Econ 203 Chapter 6

Jeannie is a successful real estate agent in San Francisco who occasionally includes one of her home listings in the real estate section on eBay. In December 2012, Jeannine listed a home built in 1934 on eBay for $1.2 million, and she accepted an offer from a buyer in Copenhagen, Denmark for $1.15 million in January 2013. What part of this transaction will be included as a part of U.S GDP in 2013?

real estate commissions and the fees collected by eBay

The personal saving rate is

the percentage of disposable personal income that is saved.

Which of the following is an example of an intermediate good?

the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to.

If you buy a new house, it

will increase the current year's GDP

If a public utility installs a new antipollution equipment in its smokestacks, it

will increase this years GDP

If disposable personal income is $400 billion and personal saving is $8 billion, the personal saving rate is

2%

If receipts of factor income from the rest of the world exceed payments of factor income to the rest of the world, then

GNP is greater than GDP

Net national product is

GNP minus depreciation

The value of what KFC produces in Japan is included in the U.S. _______ and in the Japanese _________.

GNP;GDP

Which of the following is NOT counted in the GNP of the United Sates?

The profit earned by a restaurant located in the U.S but owned by a Mexican company.

GDP

The total market value of all final goods and services produced within a given period by factors of production located within a country

Which of the following would NOT be counted in 2013's GDP?`

The value of a 2011 boat you purchase from a boat dealer in 2013.

What is included in both the U.S GDP and GNP?

The value of all cars produced by General Motors in the U.S.

A recession is

a period during which aggregate output declines and an expansion is a period when output and employment grow

When calculating GDP, exports are _______ and imports are _________.

added;subtracted

Gross national product is the total market value of

all final goods and services produced by resources owned by a country, regardless of where production takes place.

Our disadvantage of using fixed weight approach to calculate real GDP is that, it

cannot capture the changes in relative prices and quantities of different goods produced in the economy

The largest income component of GDP is

compensation of employees

The total value of all capital goods newly produced in a given period is

gross investment

Net investment is

gross investment minus depreciation

Net investment equals

gross investment minus depreciation.

If the value of net exports is negative, then

imports exceed exports

One reason why GDP is not a good measure of nation well-being is that it fails to take into account

income distribution

In the base year, nominal GDP

is always equal to real GDP

Double counting can avoided by

not counting the value of intermediate goods in GDP.

During 2006 a leading auto manufacturer produced $18 million worth of SUV's. However, due to soaring gas prices, the sale of SUVs became sluggish and by the end of 2006 only $16 million worth of SUVs were sold.

$18 million are added to 2006's GDP with $16 million as consumption and $2 million as private investment.

What is an example of a final good or service?

a computer purchased by Federal Express to track shipments

If no foreign companies produce in a country, but many of the country's companies produce abroad, then

the country's GNP will tend to exceed its GDP.

GDP calculated by the expenditure approach will be equal to the GDP calculated by the income approach because

the dollar value of the expenditure on new goods and services in a year must be equal to the dollar value of the income generated in that year.

The U.S BEA has recently adopted a new approach to calculate real GDP and real GDP growth to correct the problems of the fixed weights approach. One of the features of the new approach is that, now the BEA uses

the geometric average of fixed weights indeed and uses two base years to calculate the growth rate of real GDP