CH. 8 Test Study Guide
Indicate whether each of the following is a final good, an intermediate good, or neither. 1. Coffee beans purchased by a coffee shop: 2. One share of Google stock: 3. A new pick-up truck purchased by a consumer: 4. A new home purchased by a family:
1. Coffee beans purchased by a coffee shop: Intermediate good 2. One share of Google stock: Neither 3. A new pick-up truck purchased by a consumer: Final good 4. A new home purchased by a family: Final good
What are the four categories of income? A. Wages, Interest, Rent, and Profit. B. Consumption, Investment, Government Purchases, and Net Exports. C. Labor, Capital, Natural Resources, and Entrepreneurship. D. Wages, Salaries, Interest, and Dividends.
A. Wages, Interest, Rent, and Profit.
Suppose the base year is 2001. Looking at GDP data from the United States from 2001 to the present, what would be true of the relationship between nominal GDP and real GDP? A. RGDP = NGDP because prices are stable. B. RGDP < NGDP because prices are rising. C. RGDP > NGDP because prices are falling. D. The relationship is uncertain without more information on prices.
B. RGDP < NGDP because prices are rising.
What are the four major categories of expenditure? A. Wages, interest, rent, and profit. B. Consumption, investment, government purchases, and net exports. C. Final goods, intermediate goods, production, and income. D. Labor, capital, natural resources, and entrepreneurship.
B. Consumption, investment, government purchases, and net exports.
Why is GDP an imperfect measurement of total production in the economy? A. The BEA does not include the value of new houses in GDP. B. GDP measures total income paid to the factors of production, not production. C. GDP does not include household production or production from the underground economy. D. The official measure of GDP does not include intermediate goods and services.
C. GDP does not include household production or production from the underground economy.
Real GDP per capita LOADING... is often used as a measure of general well-being. While increases in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being? A. The value of leisure is not included. B. The costs of pollution are not included. C. GDP does not include crime rates or income distribution. D. All of the above.
D. All of the above. (The value of leisure is not included, the costs of pollution are not included, & GDP does not include crime rates or income distribution.)
How to calculate Real GDP:
GDP Year1 = p1 X Q1 + P2 X Q2 GDP Year2 = P1 X Q1 + P2 X Q2 1. pick a base year 2. Calculate GDP again but only use base year PRICES.
What is the equation that sums up the components of Gross Domestic Product (GDP)?
Y = C + I + G + NX
