ECON 2010 Chapter 5

The value of capital used up in the production of goods and services is called ____

depreciation

An example of unreported income is_____.

lawn care that is paid "off the books"

At present, government spending on goods and services claims roughly ______ of total U.S. output

1/5 or 20%

Investment currently claims about _____ of U.S. output.

1/6

An intermediate good is:

a good used in the production of final products

The distinction of imports from domestic made goods is ___ to establish

difficult

Measuring the many things that give us pleasure, such as beautiful sunsets and loving parents, is:

difficult to measure because they are intangible

The amount of income that households have left over after paying their personal taxes is :

disposable income

GDP accounts have two sides. One side focuses on the demand side (called the ___ approach) and the other side focuses on the supply side (called the ___ approach)

expenditure, income

___ goods are included in the calculation of GDP, while ___ goods are not included

final; intermediate

Which of the following is equal to net investment?

gross investment minus depreciation

Goods and services purchase from international sources are:

imports

Nominal GDP measures the value of all goods and services:

in current prices

Which of the following is subtracted from national income to arrive at person income?

indirect business taxes, corporate profits

An increase in the average level of prices of goods and services is:

inflation

Nominal GDP is not an accurate measure of the real level of economic activity in a country because:

inflation distorts the real value of all goods and services produced

Goods and services that are purchased for resale or for further processing or manufacturing are called____ goods.

intermediate

The chain-weighted price indexes employed by the US Department of Commerce to compute real GDP use a ___ average of price levels in consecutive years as an inflation adjustment.

moving

Investment goods consist of _____.

newly produced plants, machinery, and equipment

Computing GDP using current prices gives us ____.

nominal GDP

Suppose the physical output produced by an economy falls, yet higher prices give rise to an increase in measured GDP. Un this case we can say that ___ GDP is higher and ___ GDP is lower.

nominal; real

Which of the following two items are added to national income to arrive at personal income?

transfer payments and capital income

Calculating national income helps us understand For whole our output was produced

true

True or False: All final purchases of plant, machinery, and equipment in a given time period are included as gross investment

true

The GDP identifies the mix of output a country has selected, which also answers the question of ___ to produce.

what

Net investment is:

what is left over from total new private investment after depreciation

Consumption goods and services purchased by their end consumers are called ____ goods

Final

Society's answer to the core issue of WHAT to produce is answered by ______

GDP

Net domestic product is____

GDP - depreciation

Per capita GDP is:

GDP / population

GDP per capita means:

GDP per person

The output of the German-owned BMW plant in South Carolina is included in Germany's ___ and in the United States' ___.

GNP; GDP

The market value of all final goods and services produced within the borders of a given country during a given period of time is the definition of ____.

Gross domestic product

If GDP included unreported income, GDP would:

Increase

Gross domestic product less depreciation equals ___

Net domestic product

____ serves as a measure of value for calculating total output of a product.

Price

Gross___ product refers to output produced by American-owned factors of production regardless of where they're located.

Simon Kuznets

The flow of income illustrates that:

The dollar value of output will always equal the dollar value of income

National Income Accounting is:

The measurement of aggregate economic activity, particularly national income and its components

True or False: Prices serve as a measure of value for calculating total output.

True

Depreciation is ____

the wearing out of plant and equipment

When describing the flow of income, GDP returns to the market in the form of which of the following?

consumption, government spending, investment

Government ___ include all federal, state, and local government outlays on final goods and services.

purchases

Foreign goods purchased by American consumers, firms, or governments should be ___ GDP because the goods were produced outside the United States

subtracted from

The view of GDP as the sum of Monet spent on purchases is called:

the expenditure approach

Gross investment is ____.

the total amount of investment purchases in a given time period