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79 terms

Macro-Economics

Test 2
STUDY
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GDP is measured by:
adding the market value of total final production
If you make dinner for yourself:
only the market value of ingredients that you purchased this year is added to GDP.
Germany's GDP includes
China produced by the English owned Wedgewood Company at a factory in Berlin. Germany
Expenditures on US produced steaks, shoes, and doctor visits
Consumption Expenditures
Investment in GDP:
Cars produced during the year but unsold at the end of the year and the new capital equipment produced and purchased during the year
Bob had 1,000 shirts in inventory, produced 10,000 shirts during the year and ended up with 1,100 shirts in inventory. The 100 shirts added to his inventory is
Investment
GDP is measured through
the expenditures on goods and services by all levels of government included
Net exports of goods and services are defined as equal to
the value of exports of goods and services minus the imports of goods and services
In calculating GDP, we must
add the market value of exports and subtract the market value of imports
In 2007, Candamia's consumption expenditure was 13 billion, interest, rent, and profit was 1.5 billion, government expenditures on goods and services were 3 billion, net exports of goods and services amounted to 2 billion, and investment was 8 billion: the total expenditure was
26 billion
If consumption was 70 percent of GDP and both investment and government expenditure was 18 percent of each other than
exports must be less than imports
The income approach measures GDP as
the incomes paid households for the resources they own
To measure GDP, using the income approach, one of the adjustments made to net domestic product at factor cost is
add depreciation
During 2008, net domestic product factor cost equals 3,300 billion. Indirect taxes minus subsides equals 200 billion, depreciation equals 800 billion, statistical discrepancy equals zero, and net operating surplus equals 150 billion. The country's GDP is
4,300 billion
Real GDP is all final goods and services produced in a year within a country valued at
base year prices
Nominal GDP measures the value of goods and services produces in a given year valued using
prices of the same year
An increase in nominal GDP could result from an increase in
production and price
Last year, a country produced 10,00 pizzas and 30,000 burgers and nothing else. The pizzas sold for 9.00 each and burgers for 2,00 each. The nominal GDP was
150,000
The base year is 2008. A country only produces MP3 Players. The price of an MP3 player in 2008 was 100. The price of an MP3 player was 90 in 2009. The quantity of MP3 players produces in 2008 was 10,000 units and in 2009 was 10,500 units. Nominal GDP in 2008 equals
1,000,000
A reason real GDP does not accurately measure in our standard of living is because real GDP
does not measure all goods and services produced
U.S real GDP
excludes the value of underground production and leisure time.
As measured, GDP omits
Illegal sales of goods and services, changes in the amount of leisure time, and household production of goods and services
Goods and services such as environmental quality, leisure time, and household production are not included in GDP because they are not
bought in the markets
Household production such as baking bread at home, is not included in the GDP because it
does not involve a market transaction.
The calculation of GDP excludes
a family member painting the family home
What is not included in measuring GDP
the value of leisure time
Consumption expenditure accounts for what percentage of GDP
70%
The expenditure approach to measuring GDP does not include spending it on
intermediate goods and services
Real GDP is the value of final goods and services produced in a year
expressed in the prices of a base year
What is NOT a part of the income used in the income approach?
taxes paid by the person
The difference between nominal GDP and real GDP is
the prices used in their calculations
Instead of taking dirty clothes home to GA you got to the laundromat. Using the Laundromat means that
the 1.75 you use to pay for the Laundromat will be included in your GDP.
Leisure time is the economic good
because the more leisure time we have, the better off we are
In the business cycle, what immediately precedes the time when real GDP is falling
peak
The calculation of GDP using the income approach EXCLUDES
environmental quality
Pat Brown is 29 and takes care of her 2 year old daughter. She is not looking for a job. The current population survey counts Pat as
not being in the labor force
Assume the Us population is 275 million. If 210 million people are working of age, 125 million are employed and 6 million are unemployed, what is the size of the labor force.
141 million
When calculating the unemployment rate, the BLS counts those over 16 in jail as
institutionalized and therefore not in the working-age population
If 150 million people are employed, 50 million people are unemployed and the population is 285 million people
25 percent
The working age population is 220 million, the labor force is 150 million, the unemployment rate is 10 percent. The number of unemployed people is
15 million
The labor force participation rate is equal to
the labor force divided by working-age population multiplied by 100
A discouraged worker
is someone who does not have a job and has given up looking.
After taking maternity leave, Katie has decided to return to her medical practice. She will be working on Mondays, Tuesdays, and Thursdays from 8 to 5. She is a
part-time worker for non-economic reasons
Aggregate hours are measured by the total number of
hours worked by both full-time and part-time employees
During the Great Depression, the unemployment rate rose to a maximum of
25 percent
After combining the effects of women and men, over the 40 years in the US the overall labor force has
increased during those times
Over the past 40 years in the US, the labor force participation rate of men has what? and the rate of women has what?
Men-decreased and Women-Increased
Which of the following are sources of unemployment
Job losers, Lob leavers, and Entrants and Re-entrants
Job losers
are those who are laid off
The biggest source of unemployment are
job losers
June has never had a job but will graduate from college this coming spring when she will look for a job. June is
a job market entrant
Withdrawals are people who
decide to stop looking for a job
Frictional unemployment is the result of
the normal process of jobs being created and destroyed.
Rosina quit her job and moved to California. She is looking for work so she is
a frictionally unemployed
An employee who is fired from his or her job because he or she lacks the skills required to accomplish the task is
structural
During a recession, cyclical unemployment does what? and real GDP does what?
Cyclical=increase
real GDP=decrease
The average duration of unemployment is
increase during recession and decrease during expansion
When the economy is at full time employment, the
natural employment rate equals the unemployment rate
Potential GDP is the level of output produced when the unemployment rate is
equal to the natural unemployment rate
During a recession,
real GDP is less than the potential GDP.
The labor force is:
people who are employed or unemployed.
I'm employed that means?
I have worked for pay for one hour or more or else worked without pay for 15 hours or more in a family-owned business or else been temporarily absent from my job.
I am unemployed! That means?
The person must have no job, be available to work, have made specific efforts to find work within a month time or waiting to be recalled to a job from which they were laid off.
What are final goods
Final goods are goods that are purchased by their final user; theyre have been completed and do not need to go through further processes of completion.
What does GDP stand for?
Gross Domestic Product
What is value production?
It uses market prices to value production.
Intermediate goods and services?
Goods and services that are produced by one firm and bought by another; used as a component of a final good or service.
Investment?
Purchases of new capital goods, tools, instruments, machines, buildings and other constructions in addition to inventory
Government expenditure
All levels of government on goods and services
Net exports
Value of exports of goods and services minus the value of imports of goods and services.
GDP is measured by
Expenditure Approach and Income Approach
Expenditure=C+I+G+NX
Consumption, Investment, Government and Net Exports
Income includes
Labor earns wages, capital earns interest, land earns rent and entrepreneurship earns profit
Wages
payment of labor services
Profit
Total revenue-Total Cost
Disposable personal income
income received by households - MINUS- the personal income taxes paid
Real GDP
value of final goods and services produced in a given year expressed by prices of base year
Nominal GDP
final value of goods and services produced in a given year expressed in prices of that same year
Business Cycle
Peak
Recession
Trough
Recovery/Expansion