Macroeconomics Ch.8

How does the Bureau of Economic Analysis of the U.S. Department of Commerce measure GDP?

How does the Bureau of Economic Analysis of the U.S. Department of Commerce measure GDP?

Which of the following are not counted as final goods and used in the GDP calculation?

Intermediate goods

As the value of a country's real GDP increases, the country is likely to:

devote more resources to pollution reduction.

Gross domestic product is best defined as the:

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

Disposable personal income is equal to personal income minus:

personal tax payments

If Americans still worked 60-hours weeks, as they did in 1890,..

the GDP would be much higher than it is but the well-being of the typical person would not necessarily be higher

When a significant fraction of the domestic production takes place in foreign-owned facilities, a country's difference between GDP and GNP is as follows:

When a significant fraction of the domestic production takes place in foreign-owned facilities, a country's GDP will be much larger than GNP.

Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?

The real GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant. By holding price constant, we know that any change in the real GDP represents changes in real output.

The flow of funds from __________ into the financial system makes it possible for government and firms to borrow.

Households

The total national income actually received by a country's residents is:

The total national income actually received by a country's residents is smaller than the value of GDP.

Which of the following goods and services would be excluded from personal consumption expenditures in the Bureau of Economic Analysis (BEA) statistics?

A new house

A period of real economic growth, where production and employment are both moving higher is known as:

A period of real economic growth, where production and employment are both moving higher is known as expansion. The expansion is the phase of the business cycle where the economy is experiencing economic growth that is measured by a period-to-period increase in real GDP. Using real GDP adjusts the measurement for any changes that are simply the result of price increases.

An alternating period of economic contraction and economic expansion measured over time with real GDP is known as the:

An alternating period of economic contraction and economic expansion measured over time with real GDP is known as the business cycle. One full business cycle is measured as peak to peak or trough to trough. It is the period of time from when economic growth peaks, moves into decline, moves back into expansion, and peaks again. Business cycles typically range from 3 to 15 years.

Which letter best represents the demand for factors of production in this circular flow model?

C The letter C best represents the demand for factors of production in this circular flow model. Firms demand factors of production from the factor market and in return pay income.

The best measure of the income households actually have available to spend is:

Disposable personal income

Economic growth is important to an economy because it typically translates to:

Economic growth is important to an economy because it typically translates to a higher standard of living for the country's population. Higher national income results from an increase in the GDP, and if the population is stable, that means the per capita income increases. Economic growth can, therefore, increase the financial well-being of a nation's citizens.

The GDP per capita is computed by dividing a country's:

GDP only counts final goods and services, not intermediate goods.

Real GDP is:

Real GDP is the value of goods and services evaluated at base year prices.

The buying and selling of goods and services that is hidden from the government in order to avoid taxes and/or regulation is known as the:

The buying and selling of goods and services that is hidden from the government in order to avoid taxes and/or regulation is known as the underground economy. The underground economy deals in cash and includes illegal products and services such as drugs and prostitution. Some small businesses, such as a lawn service, may not report income to avoid taxes and this is considered part of the underground economy.

Which of the following is included in the economist's definition of investment?

The purchase of new machines, factories, or houses