ECON CHP 5

Because of the circular flows of expenditure and income in the economy, total __ = total____= ____

Expenditure, Income; Value of Production

The following are all final goods EXCEPT: a. flour used by the baker to make cupcakes b.bread eaten by a family for lunch c. a computer used by Intel to design new computer chips d.Nike shoes used by a basketball player e. Pencils used by a 6th grader in class

Flour used by the baker to make cupcakes

In the circular flow diagrams, S (saving) and NT (Net Taxes) are

Flows of Money

If a wealthy woman marries her butler, quits paying him and does not hire a new butler, then

GDP definitely does not change

Statistical discrepancy is calculated as

GDP expenditure - GDP income total

Nominal GDP increases

If either prices and/or total production increases

The purchase of a new Boeing fighter jet by Israel is classified in the U.S GDP accounts as

Import Expenditure

Which of the following is NOT part of the business cycle?

Inflation

A south sea island produces only coconuts. In 2019 the price of a coconut is $1 and the quantity produced is 200. In 2020, the price of a coconut is $1.50 and the quantity produced is 250, 2019 is the base year. Real Gdp in 2020 is

$250

The expenditure approach to measuring GDP is done by using data on only

-Consumption Expenditure -Investment -Government Expenditure on goods/services -Net Exports of goods and services

In calculating GDP, we must

Add the market value of exports and subtract the market value of imports

`Economists define investment to include purchases of

Capital goods and inventories

If you mow the lawn yourself, the lawn mowing is considered household production. If you pay Larry's Lawn Service to mow your lawn, the lawn mowing is considered

a service, that will be counted as part of GDP

To measure GDP by using the income approach, we must add all incomes and then ___ depreciation and ____ net taxes less subsidies.

add;add

Investment is defined as the purchase of ___

New Capital goods and additions to inventories

Of the following, which country has the highest HDI in 2018?

Norway

Over the business cycle

Real GDP fluctuates around its trend

Which of the following would NOT be directly included in the U.S. GDP in 2020? a. the market value of restaurant meals sold in 2020 b. the value of the automobiles produced in 2020 at the toyota plant located in Georgetown, Kentucky. c.legal services provided to first time home buyers during 2020. d.the market value of the jet fuel bought by Delta to use for its flights in 2020 e. the purchase of a new home in Atlanta, Georgia in 2020.

The market value of the jet fuel bought by Delta to use for its flights in 2020.

Bobby was researching the economic growth of a country between 2016 and 2021.Using 2016 as the base year he calculated a twelve percent increase for real GDP and a ten percent increase for nominal GDP. His results indicate that:

The quantity of goods and services produced increased and prices decreased over the period.

If both the production of goods and services increase and prices rise, then the change in nominal GDP

definitely overstates the change in production

Babysitting services the oldest son provides his parents

does not count as real GDP or nominal GDP (not helping the economy)

The value of leisure time is

excluded from GDP

Last year U.S net exports of goods and services was negative. This fact means that last year___

the value of U.S exports was less than the value of U.S imports

Which of the following is classified as an intermediate good? i.the purchase of a Big Mac by a college student ii. Mcdonalds purchase of pickles iii. Mcdonalds restaurant owners interest payment for the loan on her building

ii.

If we use GDP to measure our standard of living, then our procedure is

inaccurate because our standard of living does not depend only on goods and services

The category of "rent" in the income approach to GDP

includes the money paid to use land and other rented inputs

After calculating the net domestic product at factor cost, to calculate GDP using the income approach, in part we must add

indirect taxes and depreciation

The nations supply of a productive resources increases if

investment is greater than depreciation

Comparing GDP of 2019 to nominal GDP of twenty years ago

is an inaccurate measure of the changes in total production

Leisure time

is not valued as part of GDP

The U.S economy is experiencing falling output, falling employment, falling incomes and rising unemployment. These conditions best describe a business cycle

recession

The business cycle has two phases

recession and expansion

Depreciation is

the decrease in the value of capital resulting from its use and obsolescence

If real GDP increases over time, the cost of living will

more information is needed to determine how the cost of living changes

The sum of the components of incomes is called

net domestic product at factor cost

The HDI does not include

political freedom

Consumption expenditure includes spendings

by households

If nominal Gdp increases from one year to the next, then

production could have increased, decreased, or stayed the same

The business cycle is defined as

changes in the financial markets

Nominal GDP is GDP

computed with current market values.

If nominal GDP increases this year, then real GDP

could increase, decrease, or not change

If a firm does not sell all of the goods that it produces in a given time period, then the goods

count positively in GDP as inventory investment.

Which of the following is likely to be an unreported economic activity?

tips paid to a taxi driver

To calculate GDP it is necessary to

use the market price to place a dollar value on each good produced

The income approach to measuring GDP is based on summing:

wages, interest, rent, and profits

Where are the final goods and services produced that are included in Germanys GDP?

within Gernmany

GDP is defined to be the market value of all the final goods and services produced during a given time period

within a country