Chapter 7: Measuring Domestic Output and National Income – Flashcards
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Social Security payments, welfare payments, and veterans' payments that the government makes directly to households are called government public _____ payments.
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Transfer
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An intermediate good is:
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A good used only in the production of other products.
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A final good is:
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A good directly consumed by individuals or businesses. Counted as part of GDP
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GDP is calculated
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C+Ig+G+Xn
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The term that covers all expenditures by households is ____ ____ expenditures
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Personal consumption
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_____ market transactions are not included in measuring GDP.
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Black Stock Secondhand
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A nation's GDP:
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Reflects the total market value of all final goods and services produced within an economy in a given year
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National ____ accounting measures the overall performance of the economy.
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Income
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The primary measure of the economy's performance is its annual total output of goods and services, which is called its:
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Aggregate output
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The market value of a firm's output minus the value of the inputs the firm has bought from others is called:
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Value added
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What are the three categories of personal consumption expenditures?
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Services Durable consumer goods Nondurable consumer goods
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The three types of private domestic investment include all final purchases of machinery, equipment, and tools; all construction; and all changes in business ______.
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Inventories
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Which of the following is not included in investment spending in the national income accounts?
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The purchase of stocks and bonds
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Gross private domestic investment consists of:
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Spending on new plant and equipment during the year Any changes in inventory Newly produced housing
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The iew of GDP as the sum of money spent on buying it is called the aggregate ____approach.
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Expenditure
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A price index:
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Measures the cost of purchasing a market basket of output across different years. Is normalized to 100 for the base year. Always includes a base year
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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.
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Intermediate
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Transfer payments are excluded from government purchases in GDP accounting because:
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Nothing is being produced in return for the payment.
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____ GDP, or adjusted GDP, reflects changes in the price level.
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Real
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When gross investment is less than depreciation, net investment is _____.
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Negative
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A country's exports are included in GDP when the goods and services are:
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Produced within the borders of said country
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For the purposes of GDP accounting, government purchases include _____.
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Spending on highway construction The purchase of new military equipment
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Viewing GDP in terms of earnings derived or created by producing something is called the ____ approach.
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Income
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In order to determine GDP using the expenditures approach, all spending on ____ goods and services, not intermediate goods, is added up.
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Final
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The national accounts keep track of:
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Spending by consumers and government. Business investment. The sales of producers.
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Net exports is exports minus ____.
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Imports
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As a measurement of economic output and the nation's wealth, GDP fails to account for:
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Improved product quality Non-market activities The underground economy Leisure time
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What happens to the size of the capital stock when gross investment and depreciation are equal?
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It stays the same
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All the final purchases of machinery, equipment, and tools by business enterprises, including construction, and changes in inventories make up gross private ____ investment.
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domestic
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By ignoring the value of leisure time, how does national income accounting affect our well-being?
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It understates our well-being.
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In calculating gross private domestic investment, a ____ change in ____ must be subtracted from total investment for that particular year.
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Negatie; Inventories
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Select all of the benefits of national income accounting.
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Tracks the long-run course of the economy. Enables formulation of policies to improve or safeguard the economy's health. Assesses the health of the economy.
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A measure of the value of a specified collection of goods and services in a given year as compared to the value of a highly similar collection of goods and services in a reference year:
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Price index
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Nominal GDP divided by price index equals:
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real GDP
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which of the following are components of government purchases in GDP?
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Expenditures for publicly owned capital. Expenditures for goods and services that the government consumes in providing public services.
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The annual amount allocated to the wear and tear on private investment is called or termed:
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Depreciation
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The formula for calculating the price index of a basket of goods is:
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(Price of market basket in specific year / Price of same market basket in base year) X100
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Government ____, officially labeled "government consumption expenditures and gross investment," include all federal, state, and local government outlays on final goods.
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purchases
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The sale of ____ is excluded from the calculation of GDP because they contribute nothing to current production.
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Used goods
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According to the World Bank, which three countries had the highest GDPs?
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US, China, Japan
