Chapter 7

Which one of the following is an example of consumption expenditure?

Stephanie bought a laptop for her brother.

If we add up the consumer spending on goods and services, investment spending, government purchases of goods and services, and the value of exports, then subtract the value of imports, we have measured the nation's

gross domestic product.

If nominal GDP decreases from one year to the next

prices and real GDP must have fallen from one year to the next.

Which of the following is the best definition of GDP?

the market value of all final goods and services produced in the economy during a given year

Consider an economy that produces only two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Real GDP this year using last year as the base year is:

$1,300.

Consider an economy that produces only two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Nominal GDP this year is

$650.

Real GDP is nominal GDP adjusted for

changes in prices.

Gross domestic product is defined as

consumer spending + government purchases + investment spending + exports - imports.

Which of the following is NOT included in investment spending in the national income accounts?

the purchase of stocks and bonds by a business