Macroeconomics, Chapter Five, Section One
Which of the following is included in the measure of U.S. GDP?
A Hershey's Kiss produced and sold in the United States
Final good or service
A good or service that is prodiced for its final user and not as a component of another good or service.
Intermediate good or service
A good or service that is used as a component of a final good or service.
Recession
A period during which real GDP decreases for at least two successive quarters
Business cycle
A periodic but irregular up-an-down movement of total production and other measures of economic activity.
______ good is used as a component of a final good. We ______ add the value of intermediate goods produced to the value of final goods to measure GDP.
An intermediate; do not
Total Expenditure
C(Consumption expenditure)+I(Investment)+G(Government expernditure on goods and services)+NX(Net exports on goods and services) so{ C+I+G+NX }
The value of exports of goods and services minus the value of imports of goods and services is
Called net exports of goods and services
Read the news clip, then answer the following questions. Which component of GDP changed because retail sales increased? Which component of GDP changed because inventories held by businesses rose? Expansion remains slow The Commerce Department reported that retail sales increased 1.3 percent in June. Net exports were up 0.8 percent in the first quarter and inventories held by businesses rose by 0.3 percent in June. Total sales by businesses rose 0.3 percent. Source: Commerce Department, 2013 ______ changed because retail sales increased. ______ changed because inventories held by businesses rose.
Consumption expenditure; Investment
The items that firms in the United States produce and sell to the rest of the world are ______. The items that households, firms, and governments in the United States buy from the rest of the world are ______.
Exports of goods and services; imports of goods of services.
Saving equals ______.
Income minus consumption expenditure minus net taxes ( S= Y-C-NT)
Exports of goods and services
Items that firms in the US Produce and sell to the rest of the world.
Net Taxes
Taxes paid minus cash benefits received from governments.
Saving
The amount of income that is not paid in net taxes or spent on consumption goods and services.
Depreciation
The decrease in the value of capital that results from its use and from obsolescence
Government expenditure on goods and services
The expenditure by all levels of government on goods and services
Consumption expenditure
The expenditure by households on consumption goods and services
Gross domestic product (GDP)
The market value of all the final goods and services produced within a country in a given time period.
Investments
The purchase of new capital goods (tools, instruments, machines, buildings) and additions to inventories.
Which of the following is an example of government expenditure on goods and services?
The purchase of office supplies for the office of the junior senator from New York
Which of the following is an example of government expenditure on goods and services?
The purchase of telephone service for the House of Representatives
Net exports of goods and services
The value of exports of goods and services minus the value of imports of goods and services.
In 2008, U.S. exports of goods and services were $1 847 billion and imports of goods and services were $2,557 billion. What was the value of net exports?
The value of net exports in 2008 was −710 billion dollars.
Real GDP
The value of the final goods and service produced in a given year expressed in terms of the prices in a base year.
Nominal GDP
The value of the final goods and services produced in a given year expressed in terms of the prices of that same year.
Value Produced
Use market prices to value product.
Expenditure equals income
Y= C+S+NT
______ is an example of U.S. consumption expenditure.
Your purchase of a flight on American Airlines.
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 covert aggregate income from factor cost to market prices
The expenditure approach to measuring U.S. GDP equals ______.
all expenditure on final goods and services produced in the United States in a given time period
Gross domestic product is the market value of all 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
Nominal GDP
is the value of the final goods and services produced in a given year expressed in the prices of that same year.
Total expenditure in the United States is equal to consumption expenditure plus investment ______.
plus government expenditure on goods and services plus net exports
Underground production
production of goods and services hidden from the view of government because people want to avoid taxes and regulations or their actions are illegal.
A ______ is a final good and ______ is an intermediate good.
tank of gasoline bought by you; jet fuel bought by Southwest Airlines.
Household production
the production of goods and services (mainly services) in the home.
