Chapter 10: Measuring a Nation's Income
only in Japan's GDP.
After graduation, an American college student moves to Japan to teach English. Her salary is included
final goods and services
Gross domestic product is the sum of the market value of the
Consumption increases by $40,000 and net exports decrease by $40,000.
How is your purchase of a $40,000 BMW automobile that was produced entirely in Germany recorded in the U.S. GDP accounts?
falls because his market income decreases.
If Mr. Keating quits his job as a teacher to home school his own children, GDP
foreigners are producing more in the United States than Americans are producing in foreign countries.
If U.S. GDP exceeds U.S. GNP, then
$500
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 to GDP is
Real GDP rises by 5 percent, while nominal GDP is unchanged.
If all quantities produced rise by 5 percent and all prices fall by 5 percent, which of the following best describes what occurs?
risen or fallen because there is not enough information to determine what happened to real output.
If nominal GDP in 2019 exceeds nominal GDP in 2018, then the production of output must have
15
If the price of a hot dog is $2 and the price of a hamburger is $4, then 30 hot dogs contribute as much to GDP as _____ hamburgers.
Investmenet
If your grandparents buy a new retirement home, this transaction would affect
base year, current year
Real GDP is measured in ______ prices while nominal GDP is measured in ______ prices.
Depreciation
The value of plant and equipment worn out in the process of manufacturing goods and services is measured by
a home built in 2018 and first sold in 2019.
Which of the following would be excluded from 2019 GDP? The sale of
GDP formula
Y = C + I + G + NX
GDP deflator
a measure of the price level calculated as the ratio of nominal GDP to real GDP times
Consumption
spending by households on goods and services, with the exception of purchases of new housing
Depreciation
wear and tear on the economy's stock of equipment and structures
Net exports fall, while GDP does not change.
An American buys a pair of shoes made in Italy. How do the U.S. national income accounts treat the transaction?
20 percent
An economy produces 10 cookies in year 1 at a price of $2 per cookie and 12 cookies in year 2 at a price of $3 per cookie. From year 1 to year 2, real GDP increases by
total income and total spending.
An economy's gross domestic product is
unemployment benefits
An example of a transfer payment is
$80
Angus the sheep farmer sells wool to Barnaby the knitter for $20. Barnaby makes two sweaters, each of which has a market price of $40. Collette buys one of them, while the other remains on the shelf of Barnaby's store to be sold later. What is GDP here?
Disposable personal income
Disposable personal income is the income that households and noncorporate businesses have left after satisfying all their obligations to the government.
ignores the environmental degradation from economic activity.
GDP is an imperfect measure of well-being because it
consulting services
GDP would include which of the following?
consumption, investment, government purchases, and net exports.
Gross domestic product can be measured as the sum of
Gross Domestic Product (GDP)
Measures the total income of a nation Measures two things at once: Total income of everyone & Total expenditure on the economy's output of goods and services
$40
Sam bakes a cake and sells it to Carla for $10. Woody pays Diane $30 to tutor him. In this economy, GDP is
Macoreconomics
Study of the economy as a whole
Gross Domestic Income (GDI)
The Total income in the economy
statistical discrepancy
The difference between GDI and GDP
cotton purchased by Lee Jeans
U.S. GDP would exclude which of the following?
people and factories located within the borders of the United States.
U.S. gross domestic product (in contrast to gross national product) measures the production and income of
22 percent
What is the approximate percentage increase in prices from 2018 to 2019?
13 percent
What is the percentage increase in prices from 2017 to 2018?
0 percent
What is the percentage increase in real GDP from 2018 to 2019?
$1,200
What is the value of nominal GDP for 2018?
$1,060
What is the value of real GDP for 2018?
113
What is the value of the GDP deflator in 2018?
consumption
Which is the largest component of GDP?
The federal government sends a Social Security check to your grandmother
Which of the following does NOT add to U.S. GDP?
identity
an equation that must be true because of how the variables in the equation are defined
Gross Domestic Product (GDP)
is the market value of all final goods and services produced within a country in a given period of time.
Investment
spending on business capital, residential capital, and inventories
Net Exports
spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)
Government purchases
spending on goods and services by local, state, and federal governments
retained earnings
the income that corporations earn but do not pay out to their owners.
Personal income
the income that households and noncorporate businesses receive
Real GDP
the production of goods and services valued at constant prices
Nominal GDP
the production of goods and services valued at current prices
Microeconomics
the study of how individuals, households, and firms make decisions and how they interact with one another in markets
Gross national product (GNP)
the total income earned by a nation's permanent residents (called nationals)
National income
the total income earned by a nation's residents in the production of goods and services
Net National Product (NNP)
the total income of a nation's residents (GNP) minus losses from depreciation