Chapter 4- The National Income and Product Accounts
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 the GDP
Whip-It manufactures blenders. In 2009 it had $50,000 of blenders in inventory. In 2010 it sold $300,000 of blenders to consumers and had $40,000 of blenders in inventory. How much did blenders produced by Whip-it add to GDP in 2010?
$290,000
GDP =
C + I + G + X
real GDP
GDP adjusted for price changes
what is real GDP?
GDP adjusted for price changes
If XYZ Corporation buys an original Matisse painting to hang in its board room, then
GDP is unaffected because it is a second hand sale
national income and product accounts (NIPA)
a comprehensive group of statistics that measures various aspects of the economy's performance
underground economy
all the illegal production of goods and services and legal production that does not pass through markets
the bulk of "investment" comes from
businesses
if GDP increases from one year to the next, we can conclude that
either prices or production have increased
two ways the GDP is calculated
expenditures approach and income approach
investment expenditures
expenditures by businesses on plant and equipment and the change in business inventories
net exports
exports minus imports
in the equation GDP=C+I+G+NX, NX stands for
exports-imports
government expenditures
goods and services sold to the government
what happens to real GDP when prices rise and production levels fall?
it decreases
gross domestic product (GDP) GDP deflator
measures the dollar value of production within the nations borders
if you bought a 1957 chevy from a friend, what effect would that have on the GDP
no effect because it's a second hand sale
cabbages grown in your summer garden are
not counted in the GDP
what does GDP measure?
production of final goods and services within a nations borders and income earned during the production process
GDP is calculated for each_______ and by _________
quarter; The Bureau of Economic Analysis
intermediate sales
sales to firms that will incorporate the item into their final product