UNIT 3 AP MACRO

What would be classified as consumption?

A new car purchased by an employee of a company for personal use

Investment Spending

C

How do you measure GDP?

C+I+G+(X-M) Consumer Spending+Government Spending+Investment Spending+Exports-Imports

Which of the following is considered investment spending in GDP calculations?

Frank Construction builds a new apartment complex in Indianapolis, Indiana

Example of an intermediate good?

Goodyear tired purchased by General motors for newly produced electric cars

When consumers purchase imported products, this is:

Subtracted from GDP

An example of investment spending?

The purchase of a freezer by an ice-cream parlor

When computing GDP, goods that are produced in a particular year but NOT sold in that year:

are added to inventories and are included in investment

Consumption Spending

C

Exports

C

Government purchases of goods and services

C

GDP

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

Imports

NC

Interest

NC

Payroll and Sales Taxes

NC

Profits

NC

Purchase of stocks

NC

Rent

NC

Social security Benefit

NC

Unemployment Compensation

NC

Wages and salaries

NC

Real GDP is nominal GDP adjusted for:

changes in prices

Net exports are calculated by subtracting

imports from exports

When a firm buys a new machine for its business is considered:

investment

An intermediate good would be:

lumber used in building a house

Double counting would occur if:

used goods were included in the GDP calculation