ECO 2303: Chapter 6

GNP converted into dollars using an average exchange rate over several years adjusted for rates of inflation is

gross national income.

Depreciation is

subtracted from GNP to get NNP.

If receipts of factor income from the rest of the world exceed payments of factor income to the rest of the​ world, then

GNP is greater than GDP.

Gross national product is the total market value of

all final goods and services produced by resources owned by a​ country, regardless of where production takes place.

Real GDP is gross domestic product measured

in the prices of a base year.

GDP is not a perfect measure of social welfare and the​ society's economic​ well-being because

it does not say anything about the distribution of income, GDP accounting rules do not adjust for production that causes negative externalities, and it does not include all economic activities in the economy.

A rancher raises alpaca. Once a​ year, he shears them and sells the raw wool to a processor who spins it into yarn. The yarn is then sold to a mill which produces and sells alpaca sweaters. In calculating GDP we would count

only the sweaters.

This tractor is included in GDP as

part of gross private domestic investment.

If real GDP in 2016 using 2015 prices is lower than nominal GDP of​ 2016, then

prices in 2016 are higher than prices in 2015.

Assume that this economy produces only two​ goods: Good X and Good Y. The value for this​ economy's nominal GDP in year 1 is

​$140.

Assume that this economy produces only two​ goods: Good X and Good Y. If year 1 is the base​ year, the value for this​ economy's real GDP in year 2 is

​$168.

Suppose that net investment in 2016 was​ $20 billion and depreciation was​ $4 billion. Gross investment in 2016 was

​$24 billion.

The value of what KFC produces in Japan is included in the U.S.​ ________ and in the Japanese​ ________.

​GNP; GDP

If an economy produced 10 pizzas at​ $20 each and fifteen gallons of root beer at​ $5 each, the total value of these goods and services would be

$275

A company produced 8 dishwasher machines in 2015. The company sold 6 in 2015 and added 2 to its inventories. The market value of the dishwasher machines in 2015 was​ $200 per unit. What is the value of this​ company's output that will be included in the 2015​ GDP?

1,600

Assume that this economy produces only two​ goods: Good X and Good Y. If year 1 is the base​ year, the value for this​ economy's GDP deflator in year 1 is

100

Assume that this economy produces only two​ goods: Good X and Good Y. If year 1 is the base​ year, the value for this​ economy's GDP deflator in year 2 is

106.5

If nominal GDP is​ $8 trillion and real GDP is​ $6 trillion, the GDP deflator is

133.33.

The value for net exports in billions of dollars is

150

The value of gross domestic product in billions of dollars is

3,075

If the economy grows at 10 percent from year 1 to year 2 and real GDP is 300 in year​ 1, what will real GDP be in year​ 2?

330

The GDP deflator in year 2 is 110 and the GDP deflator in year 3 is 118. The rate of inflation between years 2 and 3 is

7.27%

Gross domestic product measures

the total income of everyone in the economy, the total spending of everyone in the economy, and the value of all output in the economy.

Per capita gross national income​ (GNI) increases when

GNI increases and the population does not change.