Macroeconomics EXAM 1 (ch.3,4,&5)
Aggregate expenditure include all of the following EXCEPT
Purchases of intermediate goods
If the supply of spring water decreases and at the same time the demand for spring water increases, the equilibrium price _____ and the equilibrium quantity ____
Rises; Might increase, decrease, or stay the same
Which of the following is NOT part of GDP
Social security payments made to the elderly
You observe that the price of a good rises and the quantity decreases. These observations can be the result of the
Supply curve shifting leftward
GDP equals
a. smaller than national income b. aggregate income c. the value of the aggregate production in a country during a given time period
An increase in the price of jet fuel will ____ air flights and the equilibrium quantity of air flights will ___
decrease the supply of; decrease
GDP equals net domestic product plus
depreciation
In the national income accounts, government purchases of goods and services refer to those purchases made by
All levels of government
All of the following household expenditures are included in consumption expenditure EXCEPT
Purchase of corporate stock
Let C represent consumption expenditure, S saving, I gross private domestic investment, G government purchases of goods and services, and NX net exports of goods and serices. Then GDP equals
C+I+G+NX
The CPI
Compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period
The largest component of national income is
Compensation of employees
Paying higher prices means that our
Cost of living has increased
Goods that are produced this year, stored in inventories, and then sold to consumers next year
Count in this year's GDP
The equilibrium price will fall and the equilibrium quantity might increase, decrease, or stay the same when the
Demand for a good decreases and the supply of it increases
Gross domestic product minus net domestic product equals
Depreciation
The difference between gross investment and net investment is
Depreciation
Economists distinguish real from nominal GDP to
Determine whether real production has changed
Personal consumption expenditures include
Expenditures by households on goods and services produced in the US and the rest of the world
To measure GDP using the expenditure approach you must collect data on
Exports
Depreciation equals
Gross investment minus net investment
When we produce during our working time is ___ as part of GDP and the enjoyment we gain from our leisure time is ___ as part of GDP
Included; not included
The approach to GDP that sums compensation of employees, rental income, corporate profits, net interest, proprietors income, depreciation, and indirect taxes and subtracts subsidies is the
Income approach
All of the following are indirect taxes EXCEPT
Income taxes
If the GDP deflator for 2004 is 125, nominal GDP
Is greater than real GDP in 2004
Gross domestic product is the total ______ produced within a country in a given time period
Market value of all final goods and services
When the GDP deflator increases from 120 to 126 in one year...
Money is losing its value
Which of the following is NOT part of the expenditure approach to measuring GDP?
Net Interest
Depreciation is subtracted from gross domestic product to determine directly
Net domestic product
Because pollution reduces economic welfare, real GDP
Overstates economic welfare
In the expenditure approach to GDP, the largest component is
Personal consumption expenditures
To calculate real GDP, the GDP deflator can be used to adjust nominal GDP for changes in
The general price level
The chain-weighted output index method of calculating real GDP compares
The quantities of goods produced in consecutive years using prices in both years and averaging the percentage changes in the value of outputs
In the national income accounts, government purchases of goods and services exclude
Transfer payments
In the computation of GDP, social security payments count as
Transfer payments and are not included in GDP
Real GDP measures the
Value of the total production linked to prices of a single year.
Which of the following is a component of the incomes approach to GDP?
Wages and salaries
An indirect tax is a tax paid by consumers
When they purchase goods and services
If good growing conditions increase the supply of strawberries and hot weather increases the demand for strawberries, the quantity of strawberries bought
increases and the price might rise, fall or not change
If this years price level exceeds last years
the inflation rate between these years has been positive
If both demand and supply increase, what will be the effect on the equalibrium price and quantity?
the quantity will increase but the price could either rise, fall, or remain the same