Macro Exam

Scarcity refers to the situation in which

unlimited wants exceed limited resources

Real GDP is GDP in a given year

valued in the price of the base year

Define GDP-

Gross Domestic Product- market value of all final goods+ services produced in a country for a given period of time, usually a year

Gross domestic product understates that the total production of final goods and services because of the omission of?

household products

The size of the underground economy would tend to increase if the government of a country

increased income tax

The purchase of a new house is included in the

investment expenditures

in an underground economy the production of goods and services

is not measured or included in GDP

In 2014, which component of GDP had a negative value?

net exports

Define economic models-

simplified versions of reality used to analyze real world economic situation

Define economics-

the study of how individuals, households+ governments make choices.

Suppose in 2016 you purchase a home built in 2003. Which of the following would be included in the gross domestic product for 2016?

the value of the services of the real estate agent

Define scarcity-

unlimited wants but limited resources- this is the economic problem

Differentiate macroeconomics from microeconomics

- macro the whole economy micro- individuals+ house hold firms

If nominal GDP exceeds real GDP for a specific year, the GDP deflator must be

greater than 100

legalizing all forms of illegal activities

increases GDP and reduces the size of the underground economy

The purchase by a foreign government of an airplane produced in the US is included in U.S

net exports