Econ Chapter 8 Module

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

Add government transfer payments

How does the Bureau of Economic Analysis of the U.S. Department of Commerce measure GDP?

By adding the value in dollar terms of all the final goods and services produced domestically.

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

C

Which is the largest component of GDP?

Consumption

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

Households

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

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

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

Real GDP

The GDP per capita is computed by dividing a country's?

Real GDP by its population

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

The purchase of new machines, factories, or houses.

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

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

Smaller than the value of GDP

The theory of purchasing power parity states that, in the long run exchange rates __________?

Move to equalize the amount of goods that different currencies can buy.

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.

Gross domestic product is best defined as the?

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

If the dollar price of a euro is $1.25, then the euro price of the dollar is __________?

0.80 euros

In measuring changes in the standard of living of a country, economists rely heavily on comparisons over time of real GDP per capita because?

Despite its well-known flaws, it is the best means we have of comparing the performance of an economy over time.

As the value of a country's real GDP increases, the country is likely to?

Devote more resources to pollution reduction

The best measure of the income households actually have available to spend is?

Disposable personal income

Because the focus of long-run economic growth is on the standard of living of the average person, we measure the standard of living in terms of?

Real GDP per capita

If Americans still worked sixty hour weeks, as they did in 1890, __________?

The GDP would be much higher than it is but the well-being of the typical person would not necessarily be higher.

Real GDP is?

The value of goods and services evaluated at base year prices.

The GDP is a measure of the?

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