Econ Chapter 27

US Government US households US businesses

Domestic sectors of the US economy

annual total output of goods and services

Aggregate output is the primary measure of the economy's:

a good directly consumed by individuals or businesses counted as part of GDP

A final good is:

reflects the total market value of all final goods and services produced within an economy in a given year

A nation's gross domestic product (GDP):

is normalized to 100 for the base year always includes a base year measures the cost of purchasing a market basket of output across different years

A price index:

Leisure time Improved product quality Non-market activities The underground economy

As a measurement of economic output and the nation's wealth, GDP fails to account for:

American salaries earned abroad compensation of employees interest corporate profits taxes on production and imports rents proprietors' income

Comprise national income:

durable goods, nondurable goods, and services

For the purpose of GDP accounting, consumption expenditures include:

the purchase of new military equipment spending on highway construction

For the purposes of GDP accounting, gov purchases include:

quantitative measure

GDP does not capture the full value of improvements in product quality because GDP is:

consumer spending, investment spending, gov purchases of goods and services, and exports minus imports

GDP may be calculated as the sum of:

intermediate goods

Goods and services that are used up in the production of final goods are called

national income

Income earned through the use of American-owned resources for services and production is called:

to keep track of expenditures that are diverted to the government

National income accountants add indirect bus taxes to wages, rent, interest, and profits in order:

corporate income taxes undistributed corporate profits dividends

National income accountants subdivide corporate profits into which categories?

domestically that are sold abroad, less goods that are produced abroad that are sold domestically

Net exports include goods produced:

imports

Net exports is exports minus

avoid

Only final goods and services are included in the calculation of GDP in order to ? multiple counting of goods and services

spending on new plant and equipment any increase in inventories newly produces housing

Private domestic investment expenditures consist of:

do not add to current production

Secondhand sales are excluded from the calculation of GDP because they:

net foreign factor income

The difference between the income Americans earn abroad and the income they earn in the US is called:

value added

The market value of a firm's output minus the value of the inputs the firm has bought from others is called:

expenditure approach

The view of GDP as the sum of money spent on purchases is called:

households government firms

Three domestic sectors of the economy:

noting is being produced in return for the payment

Transfer payments are excluded from gov purchases in GDP accounting because:

income approach

Viewing GDP in terms of earnings derived or created by producing something is called:

Expenditures for goods and services that the government consumes in providing public services Expenditures for publicity owned capital

Which of the following are components of government purchases in GDP

excise taxes general sales taxes business property taxes license fees customs duties

Which of the following are part of taxes on production and imports?

Payments by employers into private pension plans for employees Payments by employers into social insurance for employees Wages and salaries

Which pf the following are included in compensation of employees?

price index

a measure of the value of a specified collection goods and services in a given year is compared to the value of a highly similar collection of goods and services in a reference year is called:

gross private domestic investment

all the final purchases of machinery, equipment, and tools by business enterprises, including construction, and changes in inventories make up:

final goods

consumption goods, capital goods and services purchased by their ultimate users are called

the annual amount allocated to wear and tear on private investment

depreciation of capital is:

private transfer payments

excluded from GDP because they produce no output and are simply a transfer of funds from one private individual to another

produced outside

imports must be subtracted from GDP because they are goods and services ? the borders of the United States

rent

income received by the households and businesses that supply property resources is called:

statistical discrepancy

the amount accountants add to national income to make the income approach match the outcome of the expenditure approach

depreciation

the estimate of how much of the capital is being used up each year

interest

the money paid by private business to the suppliers of loans used to purchase capital or money that households receive on savings accounts is called:

personal consumption expenditures

the term that covers all expenditures by households is

employee compensation

wages, salaries, and benefits paid by businesses and government to their workers are called:

zero

when gross investment and depreciation are equal, the value of net investment is: