Macroeconomics Ch. 8 MyEconLab HW

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In calculating gross domestic product, the Bureau of Economic Analysis uses the sum of the market value of final goods and services produced. This means that the BEA
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values goods and services at their market prices, multiplies them by the quantity produced, and then adds them up
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Gross Domestic Product (GDP) is
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the market value of all final goods and services produced in a country during a period of time
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Macroeconomics, as opposed to microeconomics, includes the study of what determines the
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average price of goods and services in the economy
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Suppose, in 2014, you purchased a house built in 2003. Which of the following would be included in the gross domestic product for 2014?
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the value of the services of the real estate agent
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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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Which of the following goods is directly counted in GDP?
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a 12 inch Subway sandwich purchased by a student
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In 2012, the largest component of gross domestic product income was
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wages
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One major component of GDP that can be negative is
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net exports
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Real GDP is
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the value of goods and services evaluated at base year prices
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Over time, prices may change relative to each other. To take this change into account, the Bureau of Economic Analysis calculates
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real GDP using chain weights
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In an economy with rising prices, compared to the base year,
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nominal GDP is larger than real GDP in years after the base year.
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If the U.S. Bureau of Economic Analysis (BEA) added up the values of every good and service sold during the year, would the total be larger or smaller than measured gross domestic product (GDP)?
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Larger: the value of all goods and services sold would include intermediate goods
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If you were attempting to forecast the level of consumer spending by households, which measure of total production or total income might be most helpful in making your forecast?
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Disposable personal income
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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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What is the difference between the value of a firm’s total product and the value added by the firm to the final product?
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the value of a firm’s final product is the sale price; value added is the difference between the sale price and the price of intermediate goods
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In the circular flow model, the value of total income for an economy_____________the value of production
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equals
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Which of the following is NOT a durable good?
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clothing
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Which of the following is included in the economist’s definition of investment?
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the purchase of new machines, factories, or houses
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In calculating GDP, which levels of government spending are included in government purchases?
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spending by federal, state, and local governments
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The purchase of a new house in included in
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investment expenditures

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