MACRO CH. 5
inflation rate
100 X (deflator yr 2 - deflator yr 1) / (deflator yr 1)
GDP deflator
100 X (nominal GDP / real GDP)
which of the following is NOT an example of a durable good?
a business suit
gasoline is considered a final good if it is sold by
a gasoline station to a motorist in LA
a U.S. publisher purchases new computers that were manufactured in the U.S. This purchase by itself makes
a positive contribution both to investment and to GDP
government purchases
all spending on the goods and services purchased by the government (at federal, state, and local levels)
GDP deflator in base year
always 100
exports
foreign spending on the economy's goods and services
inventory accumulations
goods produced but not yet sold
who are the consumers in actual economy?
households and firms
Sheri, a U.S. citizen, works only in Germany. The value she adds to production in Germany is included
in german GDP, but is not included in U.S. GDP
consumption - renters
includes rent payments
consumption - homeowners
includes the imputed RENTAL VALUE OF THE HOUSE, but not the purchase price or mortgage payments
final goods
intended for the end user
Sarah spends $1200 on a new laptop to use in her publishing business. the laptop was built in China
investment rises by $1200, net exports fall by $1200, GDP is unchanged
residential capital
landlord's apartment building; a homeowner's personal residence
gross domestic product includes
legal final goods and services, but it excludes illegal final goods and services
GDP excludes most items that are produced and sold illegally and most items that are produced and consumed at home because
measuring them is too difficult
Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in
mexican GDP, but is not included in U.S. GDP
Consumption consists of spending by households on goods and services, with the exception of
purchases of new houses
transfer payments examples
social security, unemployment
macroeconomics
study of economy-wide phenomena
Jennifer lives in a home that was newly constructed in 2011 for which she paid $240,000. In 2014 she sold the house for $260,000. Which of the following statements is correct regarding the sale of the house?
the 2014 sale affected neither 2014 GDP nor 2011 GDP
real GDP per capita
the main indicator of the average person's standard of living
gross domestic product (GDP)
the market value of all final goods and services produced within a country in a given period of time
imports
the portions of C, I, and G that are spent on goods and services produced abroad
grapes are considered intermediate goods if
the purchaser uses them to make wine to sell to others but not if the purchaser eats them
a painter pays $500 for paint he uses to repaint a house. he then presents a bill for $1200 that covers his time and expenses to the homeowner. how much do these transactions add to the GDP?
$1200
James owns two houses. He rents one house to the Johnson family for $10,000 per year. He lives in the other house. If he were to rent the house in which he lives, he could earn $12,000 per year in rent. How much do the housing services provided by the two houses contribute to GDP?
$22,000
A steel company sells some steel to a bicycle company for $150. The bicycle company uses the steel to produce a bicycle, which it sells for $250. Taken together, these two transactions contribute
$250 to GDP
Ryan lives in an apartment where he pays $7,000 a year in rent. Sarah lives in a house that could be rented for $21,000 a year. How much do these housing services contribute to GDP?
$28,000
net exports
= exports - imports
which of the following items is included in U.S. GDP? A. goods produced by foreign citizens working in the U.S. B. the difference in the price of the sale of an existing home and its original purchase price C. known illegal activities D. none of the above
A
which of the following transactions is NOT included in the GDP? A. oranges sold to households by a grocer B. orange juice sold by a restaurant to its diners C. oranges sold by a farmer to a grocery store D. all of the above are included in GDP
C
GDP =
C + I + G + NX (= e - i)
which of the following domestically produced items is NOT included in GDP? A. a bottle of shampoo B. a hairdryer C. a haircut D. all of the above are included in GDP
D
which of the following is included in the consumption component of GDP? A. household purchase of appliances B. household purchases of medical care C. household purchases of food D. all of the above
D
which of the following is included in the investment component of GDP? A. households' purchases of newly constructed homes B. net additions to firms' inventories C. firms' purchases of capital equipment D. all of the above
D
which of the following items is counted as part of government purchases? A. the federal government pays the salary of a Navy Officer B. the State of Nevada pays a private firm to repaid a Nevada state highway C. the city of Las Vegas, Nevada pays a private firm to collect garbage in the city D. all of the above
D
which of the following items is included in U.S. GDP? A. final goods and services that are purchased by the U.S. federal govt B. intermediate goods that are produced in the U.S. but that are unsold at the end of the GDP accounting period C. goods and services produced by foreign citizens working in the U.S. D. all of the above
D
tangible goods
DVDs, mountain bikes, beer
T/F: GDP includes purchasing of NEW housing?
FALSE
T/F: GDP includes transfer payments (social security/ unemployment) ?
FALSE
T/F: Intermediate goods are included in GDP?
False
example of investment
baker purchases a stove
business capital
business structures, equipment, and intellectual property products
If we add goods to inventory, what component of GDP is affected?
consumption
education is included in what component of the gdp?
consumption
components of GDP
consumption investment government purchases new exports
Debbie spend $300 to buy her husband dinner at the finest restaurant in Boston
consumption and GDP rise by $300
general motors builds $500 million worth of cars, but consumers only buy $470 million of them
consumption rises by $470 million, inventory investment increases by $30 million, and GDP rises by $500 million
GDP includes: current or past produced goods?
current
Jane spends $800 on a computer to use in her editing business. She got last year's model on sale for a great price from a local manufacturer.
current GDP and investment do not change because the computer was built last year
intangible goods
dry cleaning, concerts, cell phone service
T/F: stocks and bonds are included in GDP
false
An American company operates a fast food restaurant in Paris, France. Which of the following statements is accurate?
the value of the goods and services produced by the restaurant is included in French GDP, but not in the U.S. GDP
GDP measures ...
total income of everyone in the economy and total expenditure on the economy's output of goods and services
consumption
total spending by HOUSEHOLDS on goods and services
investment
total spending on goods that will be used in FUTURE to produce more goods
inventory accumulations example
toyota car produced in 2019 but sold in 2020
intermediate goods
used as components or ingredients in the production of other goods
nominal GDP
values output using current prices NOT corrected for inflation
real GDP
values output using prices of a base year IS corrected for inflation