Lecture PowerPoint
What are the 2 versions of GDP?
Nominal GDP
values output using current prices
not corrected for inflation
Real GDP
values output using the prices of a base year
is corrected for inflation
GDP equals _______.
a. the market value of all final goods and services produced by domestic residents minus profits made by domestic firms
b. the quantities of all final goods and services produced by domestic residents
c. the market value of all final goods and services produced within a country in a given period of time
d. the wages paid to all domestic residents, less taxes
c. the market value of all final goods and services produced within a country in a given period of time
identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Felix records an album and is sold to fans in Australia.
X exports
The U.S GDP is...
30 trillion
microeconomics definition
the study of how individual households and
firms make decisions, interact with one another
in markets
Factors of production examples
inputs like labor,
land, capital, and natural resources.
Suppose a country has government purchases of $3,000, taxes of $2,000, consumption of $9,000, exports of $2,500, imports of $2,700, transfer payments of $750, capital depreciation of $800, and investment of $4,000. GDP equals _______.
a. $17,550
b. $15,800
c. $17,000
d. $16,000
b. $15,800
Why is real GDP a more accurate measure of an economy's production than nominal GDP?
a. Real GDP is not influenced by price changes, but nominal GDP is.
b. Real GDP measures the value of the goods and services an economy produces, but nominal GDP measures the value of the goods and services an economy consumes.
c.Real GDP does not include the value of intermediate goods and services, but nominal GDP does.
a. Real GDP is not influenced by price changes, but nominal GDP is.
U.S national debt is..
37 trillion
what are factor payments
are payments to the factors
of production (e.g., wages, rent).
Gross Domestic Product (GDP) is...
he market value of all final goods &
services produced within a country
in a given period of time.
Which of the following items purchased by households are included in investment rather than consumption?
a. Spending on education and the purchases of stocks and bonds
B. Only the purchase of stocks and bonds
c. Spending on education and the purchases of new housing
d. Only the purchases of new houses
d. Only the purchases of new houses
Which of the following scenarios are either not accounted for or measured inaccurately by either the income or the expenditure methods of calculating GDP for the United States? Check all that apply.
1. The costs of air and water pollution
2. Funds spent by local governments to increase public safety
3. The variety of goods available to consumers
4. The value of house cleaning services, when the house cleaner is paid in cash and the transaction isn't reported to the government
1. The costs of air and water pollution
3. The variety of goods available to consumers
4. The value of house cleaning services, when the house cleaner is paid in cash and the transaction isn't reported to the government
Is the U.S a net import or a net export?
net import
True or False: Gross domestic product (GDP) measures total expenditures on final goods and services during a given period of time.
true
The equation for the components of GDP.
Consumption (C)+ Investment (I)+ Government Purchases (G)+Net Exports (NX)= GDP (denoted Y):
When economists refer to intangible items, they are referring to such things as _______.
a. public parks and schools, and the value of such items is included in GDP
b. legal and medical services, and the value of such items is included in GDP
c. public parks and schools, and the value of such items is excluded from GDP
d. legal and medical services, and the value of such items is excluded from GDP
b. legal and medical services, and the value of such items is included in GDP
When a U.S. company purchases and imports electronic parts from Taiwan to use to produce laptops within the United States, this purchase increases the BLANK component of GDP.
Investment
U.S CPI
3%
Identify whether the event in this scenario occurs in the market for factors of production or the market for goods and services.
Rina spends $8 to have a pint.
Market for Goods and Services
explain the circular-flow diagram
a simple depiction of the macroeconomy
illustrates GDP as spending, revenue,
factor payments, and income
Preliminaries:
Factors of production are inputs like labor,
land, capital, and natural resources.
Factor payments are payments to the factors
of production (e.g., wages, rent).
Yan lives in a home that was newly constructed in 2017 for which he paid $200,000. In 2019 he sold the house by himself for $250,000. Which of the following statements is correct regarding the sale of the house?
a. The 2019 sale affected neither 2019 GDP nor 2017 GDP.
b. The 2019 sale increased 2019 GDP by $250,000 and had no effect on 2017 GDP.
c. The 2019 sale increased 2019 GDP by $250,000; furthermore, the 2019 sale caused 2017 GDP to be revised upward by $50,000.
d. The 2019 sale increased 2019 GDP by $200,000 and had no effect on 2017 GDP.
a. The 2019 sale affected neither 2019 GDP nor 2017 GDP
based on the circular flow model, households earn income when firms purchase _____ ___ _______ in markets for factors of production
labor and capitol
U.S Trade Deficit
1.4 billion
What does "final goods" mean in the GDP definition: "he market value of all final goods &
services produced within a country
in a given period of time"
intended for the end user