Chapter 12

What flow of funds into the financial system make it possible for the government and firms to borrow?

Flow from households make this possible

Which is larger in comparison, GDP or GNP?

GDP will be much larger than GNP

What is considered personal consumption expenditures?

Haircuts, education, TV, cars and all other goods and services are considered consumption expenditures.

In the circular flow model, who supplies factors of production in exchange for income?

Households supply the factors of production om exchange for income.

Economic growth is important to an economy because it usually translate to?

It translate to a higher standard of living for the country population

The GDP per capita is computed by dividing a country's by?

Real GDP by its population.

What is Real GDP?

Real GDP is the value of goods and services evaluated at base year prices

What is disposable person income?

The amount of income households actually have available to spend.

What is the largest component of GDP?'

The largest component of GDP is consumption.

Definition of gross domestic product?

The market value of all final goods and services produced in a country during a period of time.

Real GDP

The measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant.

How does the BEA measure GDP?

They measure real GDP bye adding the values in dollar terms of all the final goods and services produced domestically.

The total national income actually received by a country's residents is smaller or larger than the value of GDP?

is smaller than the value of GDP