ECON CHP 5
Because of the circular flows of expenditure and income in the economy, total __ = total____= ____
Expenditure, Income; Value of Production
The following are all final goods EXCEPT: a. flour used by the baker to make cupcakes b.bread eaten by a family for lunch c. a computer used by Intel to design new computer chips d.Nike shoes used by a basketball player e. Pencils used by a 6th grader in class
Flour used by the baker to make cupcakes
In the circular flow diagrams, S (saving) and NT (Net Taxes) are
Flows of Money
If a wealthy woman marries her butler, quits paying him and does not hire a new butler, then
GDP definitely does not change
Statistical discrepancy is calculated as
GDP expenditure - GDP income total
Nominal GDP increases
If either prices and/or total production increases
The purchase of a new Boeing fighter jet by Israel is classified in the U.S GDP accounts as
Import Expenditure
Which of the following is NOT part of the business cycle?
Inflation
A south sea island produces only coconuts. In 2019 the price of a coconut is $1 and the quantity produced is 200. In 2020, the price of a coconut is $1.50 and the quantity produced is 250, 2019 is the base year. Real Gdp in 2020 is
$250
The expenditure approach to measuring GDP is done by using data on only
-Consumption Expenditure -Investment -Government Expenditure on goods/services -Net Exports of goods and services
In calculating GDP, we must
Add the market value of exports and subtract the market value of imports
`Economists define investment to include purchases of
Capital goods and inventories
If you mow the lawn yourself, the lawn mowing is considered household production. If you pay Larry's Lawn Service to mow your lawn, the lawn mowing is considered
a service, that will be counted as part of GDP
To measure GDP by using the income approach, we must add all incomes and then ___ depreciation and ____ net taxes less subsidies.
add;add
Investment is defined as the purchase of ___
New Capital goods and additions to inventories
Of the following, which country has the highest HDI in 2018?
Norway
Over the business cycle
Real GDP fluctuates around its trend
Which of the following would NOT be directly included in the U.S. GDP in 2020? a. the market value of restaurant meals sold in 2020 b. the value of the automobiles produced in 2020 at the toyota plant located in Georgetown, Kentucky. c.legal services provided to first time home buyers during 2020. d.the market value of the jet fuel bought by Delta to use for its flights in 2020 e. the purchase of a new home in Atlanta, Georgia in 2020.
The market value of the jet fuel bought by Delta to use for its flights in 2020.
Bobby was researching the economic growth of a country between 2016 and 2021.Using 2016 as the base year he calculated a twelve percent increase for real GDP and a ten percent increase for nominal GDP. His results indicate that:
The quantity of goods and services produced increased and prices decreased over the period.
If both the production of goods and services increase and prices rise, then the change in nominal GDP
definitely overstates the change in production
Babysitting services the oldest son provides his parents
does not count as real GDP or nominal GDP (not helping the economy)
The value of leisure time is
excluded from GDP
Last year U.S net exports of goods and services was negative. This fact means that last year___
the value of U.S exports was less than the value of U.S imports
Which of the following is classified as an intermediate good? i.the purchase of a Big Mac by a college student ii. Mcdonalds purchase of pickles iii. Mcdonalds restaurant owners interest payment for the loan on her building
ii.
If we use GDP to measure our standard of living, then our procedure is
inaccurate because our standard of living does not depend only on goods and services
The category of "rent" in the income approach to GDP
includes the money paid to use land and other rented inputs
After calculating the net domestic product at factor cost, to calculate GDP using the income approach, in part we must add
indirect taxes and depreciation
The nations supply of a productive resources increases if
investment is greater than depreciation
Comparing GDP of 2019 to nominal GDP of twenty years ago
is an inaccurate measure of the changes in total production
Leisure time
is not valued as part of GDP
The U.S economy is experiencing falling output, falling employment, falling incomes and rising unemployment. These conditions best describe a business cycle
recession
The business cycle has two phases
recession and expansion
Depreciation is
the decrease in the value of capital resulting from its use and obsolescence
If real GDP increases over time, the cost of living will
more information is needed to determine how the cost of living changes
The sum of the components of incomes is called
net domestic product at factor cost
The HDI does not include
political freedom
Consumption expenditure includes spendings
by households
If nominal Gdp increases from one year to the next, then
production could have increased, decreased, or stayed the same
The business cycle is defined as
changes in the financial markets
Nominal GDP is GDP
computed with current market values.
If nominal GDP increases this year, then real GDP
could increase, decrease, or not change
If a firm does not sell all of the goods that it produces in a given time period, then the goods
count positively in GDP as inventory investment.
Which of the following is likely to be an unreported economic activity?
tips paid to a taxi driver
To calculate GDP it is necessary to
use the market price to place a dollar value on each good produced
The income approach to measuring GDP is based on summing:
wages, interest, rent, and profits
Where are the final goods and services produced that are included in Germanys GDP?
within Gernmany
GDP is defined to be the market value of all the final goods and services produced during a given time period
within a country
