Chapter 7 macreoecon

Buying a new pair of jeans for yourself would increase

consumer nondurable goods and consequently personal consumption expenditures

Government purchases include

federal, state, and local government expenditures

GDP is the

monetary value of all final goods and services produced within the borders of a nation in a particular year

The system that measures the economy's overall performance is formally known as

national income accounting

Tom Atoe grows fruits and vegetables for home consumption. This activity is:

productive but is excluded from GDP because no market transaction occurs

The income approach to national income accounting lists "Rents" as one of the components. All of the following statements about "rents" are correct except

rents include the interest paid to the suppliers of loans used to purchase capital

If intermediate goods and services were included in GDP

then GDP would be overstated

Headlines that you will better understand after learning about national income accounting in this chapter are all following except

"UFO Sightings Are Up"

Suppose that GDP was $280 billion in Year 1 and that all other components of expenditures remained the same in Year 2 except that business inventories fell by $18 billion. GDP in year 2 is

$262 billion

Suppose that GDP was $300 billion in year 1 and that all other categories of expenditures remained the same in year 2 except that business inventories increased by $10 billion. GDP in year 2 is

$310 billion

A business buys $1,000 worth of inputs from other firms in order to produce a product. The business makes 500 units of the product and each of them sells for $3. The value added by the business to these products is

$500

National income accountants define consumer durable goods as products that have an expected life of

3 years or more

The nation's stock of capital a) is the collection of human-made resources that help to produce goods and services b) can be divided into two broad categories that we can informally refer to as "tools" and "recipes" c) includes spending that pays for new or improved software d) all of the answers are correct

All of the answers are correct

The agency responsible for compiling the National Income and Product Accounts for the U.S. economy is the

Bureau of Economic Analysis

The income amount used for "Rents" in the national accounts is net rent, so it is

Gross rental income minus depreciation of the rental property

Purchasing a two-year-old, secondhand laptop contributes nothing to this year's GDP

True

Expenditures on the research and development (R&D) of new productive technologies

are included in I(g)

A nation's gross domestic product (GDP)

can be found by summing C+Ig+G+Xn

There are several ways to measure aggregate output. The one favored by the Bureau of Economic Analysis is

gross domestic product