ECON 161 Homework 6

Type "F" for a final good, "I" for an intermediate good, and "N" for neither. A diamond purchased by Bill to give to Jean: Concrete purchased by Your Swimming Pool Inc.: Sugar purchased by Angelo's bakery to make pies and cakes: Second-hand blue jeans:

F I I N

Item 1: The ringtone you bought today Item 2: A new apartment building Item 3: A new bridge across the creek in the Augusta National Golf Club Item 4: Jet engines bought by Boeing

Item 1 is a final good that is consumption expenditure; and item 2 is a final good that is investment. Item 3 is a final good that is investment: and item 4 is an intermediate good.

Which of the following is an example of government expenditure on goods and services?

The purchase of airline tickets by Congress to send members to visit overseas troops

In 2011, US exports of goods and services were $2094 billion and imports of goods and services were $2662 billion. What was the value of net exports?

The value of net exports in 2011 was -568 billion dollars.

Choose the statement that is incorrect.

We include a measure of good health and life expectancy in GDP.

Net exports of goods and services is the value of ___ of goods and services ___ the value of ___ of goods and services.

exports; minus; imports

US gross domestic product is the market value of all the ___ produced ___ in a given time period.

final goods and services; within the United States

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

Saving is the amount of income that is ___ in net taxes or spent on ___ goods and services.

not paid; consumption

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

periodic; irregular; production

Total expenditure in the United States is equal to consumption expenditure plus investment ___.

plus government expenditure on goods and services plus net exports

A south sea island produces only coconuts. In 2010, the price of a coconut is $2.50 and the quantity produced is 400. In 2012, the price of a coconut is $3.50 and the quantity produced is 350. 2010 is the base year. Real GDP in 2012 is ___.

$875

___ 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

Item 1: New airplanes bought by United Airlines. Item 2: Coffee beans bought by Starbucks. Item 3: New battle ship bought by the US Navy. Item 4: A DVD bought by a household.

Item 1 is a final good that is investment and item 2 is an intermediate good. Item 3 is a final good that is government expenditure; and item 4 is a final good that is consumption expenditure.

___ is an example of US consumption expenditure.

Your purchase of a tire for your car

Real GDP ___.

does not accurately measure household production, underground economic activity, or life expectancy.