Econ Chapter 6

Gross domestic income (GDI) is defined as:

the total income generated in an economy by the production of final goods and services during a particular period.

Which of the following items would NOT be a part of private investment in the computation of GDP?

An old shopping center acquired by a firm

Private investment plays a crucial role in the macroeconomy because it is:

an expenditure that adds to the economy's productive capacity.

Goods that are produced in a particular period but not sold in the current period:

are called inventories and are included in gross private investment.

(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. The arrow marked "B" represents the flow of:

consumer goods and services.

The purchases of U.S. products by the citizens of Mexico are:

counted as U.S. exports.

(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. The arrow marked "D" represents the flow of:

factor incomes.

(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. The arrow marked "C" represents the flow of:

factors of production.

The value of an economy's total output of goods and services is called _____.

gross domestic product

For computing GDP, the official measure of the value of all goods produced during a period for use in the production of other goods is called:

gross private domestic investment.

Transfer payments are:

not included in GDP because they do not represent income derived from current production.

(Exhibit: Circular Flow Model) The exhibit shows a simplified circular flow model where only consumption goods are being produced. The arrow marked "A" represents the flow of:

personal consumption expenditures.

The value of goods and services purchased by households during a particular period is called:

personal consumption.

Which of the following is the best measure of a nation's standard of living?

real GDP per capita

Double counting in GDP accounting:

refers to the inclusion of both intermediate goods and final goods in GDP.

The cost of producing goods and services includes:

the cost of factors of production, depreciation, and other production-related taxes.

Government purchases are defined as:

the sum of purchases of goods and services from firms by government agencies and the total value of output produced by government agencies.

(Exhibit: Components of GDP for an Economy 2) Net exports are negative. This would mean that:

imports are larger than exports and there is a trade deficit.

GDP can be calculated by totaling either the:

market values of all final goods and services or the value added at all stages of production.

Disposable personal income is calculated as personal income:

minus taxes.