Macro Ch 19
Consider the table above showing three stages of production of an automobile. Refer to Table 19-5. The value of each automobile in gross domestic product equals
$25,000.
CANOES-R-US makes canoes. It buys the shell of the canoe from another local firm for $300 and uses its labor and intermediate goods to make the canoe. It sells the finished canoe to a retail canoe store for $800. The retail canoe store then sells the canoe to a consumer for $1,200. Refer to Scenario 19-1. The value added of CANOES-R-US for each canoe equals
$500.
Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study?
Real GDP grows by 2.3% in the second quarter.
An example of a final good would be
a soy latte sold by Starbucks to a student.
The GDP deflator is a measure of the
average level of prices of final goods and services in the economy.
Macroeconomics, as opposed to microeconomics, includes the study of what determines the
average price levels of goods and services in the economy.
To make the calculation of real GDP more accurate, in 1996 the BEA switched to using
chain-weighted prices.
When the BEA calculates real GDP using the average of prices in the current year and the year preceding it, and this average changes from year to year, this is called calculating GDP using
chained-weighted prices.
Which of the following is not a durable good?
clothing
The purchase of a new automobile is included in
consumption expenditures on durable goods
To calculate GDP by the expenditure method, one must add
consumption spending, investment spending, government purchases, and net exports.
National income equals gross national product minus
depreciation.
The best measure of the income households actually have available to spend is
disposable personal income.
The informal sector can be a significant drag on the economies of developing countries because the firms in the informal sector
do not pay taxes to the government.
Macroeconomics seeks to understand
economic growth, business cycles, and inflation.
Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of
employment in the economy.
In the circular flow model, the value of total income for an economy ________ the value of total production.
equals
In the circular flow model, the value of total production for an economy ________ the value of total expenditures on final goods and services.
equals
The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.
equals
National income is defined as
gross domestic product less the consumption of fixed capital.
During a business cycle expansion, total production ________ and total employment ________.
increases; increases
Which of the following is not directly counted in GDP?
intermediate goods
A final good is one that
is purchased by its final user
Disposable personal income equals personal income
minus personal tax payments.
National income equals gross domestic product
minus the consumption of fixed capital.
Personal income is defined as
national income less retained earnings plus transfer payments and plus interest on government bonds.
Disposable personal income is defined as
personal income less personal taxes
If real GDP in 2018 (using 2009 prices) is lower than nominal GDP of 2017, then
prices in 2018 are lower than prices in 2017.
Gross national product (GNP) of the United States is the market value of all final goods and services
produced by citizens of the United States anywhere in the world.
The "underground economy" is also referred to as
the informal sector
Value added equals the market price of the firm's product minus
the price of intermediate goods.
Gross domestic product understates the total production of final goods and services because of the omission of
the underground economy.
To calculate GDP using the value-added method, one would add up
the value added by each firm involved in the production of final goods and services.
U.S. gross national product is defined as
the value of final goods and services produced by residents of the United States even if the production takes place outside of the United States.
Depreciation is
the value of worn-out equipment, machinery, and buildings.
Nominal GDP is GDP in a given year
valued in the prices of that year
Which of the following equations correctly measures GDP in an economy?
GDP = C + I + G + NX
GDP is not a perfect measure of well-being because
GDP is not adjusted for pollution
National income is equal to
GDP minus depreciation.
The GDP deflator is equal to
Nominal GDP divided by real GDP multiplied by 100 (Nominal / Real x 100)
