Chapter 6

Consumption is the purchase of goods and services by:

households

Once every ______, the Census Bureau does a comprehensive survey of housing and residential finance.

10 years

Which of the following is included in the calculated Gross Domestic Product?

A local ice cream store sells $17,000 worth of cones and sundaes on July 1.

To compare the GDP of two different countries with different currencies, it is necessary to use _________________________.

an exchange rate

Which of the following are most likely classified by economists as consumer durable goods?

automobiles, furniture, CD players

The difference between nominal GDP and real GDP is:

real GDP adjusts for inflation

The nominal value of any economic statistic refers to the number that is actually announced at that time, while the ________________ refers to the statistic after it has been adjusted for inflation.

real value

Investment (I) includes:

the amount spent on new factories and machinery.

Which of the following is included in GDP calculations?

the university tuition paid to enroll in a course

GDP is:

the value of all final goods and services produced domestically.

The gap between exports and imports in a nation's economy is called the ___________.

trade balance

_______________, which can be approximated by the growth of gross domestic product, ultimately determines the prevailing standard of living in a country.

Economic growth

State if the following is included or excluded when calculating GDP: A Social Security check paid to a retired public school teacher.

Excluded

State if the following is included or excluded when calculating GDP: An electrician's purchase of a used truck for his business.

Excluded

State if the following is included or excluded when calculating GDP: The services of a house painter who paints his own home.

Excluded

Which of the following statements is true?

GDP includes spending on recreation and travel, but it does not cover leisure time.

State if the following is included or excluded when calculating GDP: A farmer buys a new tractor and combine for her farm.

Included

State if the following is included or excluded when calculating GDP: The federal government purchases a new fighter aircraft for the U.S. air Force.

Included

______ is calculated by taking _____ and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging, over the course of a year.

NNP; GNP

Which of the following is true?

The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude.

If imports exceed exports, as in recent years, then __________ exists.

a trade deficit

A business cycle reflects changes in economic activity, particularly real GDP. The stages of a business cycle are:

expansion, peak, recession, trough

In order to avoid double counting, statisticians just count the __________________.

final goods and services

Final goods or services used to compute GDP refer to:

goods and services purchased by the ultimate users.

The value of what businesses provide to other businesses is captured in the final products at the end of the __________ chain.

production