Eco Ch 21

In 2008, net domestic product at factor cost was ___

$11.6 trillion

US national income in 2010 was ___

$12.8 trillion

Real GDP in 2016 is ___

$135

The table shows some of the items in the US national income and product accounts in 2008. What was the US GDP as measured by the income approach in 2008? What was net domestic product at factor cost in 2008? Using the income approach, US GDP in 2008 was ___

$14.3 trillion

The table shows some of the items in the US national income and product accounts in 2010. Use the expenditure approach to calculate US GDP in 2010. US GDP in 2010 using the expenditure approach was ___

$14.5

The table shows some of the items in the US national income and product accounts in 2010. Calculate US GNP and US national income in 2010. US GNP in 2010 was ___

$14.7 trillion

The table shows some data for an economy. If the base year is 2015, calculate the economies nominal GDP in real GDP in 2016. Nominal GDP in 2016 is ___

$600

Classify each of the following items as a final good or service or an intermediate good or service, and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services. A. A new house is bought by Beyoncé B. A computer purchased for a Senators office C. A DVD bought by a household D. Newsprint bought by USA today from an international paper

A is a final good that is investment, B is a final good that is government expenditure, C is a final good that is consumption expenditure, D is an intermediate good

The following statements about the business cycle are correct except A. It is regular predictable cycle in the real GDP around potential GDP B. from the peak to the trough, the economy is in a recession C. From the trough to the peak, the economy is in an expansion D. It is a periodic movement in economic activity including employment

A. It is regular predictable cycle in the real GDP around potential GDP

When using the income approach to measure GDP at market prices, in addition to summing all factor incomes it is necessary to ___

Add indirect taxes less subsidies to convert aggregate income from factor cost to market prices

The expenditure approach to measuring US GDP equals ___

All expenditure on final goods and services produced in the United States in a given period of time

An economy produces only fun and food. The table shows the prices and quantities of fun in food produced in 2016 and 2017. The base year is 2016. Potential GDP in 2016 is $270 and he grew by 1% in 2017. The economy is in ___ because ____ between 2016 and 2017.

An expansion; real GDP is increasing

Which of the following is an example of a final good an service? A. Dell buys Intel chips B. Dan bought a Toyota Camry C. PCL construction company buys Lafarge cement D. GM buys Firestone tires

B. Dan bought a Toyota Camry

Which of the following countries is facing a recession? A. India's real GDP of 5.3% in the second quarter increased by .4% in the third quarter for 2012 B. Japan's real GDP of 3.8% in the first quarter decreased by .3 and .4% respectively and the second and third quarters of 2012 C. The United States faced the change in the inflation rate from 2.2% in 2012 to 1.7% in 2013 D. The bank of England raised the countries interest rate from .5% in the first quarter 2.9% in the second quarter of 2013

B. Japan's real GDP of 3.8% in the first quarter decreased by .3 and .4% respectively and the second and third quarters of 2012

Which of the following is an example of government expenditure on goods and services? A. The Indian government lowering import tariffs B. The White House buying internet services C. Apple outsourcing the manufacture of iPhones D. The US government lowering the interest rate

B. The White House buying internet services

Consider what is included in the measurement of GDP, then choose the correct statement. A. The underground economy, which is included in GDP is difficult to describe but easy to measure B. The underground economy, which is not included in GDP is the part of the economy that is hidden from the view of the government C. We include a measure of political freedom and social justice in GDP D. We include a measure of good health and life expectancy in GDP

B. The underground economy, which is not included in GDP is the part of the economy that is hidden from the view of the government

Read Eye on Brooms and Busts. Explain why the NBER reported that the 2008 recession began before real GDP had fallen for two successive quarters. The NBER committee ___

Based its decision on peaks in the data on real personal income, real manufacturing, wholesale and retail sales, industrial production, and employment, which all peaked between November 2007 and June 2008

The united nations human development report gives the following data for real GDP per person in 2014: chine, $12547; Russia, $22,352; Canada, $42,155; United States, $52,947. Other information suggests that household production is similar in Canada and the United States and smaller than in China and Russia. The underground economy is larger in Russia and China and a similar proportion of each of these economies. Canadians and Americans enjoy more leisure hours than do the Chinese and Russians. Canada and the United States been significantly more on the environment than do china and Russia. In which pair (or pairs) of countries is it easiest to compare the standard of living? And in which pair (or pairs) is it most difficult? Th standard of living can be easily compares ___

Between China and Russia or between Canada and the United States, because household production, the underground economy, leisure hours, and the environment are similar in each pair

Chained-dollar real GDP is the measure of real GDP calculated by the

Bureau of economic analysis

Which of the following is an example of consumption expenditure? A. Mary buying a house B. Letter buying stocks C. Rachel buying a tv D. United buying dell PCs

C. Rachel buying a tv

Which of the following is an example of investment? A. A person depositing $100 a week into her savings account B. A persons annual medical check up C. The purchase of new bookshelves by Barnes & Noble D. A person investing $250 a month in the stock market

C. The purchase of new bookshelves by Barnes & Noble

Net taxes are taxes paid minus

Cash benefits received from governments

The commerce department reported that in December 2015 retail sales rose by 0.2, net exports decreased, inventories held by businesses rose by 0.1 percent, and total sales by businesses sell by 0.6 percent. Which component of GDP changed because retail sales increased? Which component of GDP change because business inventories increased? ___ changed because retail sales increased. ___ changes because business inventories increased.

Consumption expenditure; investment

Which of the following is an example of an intermediate good or service? A. Mike bought puma shoes B. Sarah bought a Sony hdtv C. Unites buys Boeing aircrafts D. Samsung buys compressors for manufacturing refrigerators

D. Samsung buys compressors for manufacturing refrigerators

The commerce department reported that in December 2015 retail sales rose by 0.2, net exports decreased, inventories held by businesses rose by 0.1 percent, and total sales by businesses sell by 0.6 percent. Explain the effect of the call in next exports on GDP. The fall in net exports ____

Decreases GDP

The commerce department reported that in December 2015 retail sales rose by 0.2, net exports decreased, inventories held by businesses rose by 0.1 percent, and total sales by businesses sell by 0.6 percent. Does the statement that the total sales by businesses fell by 0.6 percent mean that GDP decreased by 0.6 percent? The statement that total sales by businesses fell by 0.6 percent means that GDP ___ because ____

Did not change by 0.6 percent; GDP measures production of all final goods and services and "total sales by businesses" includes final and intermediate goods and services

The United Nations human development report gives the following data for real GDP per person in 2011: China, $4833; Russia, $13,543; Canada, $50,265; United States, $48,666. Other information suggests that household production is similar in Canada and the United States and smaller than in China and Russia. The underground economy is larger in Russia and China and is similar proportion of each of these economies. Canadians and Americans enjoy more leisure hours then do the Chinese and Russians. Canada in the United States been significantly more on the environment than do china and Russia. Based on this information, differences in real GDP per person ___ correctly rank the standard of living in these countries because ___

Do; when other factors that influence the standard of living are similar the differences in real GDP per person are small, but when these other factors are not similar, the differences are huge

The United Nations HDI is based on GDP per person, life expectancy at birth, and indicators of the quality and quantity of education. The United States ___ have the highest HDI in part because ___

Does not; Americans do not have access to universal healthcare

The standard of living cannot be easily compared in ___ and ___ because ___

Either China or Russia; either Canada or the United States; in each pair household production, the underground economy, leisure hours, and the environment are different

Net exports of goods and services is the value of ___ of goods and services ___ the value of ___ of goods and services

Exports; minus; imports

Gross domestic product is the market value of all of the ___ in a given time period.

Final goods and services produced by all firms located in the United States

Gross domestic product (GDP) is the market value of all the ___ goods and services produced ___ a country in a given time period

Final; within

Imports of goods and services are items that ___ in the United States __ the rest of the world

Households, firms, and governments; buy from

GDP increases at an annual rate of .7% in the final quarter of 2015. Government expenditure grew at the same .7% rate, but consumption expenditure grew at a rate of 2.2%. Investment and net exports shrank. Use the figure to indicate the flows in which the item and the news clip occurred. How can GDP increased by .7% if consumption expenditure increases at a 2.2% rate?

In the figure, U is government expenditure on goods and services and J is investment

There is a new reason why GDP is a poor measure of economic well-being: it doesn't measure the benefits we gain from free apps and a lots of other free stuff on the Internet. And none of the other indexes deal with this problem. What are the other reasons why GDP is a poor measure of economic well-being? GDP is a poor measure of economic well-being because it ___

Includes only production that is traded in markets

Saving equals ____

Income minus consumption expenditure minus net taxes

Savings is the amount of income that is ___ in net taxes of spent on ___ goods and services

Not paid; consumption

The business cycle is a ___ but ___ up-and-down movement of total ___ and other measures of economic activity.

Periodic; irregular; production

Adding ___ to the current HDI index would not create a better standard of living index

Real GDP

A ___ is a final good and ___ is an intermediate good

Tank of gasoline bought by you; jet fuel bought by Southwest Airlines

Exports of goods and services are items that firms in ___ produce and sell to ___

The United States; any other country

It is possible for GDP to increase by only .7% in one consumption expenditure grew at 2.2% rate because

The sum of investment in net exports shrank

To accurately assess the relative standard of living in these countries, we need additional information about ___

The value of household production, underground economy, leisure, and environmental differences

How do you life expectancy at birth and political freedom change the relative thinking of living standards that the real GDP per person indicate?

They don't change the relative ranking because they rank countries in a similar way as real GDP per person ranks them

In 2016, R was $12 billion, W was $35 billion, U was $12 billion, J was $19 billion, and Z was $5 billion. Calculate total expenditure and total income

Total expenditure = $71 billion Total income = 71

In 2016, R was $9 billion, W was $32 billion, U was $11 billion, J was $17 billion, and Z was $6 billion. Calculate total expenditure and total income

Total expenditure = W + U + J + Z = $66 billion Total income = $66 billion

In 2013, U was $4 trillion, V was $7 trillion, W was $8 trillion, J was $2.5 trillion and Z was $1.5 trillion. Calculate total income, next taxes, and GDP

Total income = $8 + $2.5 + $4.0 + $1.5 = $16 trillion Net taxes = $16 - $8 - $7 = $1 trillion GDP = $16 trillion

In 2013, U was $3 trillion, V was $2.5 trillion, W was $5 trillion, J was $2.5 trillion and Z was -$1.5 trillion. Calculate total income, next taxes, and GDP

Total income = $9 trillion Net taxes = $1.5 trillion GDP = $9 trillion

Real GDP per person is not an accurate measure of the standard of living because it ___

omits the goods and services that people produce for themselves