Chapter 8 Homework – Flashcards
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What are the four major categories of expenditure?
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Consumption, investment, government purchases, and net exports.
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What are the four categories of income?
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Wages, Interest, Rent, and Profit.
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Indicate whether each of the following is a final good, an intermediate good, or neither.
a. Coffee beans purchased by a coffee shop.
b. One share of Google stock.
c. A new pick-up truck purchased by a consumer.
d. A new home purchased by a family.
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a. Intermediate good
b. Neither
c. Final good
d. Final good
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Which of the following equations sums up the components of GDP?
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Y = C + I + G + NX
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Why is GDP an imperfect measurement of total production in the economy?
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GDP does not include household production or production from the underground economy.
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Real GDP per capita is often used as a measure of general well-being. While increases in real GDP often do lead to increases in the well-being of the population, why is real GDP not a perfect measure of well-being?
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All of the above
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The Phillipines and Vietnam have roughly the same size population. Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion. You should conclude
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it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information.
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Which of the following is a true statement about the impact of World War II on the U.S. economy?
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Increased production of tanks, ships, planes, and munitions accounted for most of the increase in GDP.
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If a country passes a law limiting the number of hours of work per week, GDP would ___ and leisure would ___.
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decrease; increase
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Suppose the base year is 2001. Looking at GDP data from the United States from 2001 to the present, what would be true of the relationship between nominal GDP and real GDP?
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RGDP < NGDP because prices are rising.
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Disposable personal income is
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personal income minus personal taxes.
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Which of the following would be included in the gross national product (GNP) of the United States?
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Production from a U.S. firm that operates in Mexico.
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The largest component of gross domestic income is
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wages.
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National income is
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GDP minus depreciation.
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Personal income is
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national income minus retained corporate earnings plus government transfer payments and interest on government bonds.
