Economics 114 Macro- Harry Chatrand

Which of the following do national income accountants consider to be "investment"?

the purchase of a new house

A distinguishing characteristic of public transfer payments is that:

the recipients make no contribution to current production in return for them

Opportunity cost is best defined as:

the value of the best foregone alternative

The inescapable economic fact is that

there are unlimited wants and limited resources

Stock and bond sales are not included in GDP because they

are not goods and services

As defined in national income accounting, investment includes:

business expenditures on machinery and equipment

In calculating GDP, economists use the value of final goods and services because

by using final goods and services, they avoid double counting

Which is included in GDP?

telephone service for a home

"Value added" refers to:

the difference between the value of a firm's output and the value of the inputs it has purchased from others

Gross Domestic Product is

the market value of all the final goods and services produced in a country during a given time period

Disposable income is

aggregate income minus taxes plus transfer payments

The goods and services we sell to people in other countries are our

Exports

If intermediate goods and services were included in GDP:

GDP would be overstated

"Ceteris paribus" means:

Other things equal

An example of an intermediate good or service would be:

a desk bought by an accountant for her office

The quantity of real GDP demanded is composed of the purchases of

consumers, firms, governments, and net exporters

Complete the following sentence. Potential GDP

does not vary with the price level

GDP includes:

final, but not intermediate, goods

As a consequence of the condition of scarcity:

individuals and communities have to make choices from among alternatives

An example of a final good in national income accounts would be new:

flowers purchased by a homeowner

The term "final goods and services" refers to:

goods and services purchased by ultimate users, as opposed to resale or further processing

The change in capital from year to year is equal to

gross investment minus depreciation

Goods and services that we buy from other countries are our

imports

Gross domestic product (GDP) measures and reports output:

in dollar amounts

Transfer Payments are

included when calculating GDP because they increase the spending of recipients

If depreciation (consumption of fixed capital) exceeds domestic investment, it can be concluded that:

net investment is negative

Net domestic investment refers to:

total investment less the amount of investment goods used up in producing the year's output

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

value added from the economic activity

An economy is enlarging its stock of capital goods:

when gross investment exceeds replacement investment

The slope of a horizontal line is

zero