Ch. 11

Which of the following would be counted as a final good for inclusion in GDP?

A: A piece of glass bought this year by a consumer to fix a broken window.

National income (NI) is calculated by adjusting GDP for

A: depreciation

The circular flow of economic activity is a model of the

A: flow of goods, resources, payments, and expenditures between the sectors of a economy

The income that people earn in resource or factor markets is called

A: national income

The largest component of GDP is

A: personal consumption expenditures

If the underground economy is sizable, then GDP will

A: understate the economy's performance

Which of the following expenditures would not be included in GDP?

B: Purchase of a silver cup previously sold new in 1950

Gross Domestic Product is officially measured by adding together the

B: market value of all final goods and services produced within the borders of a nation

Based on the circular flow model, money flows from households to businesses in

B: product markets

Which of the following is a shortcoming of GDP?

C: GDP excludes nonmarket transactions

All final goods and services that make up GDP can be expressed in the form

C: GDP= C+I+G+(X-M)

The expenditure approach for the calculation of GDP includes spending on

C: consumption, gross private domestic investment, government spending for goods and services, and net exports

The equation for determining real GDP for year X is

C: nominal GDP for year X/ GDP chain price index for year X

Increased production, but not increased inflation, will result in higher

C: real GDP

GDP includes

C: the cleaning-up expenses associated with pollution

Which national income account should be examined to discover trends in the after-tax income that people have to save and spend?

D: Disposable personal income

The most broadly based price index is the

D: GDP chain price index

Which of the following items is included in the calculation of GDP?

D: None of the Above Included in the calculation of GDP are: personal consumption expenditures (C), Gross Private Domestic Investment (I), Government Consumption Expenditures and Gross Investment (G), and Net Exports (X-M) C+I+G+(X-M)

Gross Domestic Product (GDP) includes

D: Only final goods and services

Which of the following is included in personal income but not in national income?

D: Social Security payments