Macro Chapter 8

national income is....

GDP minus depreciation

The largest component of gross domestic income is....

Wages

Indicate whether each of the following is a final good, an intermediate good, or neither. 1.Coffee beans purchased by coffee shop 2.One share of google stock 3.a new pick-up truck purchased by a consumer 4.a new home purchased by a family

1. Intermediate Good 2. Neither 3. Final Good 4. Final Good

What are the four major categories of expenditure?

Consumption, investment, government purchases, and net exports.

Real GDP per capita is often used as a measure of general well-being. While increases in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being?

GDP does not include crime rates or income distribution The costs of pollution are not included The value of leisure is not included

Why is GDP an imperfect measurement of total production in the economy?

GDP does not include household production or production from the underground economy

What equation sums up the components of Gross Domestic Product (GDP)?

Y = C + I + G + NX

Personal Income is...

national income minus retained corporate earnings plus government transfer payments and interest on government bonds

Disposable personal income is

personal income minus personal taxes

Suppose the base year is 2001. Looking at GDP data from the US from 2001 to present, what would be true of the relationship between nominal GDP and real GDP?

RGDP < NGDP because prices are rising

What are the four categories of income?

Wages, interest, rent, and profit

Which of the following would be included in the gross national product of the US? a. production from a canadian firm that operates in Montana b. production from a hungarian citizen who works in Denver, CO c. Production from a US firm that operates in Mexico

c. production from a US firm that operates in Mexico