Econ Chapter 4

Choose the statement that is incorrect.

The business cycle is regular and predictable

Choose the correct equation.

Depreciation = Gross investment - Net investment

To make total income equal to GDP we​ ______ indirect taxes less subsidies and​ ______ depreciation.

add; add

In the​ figure, flow B represents​ ________

household purchases of goods and services

During​ 2012, the U.S. economy was​ _____

in an expansion

The graph shows the most recent U.S. business cycle. During​ 2012, the U.S. economy was​ ______.

in an expansion

This purchase of paper​ ______ part of GDP because the paper is​ ______ good.

is​ not; an intermediate

GDP counts only final goods and services because this

method avoids double counting of goods going through several stages of production

The income approach measures GDP by adding together compensation of​ employees, proprietors'​ income, ________.

net​ interest, rental​ income, and corporate profits

Normally in the United States the relationship between nominal and real GDP for a given year is

nominal GDP is greater than real GDP because of price increases

Which of the following transfer payments is included in​ GDP?

none of the above

A common definition of a recession is a period of time

of at least 6 months during which real GDP decreases

During a​ year, a​ firm's gross investment is ​$5,000 and net investmentnet investment is ​$4,000. The​ firm's depreciation is​ ______.

$1,000

Aggregate expenditure in the United States is equal to consumption expenditure plus investment​ ______.

. plus government expenditure plus net exports

Choose the correct statement.

To isolate the increase in production from rise in prices, we distinguish btw real GDP and nominal GDP

What is the value of U.S. GDP​ (income approach) in 2010?

The value of U.S. GDP​ (income approach) in 2010 is ​$14.4

In 2006​, U.S. GDP using the income approach is ​$12.912.9 trillion and net domestic income at factor cost is ​$10.410.4 trillion. What is the value of indirect taxes less subsidies plus depreciation in 2006​?

The value of indirect taxes less subsidies plus depreciation in 2006 is ​$ 2.5 trillion.

In 20132013​, U.S. exports were ​$2602,260 billion and imports were ​$2 comma 7572,757 billion. What was the value of net​ exports?

The value of net exports in 2013 was negative 497−497 billion dollars

An example of​ "investment" in the national income accounts is the purchase of

a new van by a​ potter, who packs it with his wares and travels to art shows.

Depreciation is defined as the

decrease in the stock of capital due to wear and tear.

The difference between gross investment and net investment is

depreciation

The income approach to measuring GDP

determines the cost of​ production, then adjusts it to equal the market value of production.

Real GDP​ ______

does not include a measure of household production or underground economic activity

Real GDP​ ______.

does not include a measure of leisure time or environmental quality

Gross domestic product is a measure of the total value of all

final goods and services produced in an economy over a period of time.

The business cycle refers to

fluctuations in the level of real GDP around potential GDP.

GDP using the expenditure approach equals the sum of personal consumption expenditures plus

gross private investment plus government expenditure on goods and services plus net exports of goods and services.

The growth rate of real GDP contributes to an improved standard of living for all of the following reasons except​ ______.

more resources are devoted to household​ production, underground economic​ activity, leisure​ time, and improving the environment

China's growth" because as the U.S. economy​ shrinks, ______. ​China's ______ and​ China's real GDP decreases.

the United States imports less from​ China; exports decrease

Potential GDP is the

the maximum amount of production that can be produced while avoiding shortages of​ labor, capital,​ land, and entrepreneurship that would bring rising inflation.

GDP decreases during

the movement from peak to trough.

Which of the following purchases is included in personal consumption expenditures when determining gross domestic​ product?

vacation expenses for a spring trip to Fort Lauderdale

The table gives data for a hypothetical nation. Gross domestic product is

​$4,079 billion.

In the circular flow​ diagram, aggregate expenditure includes the sum of

consumption and investment.

The expenditure approach to measuring GDP sums together​ ______, and the largest component is​ ______.

consumption​ expenditure, investment, government expenditure on goods and​ services, and net​ exports; consumption expenditure

Which of the following are included in the income approach to calculating​ GDP?

rental income, depreciation, compensation of employees

Aggregate expenditure is

$120

Imports of goods and services is

$30

Real GDP in 2014 expressed in​ base-year prices is ​

$7,500

The value of the paper is counted in GDP as​ ______

part of the value of the textbook

Which of the following is NOT included in real​ GDP?

production in the home

In the post World War II​ period, considerable growth in total production took place in the U.S. But at the same​ time, businesses were dumping their waste into the Great Lakes with minimal cost to​ themselves, significantly polluting the bodies of water as a result. This occurrence is an example where

real GDP gives an overly positive view of economic welfare