Macro Econ Ch. 8 – Flashcards
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What are the 4 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.
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Coffee beans purchased by a coffee shop: intermediate good
One share of Google stock: neither
A new pick-up truck purchased by a consumer: final good
A new home purchased by a family: final good
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Which of the following equations sums up the components of gross domestic product?
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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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A 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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The value of leisure is not included, costs of pollution are not included, does not include crime rates or income distribution
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GDP deflator
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Nominal GDP/ Real GDP *100
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real GDP
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Quantity of year * price of base year
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Suppose the base year is 2001. Looking at GDP data from the United States from 2001 to present, what would be true about the relationship of nominal GDP and real GDP?
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RGDP
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Gross domestic income is measured precisely
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False
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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 of the United states
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Production of 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
