# Econ 2301 Chapter 5

### 20 terms by jeremy_nelson2 Plus

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Central Texas College The Economy Today 12th Edition

### Real GDP is the:

value of output measured in constant prices

### An economy's production possibilities are most likely to expand if:

Gross investment is greater than depreciation

### An increase in the dollar value of output produced

Between 1960 and 1970 real GDP declined but nomial GDP continued to rise. The increase in nominal GDP was due to:

### National-income accounting is defined as the:

Measurement of aggregate economic activity.

### Which of the following types of government spending is included in the calculation of GDP?

Federal, state and local government spending on goods and services only

### Inflation

During the 1980-1990 time periods, real GDP was constant but nominal GDP was increased. This can be explained by

\$10,305 billion

\$430,000

### Average price levels decreased

During the period between the early 1970s and 1980, real GDP grew at a faster rate than nominal GDP. This is an indication that:

### A nation's GDP is:

A) C + I + G + (X - IM).

### Ceteris paribus, if imports increase in any given year:

GDP will decrease

### Assume nominal GDP is \$10,000 billion in period 1 and \$15,000 billion in period 2. If prices in period 2 are twice as high as in period 1, real GDP in peroid 2 is:

7,500 (7.5billion)
10bn(1.0) = 10bn; X(2.0)=15bn -> X = 15bn/2.0 = 7.5bn

### ...

Net domestic product is:

Households

### To avoid counting the same output more than once the calculation of GDP includes:

Only the value of final goods

### The sum of the value added:

Is one way to compute the GDP

### \$6.810 billion

Gross domestic product is:

\$165,000

\$175

### The national-income aggregate calculated by subtracting depreciaiton from GDP is known as:

Net domestic product

Example: