MacroEconomics - ch.21

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depreciation equals GDP​ (income approach) minus the sum of​ wages, interest, rent and​ profit, and indirect taxes less subsidies

Dp = GDP(income approach) - SoW - interest,rent,profit- indirect taxes less subsidies

Net domestic product at factor cost equals the sum of wages and​ interest, rent and​ profit

NDP (factor cost) = (Sum of wages + Interest, rent, and profit)

Net factor product at factor cost equals GDP​ (income approach) minus​ (indirect taxes less subsidies plus​ depreciation).

Net factor product at factor cost​ = ​GDP (income approach) - (direct taxes less subsidies + depreciation)

GDP is a poor measure of economic​ well-being because it​ _______.

includes only production that is traded in markets

consumption expenditure

the expenditure by households on consumption goods and services (non durable /durable goods & services)

National income equals gross national product​ ______.

minus depreciation minus the statistical discrepancy

GDP measures what?

the value of production during given time period

Depreciation is the​ _____ in the value of​ _____ that results from its use and from obsolescence.

​decrease; capital

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

​periodic; irregular; production

Gross national product equals gross domestic product plus net factor income received from or paid to other countries

(GDP + Nfi)

Nominal GDP in 2015 equals the sum of the quantities produced in​ ______ multiplied by the prices that prevailed in​ ______.

2015;2015

Remember that 2015 is the base year. Real GDP in 2016 equals the sum of the quantities produced in​ ______ multiplied by the prices that prevailed in​ ______.

2016;2015

Nominal GDP in 2016 equals the sum of the quantities produced in​ ______ multiplied by the prices that prevailed in​ ______.

2016;2016

​Chained-dollar real GDP is the measure of real GDP calculated by the​ _____.

Bureau of Economic Analysis

quarterly GDP

GDP measured after a quarter of a year

annual GDP

GDP measured yearly

Exports of goods and services

Items that firms in the United States produce and sell to the rest of the world.

Imports of goods and services

Items that households, firms, and governments in the United States buy from the rest of the world.

recession​

Recession is a period during which real GDP decreases for at least two successive​ quarters; or defined by the NBER as​ "a period of significant decline in total​ output, income,​ employment, and​ trade, usually lasting from six months to a​ year, and marked by contractions in many sectors of the​ economy."

Statistical discrepancy is calculated as the GDP expenditure total minus the GDP income​ total

SD = GDP (expenditure) - GDP (income total)

Government expenditure on goods and services

The expenditure by all levels of government on goods and services

Net exports of goods and services

The value of exports of goods and services minus the value of imports of goods and services.

An economy produces only fun and food. The table shows the prices and the quantities of fun and food produced in 2016 and 2017. The base year is 2016. Potential GDP in 2016 is​ $270 and it grew by 1 percent in 2017. The economy is in​ ______ because​ ______ between 2016 and 2017.

an​ expansion; real GDP is increasing

GDP at income approach to calculating GDP is equal to ​$17.8 - (-$ 0.3​), which is ​$18.1 trillion.

calculate expenditure approach and then subtract the statistical discrepancy

what happens to unsold inventory

it counts as investment

percentage increase In the base​ year, real GDP equals nominal​ GDP, so real GDP in 2016 equals ​(41×​$55​) ​+ ​(62×​$22​), which is ​$329. Real GDP in 2017 equals the quantity produced in 2017 multiplied by the prices in​ 2016, so real GDP in 2017 equals ​(42×​$55​) ​+ ​(66×​$22​), which is ​$342. The percentage increase in real GDP equals ​[($342−​$329​)÷​$329]times×​100, which is 4.0 percent.

percentage increase [(real of second year - real of base year) ÷ real of base year] × 100

Investment

the purchase of new capital goods

In the base​ year, real GDP equals nominal GDP.

true

Real GDP is the value of the​ _____ goods and services produced in a given year expressed in terms of the prices in​ _____ year.

​final; a​ base;

Nominal GDP is the value of the​ _____ goods and services produced in a given year expressed in terms of the prices of ​ _____ year.

​final; that same

Potential GDP is the value of real GDP when all the​ economy's factors of production​ - _____,​ _____, _____, and​ _____ - are fully​ _____.

​labor; capital;​ land; entrepreneurial​ ability; employed


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