ECON 4
which of the following would be included in the GDP of the United States?
Boeing builds a plane in Seattle that is sold to Air Canada
Which of the following would increase the investment component of US GDP?
Disney world purchases tires for the monorail from a firm in Ohio
_____ is/are the market value of final goods and services produced within a country during a given period of time
GDP
comparisons of economic activity over time should be made using
real GDP
the total market value of production in an economy must equal total
spending on final goods and services
one way to avoid counting the prices of intermediate goods multiple times in computing the value of GDP is to
sum the value added of producers of both intermediate and final goods and services
final goods and services are _____ production and ______ counted in GDP
the end products of, are
when the production process extends over more than one year, the value of the final product is
allocated to GDP in each year according to the value added in that year
the value of intermediate goods is excluded from the measurement of GDP in order to
avoid double counting
real GDP is measured in ______ prices, nominal GDP is measured in _____ prices
base-year, current
which of the following is NOT a capital good?
batteries purchased by a car manufacturer to install in new cars
Despite some problems with equating GDP with economic well being, higher real GDP per person does imply greater economic well being because it tends to be positively associated with
better education, health and life expectancy
factories and machines are examples of
capital goods
long-lived, produced goods used for producing other goods and services are called
capital goods
investment spending includes spending on
capital goods, residential housing, and changes in inventories
profits, rents, interest, and royalties are examples of
capital income
consumption spending includes spending on
durables, nondurables, and services
Although GDP is not the same as economic well being, high levels of GDP are positively correlated with all of the following EXCEPT
higher rates of infant mortality
the four categories of final users of GDP are
households, firms, governments, and the foreign sector
the market value of all domestically produced final goods and services is also equal to the total amount spent by _____ less seeping on imported goods and services
households, firms, governments, and the foreign sector
Goods and services provided by state and local governments are
included in GDP at cost
national defense services provided by the military are
included in GDP at cost
Which of the expenditure components of GDP can be negatice
net exports
investment spending includes spending on
new capital goods
a measure of GDP in which quantities produced are valued at current-year prices is called
nominal GDP
One shortcoming of GDP as an indicator of society's well-being is that it fails to take into account the
non market production
a drawback of using market values to aggregate the quantities of goods and services produced in an economy is that
not all economically valuable goods and services are bought and sold in markets
capital income in the US equals approximately ______ of GDP
one third
if an economy produces 3 million oranges that sell for 0.25 each and 100,000 cars that sell for $25,000 each, then when the market value of total output is calculated
oranges receive a smaller weight than cars
Real GDP measures the ______ of production
physical volume
Real GDP measures the _____ of production, nominal GDP measures the ______ of production
physical volume, current dollar value
when economists use market values to aggregate output, they sum the
price times the quantity of each item produced
a measure of GDP in which quantities produced are valued at the prices of a fixed base year is called
real GDP
which of the following would be classified as a final good?
a new computer sold to a business firm
In which of the following situations would GDP not change?
as domestic consumers buy fewer tobacco products, tobacco manufacturers instead sell their products, at the same price, to foreign buyers
Net exports equal
exports minus imports
the total income of capital and labor must equal the value of total
production
total spending on final goods and services in an economy must equal total
production
three equivalent ways to measure GDP are total _____, total _____ and total ______
production, income, expenditure
Capital income includes
profits, rent, interest
The government expenditure component of GDP includes
purchases of final goods and services
to compare the change in physical production (GDP) between 2000 and 2006, we should compare ______ GDP in 2000 with ______ GDP in 2006
real, real
if total output is calculated by adding up the market value of goods and services produced, then more expensive items
receive a greater weight than cheaper items
the value added by any firm equals the firm's ______ from selling the product minus _______
revenue, the cost of inputs purchased from other firms
consumption expenditures include spending by households on
services
Government purchases include all of the following EXCEPT
social security benefits paid by the federal government
which of the following would increase the government purchase component of US GDP?
the US federal government pays $3 billion in salaries to soldiers in the military
If you knew that two countries had the same level of real GDP per person, what additional piece of information would help you determine in which country people had a better standard of living?
the average number of hours worked per week in each country
the value of final goods and services equals
the sum of the value added by all firms
GDP would be a better measure of economic well being if it included
the value of leisure
GDP can be measured as each of the following EXCEPT
total business revenues
GDP is a measure of an economy's
total output
Labor income in the US equals approximately ______ of GDP
two thirds
the sum of the value added by all firms equals total
value of final goods and services
the most commonly used measure of an economy's output is
gross domestic product
which one of the following activities is most likely to be counted in GDP?
Gail buys paper and crayons to donate to poor children in need of school supplies
which of the following transactions would be included in the GDP of the United States?
Honda produces cars in Ohio
which of the following expenditures would increase the investment component of US GDP?
You purchase a new house
which of the following would increase the consumption component of US GDP?
You purchase a vacation at Disney world in Florida
Which of the following would increase the net export component of US GDP?
a bottle of California wine purchased in London
Which of the following would increase the investment component of US GDP?
a laundry in Seattle purchases a new clothes washing machine produced in the US
which of the following is an example of a capital good?
a metal stamping machine used to produce cars sold to an automaker
which of the following is an example of an intermediate good?
a new CD player sold to an automaker for installation in a car
Changes in business inventories are
classified as investment expenditures
the largest expenditure component of US GDP is
consumption
Spending on durable goods, nondurable goods, and services is included in
consumption expenditures
the four components of aggregate expenditures are
consumption, investment, government spending, and net exports
the value of goods produced, but unsold, in the current period is
counted in GDP as inventory investment
Nominal GDP measures the ____ of production
current dollar value
summing the value added of all firms yields the value of final goods and services produced because both measures
excluded the value of intermediate goods and services
goods and services that are consumed by the ultimate user are called ____ goods and services
final
Government expenditures include spending by federal, state, and local governments on
final goods and services
capital goods are treated as ______ goods and, therefore are _____ GDP
final, included in
which of the following is NOT classified as a final good?
fresh vegetables purchased by a restaurant
Real GDP is not a perfect measure of economic well being because it excludes the value of all the following except
goods and services available in the market economy
the market value of final goods and services produced within a country during a period of time is called
gross domestic product
goods and services that are used up in the production of other goods and services are called ______ goods and services
intermediate
GDP equals the value added by producers of
intermediate goods and services, as well as final goods and services
Spending on new capital goods, new homes, and the addition of unsold goods to company inventories is included in
investment
in the base year, real GDP ______ nominal GDP
is equal to
if Prices in the current year are higher on average than in the base year, real GDP in the current year ______ nominal GDP in the current year
is less than
The value of unpaid childcare services provided by a stay-at-home dad _____ included in GDP, the value of daycare services purchased from a licensed childcare provider _______ included in GDP
is not, is
the value of unpaid work by a homemaker ____ included in GDP, and the value of housekeeping services sold in the market _____ included in GDP
is not, is
Wages and Salaries are examples of
labor income
Using real GDP to compare the level of economic well being in two countries may be misleading because the value of _____ contributes to economic well being, but is excluded from real GDP
leisure
GDP excludes important factors that affect peoples well being, such as the value of
leisure time
capital goods are
long lived goods used for producing other goods and services
Countries with high real GDP tend to have ______ infant mortality rates and ______ literacy rates than countries with low real GDP
lower, higher
Gross domestic product (GDP) equals the ____ of final ______ produced within a country during a given period of time
market value, goods and services
intermediate goods and services are ______ production and ______ counted in GDP
used up in the process of, are not
a firms revenue from selling its product minus the cost of inputs purchased from other firms is called
value added
labor income includes
wages, salaries, and earnings of the self employed
if two countries are identical except that citizens in one country have more leisure time, then the level of GDP
will be the same in both countries
if two countries are identical except that there is significant air and water pollution in one, then the level of GDP
will be the same in both countries
Which of the following expenditures would increase the consumption component of US GDP?
you buy a pizza
which of the following would increase the consumption component of US GDP
you purchase a bottle of California wine
