Module 10 - GDP

The simplest circular-flow model shows the interaction between households and firms. In this model:

firms supply goods and services to households, which, in turn, supply factors of production to firms.

Consider the following transactions involving the nation of Spielbergerland. For each of the following, determine which transaction would be added to the current GDP of Spielbergerland. Explain why or why not. An increase in business inventories.

yes, investment spending

When consumers purchase imported products, this is:

subtracted from GDP

An example of an intermediate good will be:

steel purchased by the aircraft manufacturers.

Suppose only two countries existed in the world. Country A imported $200 million worth of goods and services from Country B. Country B imported $100 million worth of goods and services from Country A. This means that net exports for...

Country A equals -$100 million.

Which of the following best represents the expenditure approach for computing GDP?

GDP = C + I + G + X - IM

Suppose that in 2018, consumption spending is $5,000, government purchasing is $1,000 and investment spending is $500. If GDP for 2018 is $7,000, then:

Spending on exports is $800 and spending on imports is $300.

Which one of the following is an example of consumption spending that would be counted toward GDP this year?

Stephanie bought a laptop for her brother.

If during 2018, the country of Spielbergerland recorded investment spending for $3 billion, government purchases for $3 billion, consumer spending for $7 billion, imports for $5 billion, government transfers for $1 billion, and exports for $3 billion. Spielbergerland's GDP in 2018 was:

$11 billion

Consider the following transactions involving the nation of Spielbergerland. For each of the following, determine which transaction would be added to the current GDP of Spielbergerland. Explain why or why not. The services of a mechanic in fixing the radiator on his own car.

No - Non-Market Activity

Consider the following transactions involving the nation of Spielbergerland. For each of the following, determine which transaction would be added to the current GDP of Spielbergerland. Explain why or why not. A plumbers purchase of a two-year-old used truck

No - used good

Consider the following transactions involving the nation of Spielbergerland. For each of the following, determine which transaction would be added to the current GDP of Spielbergerland. Explain why or why not. A farmers purchase of a new tractor

Yes - investment expenditure

The circular-flow diagram illustrates how households ________ goods and services and ________ factors of production.

buy; sell

A laptop computer purchased by a private individual is considered to be:

consumption spending.

GDP is the sum of:

consumption, investment, government purchases, and net exports.

Households receive income in the form of all the following EXCEPT:

investment spending

GDP is the:

total market value of all final goods and services produced in one year.