Unit 2 Concept Checks
When calculating GDP, exports are ________ and imports are ________.
added; subtracted
Which component of consumption spending is the greatest in a typical economy?
services
Which of the following are not considered part of government purchases?
welfare benefits
Nominal GDP = 14441 Real GDP = 13312 Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The GDP deflator for 2013 equals
108.5.
If disposable personal income is $400 billion and personal saving is $8 billion, the personal saving rate is
2%
In the value added approach to counting GDP, as seen in the firm-level example, the cumulative value of sales is equal to:
all of the above
Which of the following would increase gross private domestic investment in an economy?
an increase in the level of Apple's inventory
Government spending ________ is included in gross domestic product.
at federal, state, and local levels of government
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
Saving rates tend to ________ during boom times and ________ during recession periods.
fall; rise
Net investment is
gross investment minus depreciation.
The total value of all capital goods newly produced in a given period is
gross investment..
In the circular flow diagram, ________ supply the factors of production, and ________ goods and services.
households; buy
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If the value of net exports is negative, then
imports exceed exports.
Consumption expenditures do not include household purchases of
new houses.
Personal income is national income minus
the amount of national income not going to households.
Which of the following equations correctly measures GDP in an economy?
GDP = C + I + G + (X - M)
Durable Goods = 800 Nonresidential investment = 400 Federal Purchases of goods = 300 Exports = 400 State and local purchases of goods = 200 Residential investment = 50 Services = 500 Imports = 250 Change in business inventories = -25 Nondurable goods = 700
Personal consumption expenditures in billions of dollars are
________ is/are the payment for the factor of production ________.
Profit; entrepreneurship
The personal saving rate is
The percentage of disposable personal income that is saved.
Stage of Production Seller Buyer Price 1 Steel mill Auto manufacturer $10,000 2 Auto manufacturer Auto dealer 18,000 3 Auto dealer Consumer 25,000 Consider the table above showing three stages of production of an automobile. The value added by the automobile dealer equals
$7,000
Investment spending includes spending on
changes in business inventories.
The largest income component of GDP is
compensation of employees
The largest component of spending in GDP is
consumption spending.
The total income of households is
personal income.
Which of the following is subtracted from national income to get to personal income?
retained earnings
Proprietors' income is
the income of unincorporated businesses.
Total factor income equals:
the sum of rent, wages, interest and profit.
Total income in an economy is equal to
the sum of wages, interest, rent, and profit.
Value added by one firm equals
the value of sales minus the cost of intermediate goods.
The circular flow diagram shows that
the value of total income is equal to the total value of expenditures on final goods and services..