macro ch 5

what is the largest component of GDP?

consumption

which is the national income accounting identity?

Y = C + I + G + X - M

which good/service would be excluded from personal consumption expenditures in the Bureau of economics Analysis (BEA) statistics?

a new house

GDP is best defined as the

market value of all final goods and services produced in a country during a period of time

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

devote more resources to pollution reduction

imports are subtracted from the calculation of GDP in the national income accounting identity because

expenditure on foreign production is already included in the consumption, investment and government expenditure terms

a framework used to measure the level of aggregate economic activity in a country is known as

national income accounts

the GDP deflator is 100 times the ratio of

nominal GDP to real GDP

Mariam cleans her house twice a week; this task would cost her $100 a week if she were to hire someone to clean; her activity adds _____ to the GDP.

nothing

many economists believe the CPI ______ inflation because it fails to consider quality improvements in products

overstates

which represents the aggregate accounting identity?

production = expenditure = income

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

real GDP

real GDP is

the value of goods and services evaluated at base year prices

in developed economies, labor income accounts for _____ of total income payments

2/3

which is included in the economist's definition of investment?

the purchase of new machines, factories, or houses

the CPI is an index computed using prices of a

fixed basket of goods used by the typical consumer

in the circular flow model, who supplies factors of production in exchange for income?

households

capital income is

income derived from owning physical and financial capital

the percentage increase in the cost of living from one year to the next is the

inflation rate

which is false?

inflation rate can only be calculated as the percentage change in the CPI

which are not counted as final goods hence not included in the calculation of GDP?

intermediate goods

which would be considered a type of government expenditure?

interstate construction

which is not a shortcoming of GDP as a measure of welfare?

it only counts final goods and services and not intermediate goods

if Americans still worked sixty hour weeks, as they did in 1980, ______

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

macroeconomics focuses on which of the following topics?

unemployment, inflation, growth, and trade