ECON 4

which of the following would be included in the GDP of the United States?

Boeing builds a plane in Seattle that is sold to Air Canada

Which of the following would increase the investment component of US GDP?

Disney world purchases tires for the monorail from a firm in Ohio

_____ is/are the market value of final goods and services produced within a country during a given period of time

GDP

comparisons of economic activity over time should be made using

real GDP

the total market value of production in an economy must equal total

spending on final goods and services

one way to avoid counting the prices of intermediate goods multiple times in computing the value of GDP is to

sum the value added of producers of both intermediate and final goods and services

final goods and services are _____ production and ______ counted in GDP

the end products of, are

when the production process extends over more than one year, the value of the final product is

allocated to GDP in each year according to the value added in that year

the value of intermediate goods is excluded from the measurement of GDP in order to

avoid double counting

real GDP is measured in ______ prices, nominal GDP is measured in _____ prices

base-year, current

which of the following is NOT a capital good?

batteries purchased by a car manufacturer to install in new cars

Despite some problems with equating GDP with economic well being, higher real GDP per person does imply greater economic well being because it tends to be positively associated with

better education, health and life expectancy

factories and machines are examples of

capital goods

long-lived, produced goods used for producing other goods and services are called

capital goods

investment spending includes spending on

capital goods, residential housing, and changes in inventories

profits, rents, interest, and royalties are examples of

capital income

consumption spending includes spending on

durables, nondurables, and services

Although GDP is not the same as economic well being, high levels of GDP are positively correlated with all of the following EXCEPT

higher rates of infant mortality

the four categories of final users of GDP are

households, firms, governments, and the foreign sector

the market value of all domestically produced final goods and services is also equal to the total amount spent by _____ less seeping on imported goods and services

households, firms, governments, and the foreign sector

Goods and services provided by state and local governments are

included in GDP at cost

national defense services provided by the military are

included in GDP at cost

Which of the expenditure components of GDP can be negatice

net exports

investment spending includes spending on

new capital goods

a measure of GDP in which quantities produced are valued at current-year prices is called

nominal GDP

One shortcoming of GDP as an indicator of society's well-being is that it fails to take into account the

non market production

a drawback of using market values to aggregate the quantities of goods and services produced in an economy is that

not all economically valuable goods and services are bought and sold in markets

capital income in the US equals approximately ______ of GDP

one third

if an economy produces 3 million oranges that sell for 0.25 each and 100,000 cars that sell for $25,000 each, then when the market value of total output is calculated

oranges receive a smaller weight than cars

Real GDP measures the ______ of production

physical volume

Real GDP measures the _____ of production, nominal GDP measures the ______ of production

physical volume, current dollar value

when economists use market values to aggregate output, they sum the

price times the quantity of each item produced

a measure of GDP in which quantities produced are valued at the prices of a fixed base year is called

real GDP

which of the following would be classified as a final good?

a new computer sold to a business firm

In which of the following situations would GDP not change?

as domestic consumers buy fewer tobacco products, tobacco manufacturers instead sell their products, at the same price, to foreign buyers

Net exports equal

exports minus imports

the total income of capital and labor must equal the value of total

production

total spending on final goods and services in an economy must equal total

production

three equivalent ways to measure GDP are total _____, total _____ and total ______

production, income, expenditure

Capital income includes

profits, rent, interest

The government expenditure component of GDP includes

purchases of final goods and services

to compare the change in physical production (GDP) between 2000 and 2006, we should compare ______ GDP in 2000 with ______ GDP in 2006

real, real

if total output is calculated by adding up the market value of goods and services produced, then more expensive items

receive a greater weight than cheaper items

the value added by any firm equals the firm's ______ from selling the product minus _______

revenue, the cost of inputs purchased from other firms

consumption expenditures include spending by households on

services

Government purchases include all of the following EXCEPT

social security benefits paid by the federal government

which of the following would increase the government purchase component of US GDP?

the US federal government pays $3 billion in salaries to soldiers in the military

If you knew that two countries had the same level of real GDP per person, what additional piece of information would help you determine in which country people had a better standard of living?

the average number of hours worked per week in each country

the value of final goods and services equals

the sum of the value added by all firms

GDP would be a better measure of economic well being if it included

the value of leisure

GDP can be measured as each of the following EXCEPT

total business revenues

GDP is a measure of an economy's

total output

Labor income in the US equals approximately ______ of GDP

two thirds

the sum of the value added by all firms equals total

value of final goods and services

the most commonly used measure of an economy's output is

gross domestic product

which one of the following activities is most likely to be counted in GDP?

Gail buys paper and crayons to donate to poor children in need of school supplies

which of the following transactions would be included in the GDP of the United States?

Honda produces cars in Ohio

which of the following expenditures would increase the investment component of US GDP?

You purchase a new house

which of the following would increase the consumption component of US GDP?

You purchase a vacation at Disney world in Florida

Which of the following would increase the net export component of US GDP?

a bottle of California wine purchased in London

Which of the following would increase the investment component of US GDP?

a laundry in Seattle purchases a new clothes washing machine produced in the US

which of the following is an example of a capital good?

a metal stamping machine used to produce cars sold to an automaker

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

a new CD player sold to an automaker for installation in a car

Changes in business inventories are

classified as investment expenditures

the largest expenditure component of US GDP is

consumption

Spending on durable goods, nondurable goods, and services is included in

consumption expenditures

the four components of aggregate expenditures are

consumption, investment, government spending, and net exports

the value of goods produced, but unsold, in the current period is

counted in GDP as inventory investment

Nominal GDP measures the ____ of production

current dollar value

summing the value added of all firms yields the value of final goods and services produced because both measures

excluded the value of intermediate goods and services

goods and services that are consumed by the ultimate user are called ____ goods and services

final

Government expenditures include spending by federal, state, and local governments on

final goods and services

capital goods are treated as ______ goods and, therefore are _____ GDP

final, included in

which of the following is NOT classified as a final good?

fresh vegetables purchased by a restaurant

Real GDP is not a perfect measure of economic well being because it excludes the value of all the following except

goods and services available in the market economy

the market value of final goods and services produced within a country during a period of time is called

gross domestic product

goods and services that are used up in the production of other goods and services are called ______ goods and services

intermediate

GDP equals the value added by producers of

intermediate goods and services, as well as final goods and services

Spending on new capital goods, new homes, and the addition of unsold goods to company inventories is included in

investment

in the base year, real GDP ______ nominal GDP

is equal to

if Prices in the current year are higher on average than in the base year, real GDP in the current year ______ nominal GDP in the current year

is less than

The value of unpaid childcare services provided by a stay-at-home dad _____ included in GDP, the value of daycare services purchased from a licensed childcare provider _______ included in GDP

is not, is

the value of unpaid work by a homemaker ____ included in GDP, and the value of housekeeping services sold in the market _____ included in GDP

is not, is

Wages and Salaries are examples of

labor income

Using real GDP to compare the level of economic well being in two countries may be misleading because the value of _____ contributes to economic well being, but is excluded from real GDP

leisure

GDP excludes important factors that affect peoples well being, such as the value of

leisure time

capital goods are

long lived goods used for producing other goods and services

Countries with high real GDP tend to have ______ infant mortality rates and ______ literacy rates than countries with low real GDP

lower, higher

Gross domestic product (GDP) equals the ____ of final ______ produced within a country during a given period of time

market value, goods and services

intermediate goods and services are ______ production and ______ counted in GDP

used up in the process of, are not

a firms revenue from selling its product minus the cost of inputs purchased from other firms is called

value added

labor income includes

wages, salaries, and earnings of the self employed

if two countries are identical except that citizens in one country have more leisure time, then the level of GDP

will be the same in both countries

if two countries are identical except that there is significant air and water pollution in one, then the level of GDP

will be the same in both countries

Which of the following expenditures would increase the consumption component of US GDP?

you buy a pizza

which of the following would increase the consumption component of US GDP

you purchase a bottle of California wine