Macro Ch 5
Last year in Candamica, consumption expenditure was $20 billion, interest, rent, and profit were $2.5 billion, government expenditure on goods and services was $7 billion, net exports of goods and services was $5 billion, and investment was $2 billion. Hence total expenditure was
$34 billion
Gross Domestic Product is equal to the market value of all the final goods and services_____in a given period of time
produced within in a country
Although imperfect, which of the following is used as a measure of the standard of living?
real GDP divided by person
The relationship between real GDP and potential GDP over the business cycle can be best summarized by which of the following
real GDP fluctuates around potential GDP
A recession conventionally is defined as a decrease in
real GDP that lasts for at least six months
U.S. net exports include
sales of Hollywood movies to the rest of the world
Which of the following is a final good or service?
a new replacement muffler installed by Midas Mufflers
Real GDP measures the value of goods and services produced in a given year valued using
base year prices
Total expenditure equals total income
because firms pay out everything they receive as income to the factors of production
Goods and services such as environmental quality, leisure time, and household production are not included in GDP because they are not
bought in markets
Consumption expenditure includes spending
by households
When calculating GDP, purchases of used goods are
not included
If you make dinner for yourself
only the market value of ingredients that you purchased this year is added to GDP
Nominal GDP measures the value of goods and services produced in a given year valued using
prices of the same year
The income approach to measuring GDP is based on summing
wages, interest, rent, and profits