macroeconomics

A painter pays $500 for paint he uses to repaint a house. He then presents a bill for $1200 that covers his time and expenses to the homeowner. How much do these transactions add to GDP?

$1200

James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to GDP?

$22k because you add both together because they are both contributing to gdp

A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

$250 to GDP

Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house that could be rented for $21,000 a year. How much do these housing services contribute to GDP?

$28k because both contribute so you add

Formula for the inflation rate using the GDP Deflator

(GDP def 2) - (GDP def 1) / (GDP def 1) x 100

GDP Deflator in base year

100

do we include sales of stocks and bonds in GDP

No

formula for GDP deflator

Nominal GDP/Real GDP x 100

Which of the following is not an example of a durable good

a business suit

A us publisher purchaser new computers that were manufactured in the US. This purchase by itself makes

a positive contribution both to investment and to GDP

GDP can be measured as the sum of

consumption, investment, government purchase, and net exports

the value of plant and equipment worn out in the process of manufacturing goods and services is measured by

depreciation

income=

expenditure

GDP is the sum of the market value of the

final goods and services

What do we consider a transfer payment and why do we include it or exclude it from the GDP

social, Medicare, unemployment insurance, welfare programs. exclude because not for goods or services

define study of macroeconomics

studies the behavior and performance of an economy as a whole

Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000. In 2014 she sold the house for $260,000. Which of the following statements is correct regarding the sale of the house?

the 2014 sale affected neither 2014 GDP nor 2011 GDP

which of the following items is counted as part of government purchases

the federal government pays the salary of a navy officer, the state of Nevada pays a private firm to repair a Nevada state highway, or the city of las Vegas, Nevada pays a private firm to collect garbage in that city

Do we include goods and services in the GDP produced outside the country? What about if they are produced by foreigners in the country?

the goods are counted as part of the foreign country's gdp

Purchases of newly constructed homes are included in what component of GDP

investment component

Gross domestic product includes all

legal final goods and services, but it excludes illegal final goods and services

An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?

the value of the goods and services produced by the restaurant is included in French GDP, but not in US GDP

what does gdp not reflect

the value of volunteer work or caring for one's own children

What variables do we change from year to year when we calculate Nominal GDP; what about real

prices and with real its quality

Consumption consists of spending by households on goods and services, with the exception of

purchases of new houses

how is your purchase of a $40k BMW automobile that was produced entirely in Germany recorded in the U.S GDP accounts

there is no impact because this transaction doesn't involve domestic transaction

define consumption

use of goods and services by households

Real GDP is measured in __ prices while nominal GDP is measured in ___ prices.

base year; current year

if a cobbler buys leather for $100 and thread for $50 and uses them to produce and sell $500 worth of shoes to consumers, the contribution of GDP is

500 (only final goods and services)

Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in

Mexican GDP, but not included in US GDP

Which of the following domestically produced items is not included in GDP?

bottle of shampoo, hairdryer, haircut

Remember if you buy a product that was produced in different country, which components of GDP are affected and what is the overall effect on GDP

buying from other countries decreases our GDP and selling things to other countries increases our gdp

GDP would include which of the following

consulting services

if your grandparents buy a new retirement home, this transaction would affect

consumption

Know how to calculate the GDP (Y= C+I+G+NX)

consumption + investment + government investment + net exports (exports - imports)

US GDP would exclude which of the following

cotton purchased by lee jeans

U.S GDP measures the production and income of

people and factories no matter where they are located in the world

Gasoline is considered a final good if it is sold by a

gasoline station to a bus company that operates a bus route between san Francisco and los Angeles

gdp per person

gdp of country / population

define investments

good or service not consumed today but used in the future

Education is included in what component of GDP?

goods and services

define government purchases

goods and services needed to operate the government

Which of the following items is included in U.S. GDP?

goods produced by foreign citizens working in the united states

which of the following would be excluded from 2009 GDP? The sale of

home built in 2008 and sold in 2009

which of the following is included in the consumption component of GDP

household purhases of applicances, medical care, food

which of the following is included in the investment component of GDP

households' purchases of newly constructed homes, net additions to firms' inventories, firms purchases of capital equipment

Changes in GDP Deflator reflect what?

how the economy changes

Grapes are considered intermediate goods

if the purchaser uses them to make wine to sell but not if she eats them

what does GDP per person tell you about

measure of country's economic output for its number of people

define net exports

measures of nation's total trade

examples of government expenditure

medicare, social security, health, income security, etc.

Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included

neither in German nor US

Formula for NX (Net Export)

net export=value of exports-value of imports

Illegally produced good and circulation towards GDP

no

What is an intermediate good and do we include or exclude it from GDP

no

do you include mortgage value or rental in GDP

no

is GDP a good measure of economic well-being

no

Are unemployment and Social Security payments a part of GDP? And why?

no because they aren't for goods or services

Know the difference between Nominal and Real GDP and the formulas

nominal gdp includes prices and growth, real gdp is pure growth

Know the difference between non market and market activities and whether we include or exclude it from GDP

non market is like child care. and its not included

If nominal GDP in 2010 exceeds nominal GDP in 2009, then the production of output must have

not enough info

GDP and currently produced goods and goods produced in the past

only newly produces goods

Which of the following transactions is not included in GDP?

oranges sold by the grocery store