Macroeconomics Chapter 7
which of the following would accurately characterize the portion of a firm's profit paid to the owner of holding one share of its stock?
Dividend
GDP is:
GDP = C + I(g) + G + X(n)
consumption of fixed capital is the _____ charge made against private and publicly owned capital each each year.
depreciation
gross rental income minus _____ equals net rent
depreciation
the estimate of how much of the capital is being used up each year is called _____
depreciation
which of the following is not a category when using the national income approach to calculating GDP?
depreciation of income
all final purchases of machinery, equipment, and tools by business enterprises, including construction, and changes in inventories make up gross private_____ investtment
domestic
Net exports include goods produced:
domestically that are sold abroad, less goods that are produced abroad that are sold domestically
select all of the benefits of national income accounting
enables formulation of policies to improve or safeguard the economy's health. Assesses the health of the economy. tracks the long-run course of the economy.
the view of GDP as a sum of money spent on buying it is called the aggregate _____ approach.
expenditure
which of following are components of government purchases in GDP?
expenditures for goods and services that the government consumes in providing public services. Expenditures for public owned capital
in order to determine GDP using the expenditures approach, all spending on _____ goods and services, not intermediate goods, is added up.
final
_____ goods are included in the calculation of GDP while _____ goods are not included
final intermediate
Gross private domestic investment includes:
final purchases of machinery, equipment, and tools by business enterprises, all construction, and changes in invetories
the three domestic sectors of the economy are households, government, and _____.
firms
which of the following are party of taxes on production an imports?
general sales taxes. excise taxes customs duties business property taxes license fees
the dollar value of all final goods and services produced within the borders of a given country during a given period of time is definition of:
gross domestic product
which of the following is equal to net investment?
gross investment minus depreciation
which of the following are components of the expenditure approach to measuring GDP?
gross private domestic investments personal consumption expenditures government purchases
one of the flaws of GDP is that it:
ignores transactions that do not take place in organized markets
National _____ accounting measures the overall performance of the economy
income
viewing the GDP in terms of earning derived or created by producing something is called the ____ approach
income
_____ consists of the money paid by private businesses to the suppliers of loans used to purchase capital.
interest
including the value of _____ goods along with the value of final goods in the calculation of GDP would amount to multiple counting of goods and distort GDP
intermediate
the three types of private domestic investment include all final purchases of machinery, equipment, and tools; all construction; and changes in business _____.
inventories
by ignoring the value of leisure time, how does national income accounting affect our well-being?
it understates our well-being.
a Price index:
measures the cost of purchesing a market basket of output across different years. always includes a base year. is normalized to 100 for the base year.
Gross _____ income includes all income earned from American-owned resources plus government revenue from taxes on production and imports.
national
Income earned through the use of America-owned resources for services and production is call:
national income
when gross investment is less than depreciation, net investment is _____
negative
when calculating gross private domestic investment, a _____ change in _____ must bee subtracted from total investment for that particular year.
negative inventories
the difference between the income Americans earn abroad and the income they earn in the untied states is called _____ _____ factor income
net foreign
after calculating national income, which of the following are added to or subtracted from national income to obtain GDP
net foreign factor income. statistical discrepancy consumption of fixed capital
transfer payments are not included in GDP because they generate
no output
when computing GDP using current prices, it is referred to aas
nominal GDP
as a measurement of economic output and the nation's wealth, GDP fails to account for:
non-market activities. leisure time. improved product quality the underground economy
the amount of income that households receive, whether earned or unearned, is called _____ income
personal
The term that covers all expenditures by household is _____ _____ expenditures
personal consumption
a measure of the value of a specified collection of goods and services in a given year as a compared to the value of highly similar collection of goods and services in a reference year is called
price index
the price of a market basket of goods in a specific year divided by the price of the same market basket of goods in the base year multiplied by 100 is called a:
price index
imports must be subtracted from GDP because they are goods and services ____ the borders of the united states
produced outside
Government _____ include all federal, state, and local government outlays on final goods.
purchases
_____ GDP, or adjusted GDP, reflects changes in the price level.
real
_____ is the income received by households and businesses that supply property resources.
rents
undistributed corporate profits are called _____ _____.
retained earnings
consumers are free to divide their income between consumption and _____
savings
what are the three categories of personal consumption expenditures?
services. durable consumer goods non durable consumer goods
for the purposes of GDP accounting, government purchases include
spending on highway construction. the purchase of new military equipment.
the amount accountants add to the national income to make the income approach match the outcome of the expenditure approach is called the _____ discrepancy
statistical
in national income accounts, value added refers to:
the difference in the market value and the cost of inputs purchased from other firms
one of the shortcomings of GDP is that it doesn't reveal anything about which of the following?
the distribution of output
the national accounts keep track of:
the sales of producers. business investment. spending by consumers and government.
real GDP is gross domestic product measured
to reflect changes in the price level
Social security payments, welfare payments, and veteran's payments that the government makes directly to the household are called government public _____ payments
transfer
the sale of_____ is excluded from calculation of GDP because they contribute nothing to current productions
used goods intermediate goods
when gross investment and depreciation are equal, the value of net investment is _____
zero
a country's exports are included in GDP when the goods and services are:
Produced within the borders of said country.
nominal GDP divided by price index (in hundredths) equals:
Real GDP
_____ market transactions are not included in measuring GPD
Secondhand stock black
_____ market transactions are not included in measuring GDP
Stocks secondhand black
which of the following is not included in investment spending in the national income accounts?
The purchase of stocks and bonds
A final good is
a good directly consumed by individuals or businesses. counted as part of the GDP
an intermediate good is
a good used only in the production of other products
The primary measure of the economy's performance is its annual total output of goods and services, which is called its:
aggregate output
private domestic investment expenditures consist of:
an increase in inventories. newly produced housing. spending on new plant and equipment.
National income is the sum of compensation of employees, rents, interest, proprietors' income, taxes on production and imports, and:
corporate profits
wages, salaries and benefits paid by businesses and government to their workers are called employee_____.
compensation
which of the following is the largest component of national income?
compensation of employees by firms
gross domestic product (GDP) may be calculated as the sum of
consumer spending , investment spending, government purchases of good, and services and export minus imorts
secondhand sales are excluded from the calculation of GDP because they do not:
contribute to current production
national income accountants subdivide corporate profits into which categories?
corporate income taxes. undistributed corporate profits dividends