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Macro Ch. 8
Terms in this set (40)
What macroeconomics seeks to understand
Economic growth, business cycles, and inflation
In calculating Gross Domestic Product (GDP), the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA
Values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up
Suppose, in 2018, you purchased a house built in 2003. What would be included in the GDP for 2018?
The value of the services of the real estate agent
Gross Domestic Product is calculated by summing up
The total market value of final goods and services produced in the economy during a period of time
Which of the following goods is directly counted in GDP? The lettuce that subway purchases for its sandwiches, a 12 inch subway sandwich purchased by a student, the bread that subway purchases for its sandwiches, or the plastic bags that subway purchases to wrap its sandwiches?
A 12 inch subway sandwich purchased by a student
Which of the following transactions represents the purchase of a final good? The purchase of coffee beans by Starbucks, Delta buying a new European-made jetliner, Apple computers buying CPU processors from Intel, or your father buying a new John Deere riding lawn mower?
Your father buying a new John Deere riding lawn mower
Which of the following is NOT directly counted in GDP? Intermediate goods, Investment Expenditures, Government Purchases, or Consumer Goods?
Real GDP growth is...
The value of all goods produced in a given year
Nominal GDP is...
the value of all the goods taking price changes into account
The nominal GDP of the US in 2016 was approximately $18.6 million. Does this mean that the total spending of final goods and services in 2016 was around $18.6 trillion, the value of the final output in 2016 was around $18.6 trillion, the total income in 2016 was around $18.6 trillion, or all of the above?
All of the above
Is the purchase of a new automobile included in investment expenditures, consumption expenditures on nondurable goods, consumption expenditures on services, or consumption expenditures on durable goods?
Consumption expenditures on Durable Goods
An expenditure brought upon either by an individual or a firm or the government for the creation of new capital assets like machinery, building etc
the expenditure by households on consumption goods and services
goods that last a short period of time, such as food, light bulbs, and sneakers
goods that last for a relatively long time, such as refrigerators, cars, and DVD players
Do the factors of production include capital, wages, investment, or transfers?
Four factors of production
land, labor, capital, entrepreneurship
Would an example of business fixed investment spending be a purchase of a home by a household, $200 million of unsold cars at a dealership, a purchase of a bond by General Electric Corporation, or a purchase of a computer by an accounting firm?
A purchase of a computer by an accounting firm
What must one add to calculate GDP by the expenditure method?
Consumption spending, investment spending, government purchases, and net exports
Would Ford buying U.S. government bonds be considered an investment?
Is the purchase of a new house included in consumption expenditures, government purchases, investment expenditures, or net exports?
Value of Exports - Value of Imports
The purchase by a foreign government of an airplane produced in the United States is included in US..
What's the largest component of spending in the US?
What is GDP in the economy measured by?
The dollar value of all final goods and services produced in the economy.
A car that's produced in 2018 isn't sold until 2019. According to the definition of GDP, in which year's GDP should it be counted?
A payment to the government to an individual where the government doesn't receive a good or service in return
What's an example of a transfer payment?
A welfare payment
C + I + G + NX
Formula to calculate GDP
What does C represent?
Consumption (durable and nondurable goods, services)
What does I represent?
What does G represent?
What does NX represent?
Real GDP is GDP in a given year...
Valued in the prices of the base year
First series of years in an economic or financial index
Real GDP will increase...
only if the quantity of final goods and services produced rises
GDP deflator equation
Nominal GDP/Real GDP x 100
The GDP deflator is the
ratio of nominal GDP to real GDP multiplied by 100.
the value of worn−out equipment, machinery, and buildings
disposable personal income
-income remaining for people to spend or save after all taxes have been paid
- best measure of the income households actually have available to spend
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