Macroeconomics Chapter 7

which of the following would accurately characterize the portion of a firm's profit paid to the owner of holding one share of its stock?

Dividend

GDP is:

GDP = C + I(g) + G + X(n)

consumption of fixed capital is the _____ charge made against private and publicly owned capital each each year.

depreciation

gross rental income minus _____ equals net rent

depreciation

the estimate of how much of the capital is being used up each year is called _____

depreciation

which of the following is not a category when using the national income approach to calculating GDP?

depreciation of income

all final purchases of machinery, equipment, and tools by business enterprises, including construction, and changes in inventories make up gross private_____ investtment

domestic

Net exports include goods produced:

domestically that are sold abroad, less goods that are produced abroad that are sold domestically

select all of the benefits of national income accounting

enables formulation of policies to improve or safeguard the economy's health. Assesses the health of the economy. tracks the long-run course of the economy.

the view of GDP as a sum of money spent on buying it is called the aggregate _____ approach.

expenditure

which of following are components of government purchases in GDP?

expenditures for goods and services that the government consumes in providing public services. Expenditures for public owned capital

in order to determine GDP using the expenditures approach, all spending on _____ goods and services, not intermediate goods, is added up.

final

_____ goods are included in the calculation of GDP while _____ goods are not included

final intermediate

Gross private domestic investment includes:

final purchases of machinery, equipment, and tools by business enterprises, all construction, and changes in invetories

the three domestic sectors of the economy are households, government, and _____.

firms

which of the following are party of taxes on production an imports?

general sales taxes. excise taxes customs duties business property taxes license fees

the dollar value of all final goods and services produced within the borders of a given country during a given period of time is definition of:

gross domestic product

which of the following is equal to net investment?

gross investment minus depreciation

which of the following are components of the expenditure approach to measuring GDP?

gross private domestic investments personal consumption expenditures government purchases

one of the flaws of GDP is that it:

ignores transactions that do not take place in organized markets

National _____ accounting measures the overall performance of the economy

income

viewing the GDP in terms of earning derived or created by producing something is called the ____ approach

income

_____ consists of the money paid by private businesses to the suppliers of loans used to purchase capital.

interest

including the value of _____ goods along with the value of final goods in the calculation of GDP would amount to multiple counting of goods and distort GDP

intermediate

the three types of private domestic investment include all final purchases of machinery, equipment, and tools; all construction; and changes in business _____.

inventories

by ignoring the value of leisure time, how does national income accounting affect our well-being?

it understates our well-being.

a Price index:

measures the cost of purchesing a market basket of output across different years. always includes a base year. is normalized to 100 for the base year.

Gross _____ income includes all income earned from American-owned resources plus government revenue from taxes on production and imports.

national

Income earned through the use of America-owned resources for services and production is call:

national income

when gross investment is less than depreciation, net investment is _____

negative

when calculating gross private domestic investment, a _____ change in _____ must bee subtracted from total investment for that particular year.

negative inventories

the difference between the income Americans earn abroad and the income they earn in the untied states is called _____ _____ factor income

net foreign

after calculating national income, which of the following are added to or subtracted from national income to obtain GDP

net foreign factor income. statistical discrepancy consumption of fixed capital

transfer payments are not included in GDP because they generate

no output

when computing GDP using current prices, it is referred to aas

nominal GDP

as a measurement of economic output and the nation's wealth, GDP fails to account for:

non-market activities. leisure time. improved product quality the underground economy

the amount of income that households receive, whether earned or unearned, is called _____ income

personal

The term that covers all expenditures by household is _____ _____ expenditures

personal consumption

a measure of the value of a specified collection of goods and services in a given year as a compared to the value of highly similar collection of goods and services in a reference year is called

price index

the price of a market basket of goods in a specific year divided by the price of the same market basket of goods in the base year multiplied by 100 is called a:

price index

imports must be subtracted from GDP because they are goods and services ____ the borders of the united states

produced outside

Government _____ include all federal, state, and local government outlays on final goods.

purchases

_____ GDP, or adjusted GDP, reflects changes in the price level.

real

_____ is the income received by households and businesses that supply property resources.

rents

undistributed corporate profits are called _____ _____.

retained earnings

consumers are free to divide their income between consumption and _____

savings

what are the three categories of personal consumption expenditures?

services. durable consumer goods non durable consumer goods

for the purposes of GDP accounting, government purchases include

spending on highway construction. the purchase of new military equipment.

the amount accountants add to the national income to make the income approach match the outcome of the expenditure approach is called the _____ discrepancy

statistical

in national income accounts, value added refers to:

the difference in the market value and the cost of inputs purchased from other firms

one of the shortcomings of GDP is that it doesn't reveal anything about which of the following?

the distribution of output

the national accounts keep track of:

the sales of producers. business investment. spending by consumers and government.

real GDP is gross domestic product measured

to reflect changes in the price level

Social security payments, welfare payments, and veteran's payments that the government makes directly to the household are called government public _____ payments

transfer

the sale of_____ is excluded from calculation of GDP because they contribute nothing to current productions

used goods intermediate goods

when gross investment and depreciation are equal, the value of net investment is _____

zero

a country's exports are included in GDP when the goods and services are:

Produced within the borders of said country.

nominal GDP divided by price index (in hundredths) equals:

Real GDP

_____ market transactions are not included in measuring GPD

Secondhand stock black

_____ market transactions are not included in measuring GDP

Stocks secondhand black

which of the following is not included in investment spending in the national income accounts?

The purchase of stocks and bonds

A final good is

a good directly consumed by individuals or businesses. counted as part of the GDP

an intermediate good is

a good used only in the production of other products

The primary measure of the economy's performance is its annual total output of goods and services, which is called its:

aggregate output

private domestic investment expenditures consist of:

an increase in inventories. newly produced housing. spending on new plant and equipment.

National income is the sum of compensation of employees, rents, interest, proprietors' income, taxes on production and imports, and:

corporate profits

wages, salaries and benefits paid by businesses and government to their workers are called employee_____.

compensation

which of the following is the largest component of national income?

compensation of employees by firms

gross domestic product (GDP) may be calculated as the sum of

consumer spending , investment spending, government purchases of good, and services and export minus imorts

secondhand sales are excluded from the calculation of GDP because they do not:

contribute to current production

national income accountants subdivide corporate profits into which categories?

corporate income taxes. undistributed corporate profits dividends