Chapter 21 Macro economics

Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?

Real GDP

Which phase of the business cycle is characterized by decreasing levels of real GDP?

Recession

Gross domestic product (GDP) is best defined as the __________.

market value of the final goods and services produced within a country in a given time period

The point where economic activity bottoms out in a full business cycle is known as:

the trough

The U.S. GDP per person in 2016 was approximately __________.

$52,000

Which of the following is included in the economist's definition of investment?

The purchase of new machines, factories, or houses

Real GDP is __________.

the value of final goods and services produced in a given year when valued at the prices of a reference base year

According to the graph, at what point does the economy begin a period of recession?

after the peak

The GDP is a measure of the __________.

market value of the final goods and services produced within a country in a given time period

The GDP per person is computed by dividing a country's:

real GDP by its population

Which of the following are not counted as final goods and used in the GDP calculation?

intermediate goods

Which is the largest component of GDP?

Consumption

Which of the following goods and services would be excluded from personal consumption expenditures in the Bureau of Economic Analysis (BEA) statistics?

A new house

Which of these is not a shortcoming of GDP as a measure of standard of living?

It only counts final goods and services and not intermediate goods.

In measuring changes in the standard of living of a country, economists rely heavily on comparisons over time of real GDP per person because:

despite its well-known flaws, it is the best means we have of comparing the performance of an economy over time

As the value of a country's real GDP increases, the country is likely to:

devote more resources to pollution reduction

How does the Bureau of Economic Analysis of the U.S. Department of Commerce measure GDP?

By adding the value in dollar terms of all the final goods and services produced domestically.

If Americans still worked sixty hour weeks, as they did in 1890, __________.

The GDP would be much higher than it is but the well-being of the typical person would not necessarily be higher

The cycle of short-term ups and downs in the economy is called:

the business cycle