Economics Chapter 25
GDP is the:
Monetary value of all final goods and services produced within the borders of a nation in a particular year.
What is the difference between national income and personal income?
National income represents income earned by American-owned resources, while personal income measures received income, whether earned or unearned.
Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?
The child-care services provided by stay-at-home parents.
In the treatment of US exports and imports, national income accountants:
add exports, but subtract imports, in calculating GDP.
In national income accounting, the consumption category of expenditures includes purchases of:
consumer durable goods, consumer nondurable goods, and services.
GDP can be calculated by summing:
consumption, investment, government purchases, and net exports.
Real GDP measures:
current output at base year prices.
In national income accounting, government purchases include:
purchases by federal, state, and local governments.
The growth of GDP may understate changes in the economy's economic well-being over time if the:
quality of products and services improves.
If depreciation exceeds gross investment:
the economy's stock of capital is shrinking.
In the second quarter of 2001, US nominal GDP increased by US real GDP declined. We can conclude that:
the price level rose by more than nominal GDP.
If personal income exceeds national income in a particular year, we can conclude that:
transfer payments exceeded the sum of Social Security contributions, corporate income taxes, and undistributed corporate profits.
A large underground economy results in an:
understated GDP.
The agency responsible for compiling the National Income Product Accounts for the US economy is the:
Bureau of Economic Analysis
In an economy experiencing a persistently falling price level:
changes in nominal GDP may either overstate or understate changes in real GDP.
Final goods and services refer to:
goods and services purchased by ultimate users, rather than for resale or further processing.
