Macro-Measuring Output and Income

Roughly, how much of gross domestic product is used for investment?

1/5 or less

Consider the information provided in the table about the economy of casto. The value of consumption in Casto is $___

650

If an economy exports $15 billion worth of goods and services and imports $8 billion worth, the amount of its net exports is $ ___ billion.

7

Suppose that last year a total of $15 billion in goods and services was exported to other countries, while $6 billion was imported. Net exports equals $___ billion.

9

Which of the following statement(s) is true?

After 1975 imports have exceeded exports. Exports generally exceeded imports before 1975.

Which of the following statements is true?

Capital wears out and needs to be replaced. In general, having more capital is desirable.

___ are added to GDP, whereas ___ are subtracted from GDP

Exports Imports

___ sales do not represent new production, just the reallocation of past production that was already counted as part of the GDP in another year.

Secondhand

Nominal gross domestic product measure the dollar value of

all the final goods and services that are produced during a fixed period of time.

Services now constitute two-thirds of what households buy, because:

as incomes have increased over time, people are more willing to pay others to do things for them.

The more ___ that is available to its workers, the more productive a nation will be.

capital

In economics, depreciation refers to:

capital that is worn out or obsolete

In economics, consumption is classified into one of three categories:

consumer nondurables, consumer durables, services

Gross domestic product equals the total sum of four categories

consumption, gross investment, government purchases, and next exports

Because ___ are produced domestically, they must be included in gross domestic product.

exports

Counting expenditures for only ___ goods and services provides a good estimate of the dollar value of output produced in an economy, or nominal GDP.

final

If a transaction happens in a ____ market - that is sold by a licensed seller - it will be included in GDP; if the transaction happens instead in an ____ market - one that is either illegal or otherwise untraceable - it will not be included in GDP.

formal, informal

Consumption includes purchases made by

households

Gross investment tells:

how much capital is being created.

An ___ good or service is used to build or make another product that will be subsequently sold.

intermediate

In economics, ___ does not solely refer to saving money, or buying stocks or bonds.

investment

Imports constitute:

less than 20% of nominal GDP

More gross investment today means we will have:

more capital in our economy to use for production tomorrow, potentially leading to higher GDP in the future.

Net exports are ___ when imports exceed exports.

negative

To determine whether the stock of capital is growing or shrinking, we need to calculate ___ investment.

net

Investment can be:

positive, negative, or zero

Secondhand sales represent the

reallocation of past production that was already counted as part of GDP in another year

Gross investment falls into one of three categories:

residential investment, business fixed investment, and changes in inventory

Because informal-market transactions result in increased output produced, GDP________ estimates the actual amount of output produced in an economy

under-estimates

Although consumption is the largest component of GDP, investment is the most ___ component of GDP.

volatile

When measuring GDP, we classify expenditures into four categories because:

we like to know who is consuming what