Macro Chapter 7
secondhand, black, and stock
___ market transactions are not included in measuring GDP
price index
a measure of the value of a specified collection of goods and services in a given year as compared to the value of a highly similar collection of goods and services in a reference year is called a
current product mix of goods and services
all products are assigned the same weight if they sell for the same price
savings
consumers are free to divide their income between consumption and
corporate profit categories
corporate income taxes, undistributed corporate profits, dividends
gdp = quantity*prices
express the values of products in a common unit of measurement
70
if nominal gdp is $140 and the price index is 200, then the real gdp equals:
demand; demand
in the circular flow diagram, firms ___ inputs and households ____ goods and services
price index
is normalized to 100 for the base year; always includes a base year; measures the cost of purchasing a market basket of output across different years
national account
keeps track of the sales of producers, spending by consumers and the government, and business investment
wages, rent, interest, and profits
national income accountants add indirect business taxes to ___,___, ___, and ____ in order to keep track of expenditures that are diverted to the government
+ or - from national income
net foreign factor income, consumption of fixed capital, and statistical discrepancy (expenditure approach)
adjust nominal gdp
nominal gdp divided by the price index and multiply the current year's output by price of the output in the base year
current dollars
nominal gdp measures the value of all goods and services in
investment
residual construction is considered an ____ rather than consumption
net private domestic investment
residual construction is counted as
transfer
social security payments, welfare payments, and veterans' payments that the government makes directly to households are called government public ___ payments
personal income
the amount of income that households receive, whether earned or unearned, is called
depreciation
the estimate of how much of the capital is being used up each year is called
value added
the market value of a firm's output minus the value of the inputs the firm has bought from others is called
future investments in capital
the purpose of retained earnings is to save money for
firms
the three domestic sectors of the economy are households, government, and
value of money changes
the use of money as a common denominator to sum output into a meaningful measure of gdp creates a problem because the
100
the value of the gdp price index will be ____ for the first year
false
true or false: consumers are free to divide their income between saving and investment
true
true or false: gdp reveals nothing about the way output is distributed
zero
when gross investment and depreciation are equal, the value of the net investment is
