 billion. GDP in 2006
is $290 billion
Exports equal
net exports + imports.
If the GDP deflator is greater than 100, then
nominal GDP is greater than real GDP
Interest paid by households and by the government is
not counted in GDP because it is not assumed to flow from the production of goods and services.
Double counting can be avoided by
not counting the value of intermediate goods in GDP.
The total income of households is
personal income
Gross domestic product measured in terms of the prices of a fixed, or base, year is
real GDP.
Personal income is national income minus
the amount of national income not going to households
The change in capital stock in a period is equal to
the amount of the capital stock at the beginning of the period plus gross investment minus depreciation.
If no foreign companies produce in a country, but many of the country's companies produce abroad, then
the country's GNP will tend to exceed its GDP.
The personal saving rate is
the percentage of disposable personal income that is saved.
Which of the following is an example of an intermediate good? A. the dough you buy to fix yourself a pizza for dinner B. the chocolate you buy to make yourself some cookies C. the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to D. lumber you buy to build a house for your dog
the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to
Which of the following would NOT be counted in 2007's GDP? A. the value of a 2005 boat you purchase from a boat dealer in 2007 B. the 2007 salary of a used motorcycle salesperson C. the commissions earned by a real estate agent in selling condominiums built prior to 2007 D. the value of a refrigerator manufactured in 2007 but not sold in 2007
the value of a 2005 boat you purchase from a boat dealer in 2007
GDP includes
the value of all final goods and services.
In 2007, GDP was exactly equal to final sales. This implies that
there was no change in inventories that year.
8 dishwasher machines in 2005. The company sold 6 in 2005 and added 2 to its inventories. The market value of the dishwasher machines in 2005 was $200 per unit. What is the value of this company's output that will be included in the 2005 GDP?
$1,600.
Suppose that net investment in 2008 was $20 billion and depreciation was $4 billion. Gross investment in 2008 was
$24 billion.
When calculating GDP, exports are ________ and imports are ________.
added; subtracted
The GDP of the U.S. in 2002 was around $10 trillion. This means A. that the value of output in the U.S. in 2002 was around $10 trillion B. that total income in the U.S. in 2002 was around $10 trillion C. that total spending on final goods and services in the U.S. in 2002 was around $10 trillion. D. All of the above
All of the above
Profits earned in the United States by foreign-owned companies are included in
The U.S. GDP but not GNP.
Which of the following is an example of a final good or service? A. wheat a bakery purchases to make bread B. coffee beans Starbucks purchases to make coffee C. lumber purchased by a construction company to used in building houses D. a computer purchased by Federal Express to track shipments
a computer purchased by Federal Express to track shipments
Depreciation is
a lessening in value
Which of the following is a good or service counted in GDP? A. tires Ford buys to put on a car B. a used tire you buy for your personal car C. a new tire you buy for your personal car D. used tires bought by a used car dealer to put on a car on his lot
a new tire you buy for your personal car
Personal income
may be greater than or less than national income.
The equation for GDP using the expenditure approach is
GDP = C + I + G + EX - IM.
True or False Total income in the economy can sometimes be greater than total spending
False
True or False Transfer payments are subtracted from national income to get to personal income.
False
True or False GDP measures the total income of everyone and the total spending by everyone in the economy.
False
True or False If investment is larger than depreciation, the capital stock decreases.
False
True or False Stock market transactions are part of GNP.
False
True or False The income of U.S. citizens working abroad counts in U.S. GDP.
False