Homework
Which of the following is included in the investment component of GDP?
a. purchases of stocks and bonds, and purchases of new capital goods
b. neither purchases of stocks and bonds, nor purchases of new capital goods
c. purchases of stocks and bonds, but not purchase of new capital goods
d. purchases of new capital goods, but not purchases of stocks and bonds
d. purchases of new capital goods, but not purchases of stocks and bonds
What is GDP and what does it stand for?
GDP measures total income of everyone in the economy. The market value of all final goods &
services produced within a country
in a given period of time.
Gross Domestic Product
Factors of production are...
inputs like labor, land, capital, and natural resources.
The government of a country, which has adopted American GDP accounting conventions, reported that seasonally adjusted GDP in third quarter was $36 billion at an annual rate. This means that the seasonally-adjusted market value of all final goods and services produced within this country in the third quarter was _______.
a. $36 billion
b. $3 billion
c. $12 billion
d. $9 billion
d. $9 billion
Last year was the base year, this year inflation was 5 percent. What is this year's GDP deflator?
a. 1.05
b. .95
c. 105
d. 95
c. 105
what does a K shaped economy mean?
The rich/upper class get richer and the poor + middle class get poorer
Factor payments are...
payments to the factors
of production (e.g., wages, rent).
Net exports equal _______.
a. exports plus imports which equals Y – C – I – G
b. exports minus imports which equals C + I + G –Y
c. exports plus imports which equals C + I + G –Y
d. exports minus imports which equals Y – C – I – G
d. exports minus imports which equals Y – C – I – G
If in some year real GDP was $45 billion and the GDP deflator was 130, what was nominal GDP?
a. $34.6 billion
b. $15 billion
c. $58.5 billion
d. $30.3 billion
c. $58.5 billion
What happened in 1971
US dropped the gold standard
total spending on goods that will be used in
the future to produce more goods
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. $16,000
c. $17,000
d. $15,800
d. $15,800
McDermott's builds a new restaurant and Hai purchases stock sold by McDermott's. Which of the following is correct?
a. The value of the new restaurant and the value of the new stock are included in GDP.
b. The value of the new restaurant and the value of the new stock are excluded from GDP.
c. The value of the new restaurant is included in GDP, but the value of the new stock is excluded from GDP.
d. The value of the new stock is included in GDP, but the value of the new restaurant is excluded from GDP.
c. The value of the new restaurant is included in GDP, but the value of the new stock is excluded from GDP.
What percentage of the GDP is Government spending?
25%
What is the GDP Deflator Formula?
Real GDP is computed using _______.
a. base-year prices and current quantities
b. base-year prices and base-year quantities
c. current prices and current quantities
d. current prices and base-year quantities
a. base-year prices and current quantities
An American company operates a coffeehouse in Lisbon, Portugal. Which of the following statements is accurate?
a. The value of the goods and services produced by the coffeehouse is included in U.S. GDP, but not in Portuguese GDP.
b. The value of the goods and services produced by the coffeehouse is included in both Portuguese GDP and U.S. GDP.
c. The value of the goods and services produced by the coffeehouse is included in Portuguese GDP, but not in U.S. GDP.
d. The value added by American workers and equipment in Portugal is included in U.S. GDP and the value added by Portuguese workers and equipment is included in Portuguese GDP.
c. The value of the goods and services produced by the coffeehouse is included in Portuguese GDP, but not in U.S. GDP.
____ GDP is measured using current prices.
____GDP is measured using the prices of a
constant base year and is corrected for inflation
Nominal; Real
These components add up to GDP (denoted Y):
Y = C + I + G + NX
What components do each of these letters stand for?
EX. Y=GDP
Y: GDP
C: Consumption
I: Investment
G: Government Purchases
NX: Net Exports
If the price of a shirt is five times the price of a pair of socks, then a shirt contributes _______.
a. less than five times the price of a pair of socks if shirt-makers make greater profits than sock-makers
b. exactly as much as a pair of socks does to GDP
c. more than five times the price of a pair of socks if shirt-makers make greater profits than sock-makers
d. five times the price of a pair of socks does to GDP
d. five times the price of a pair of socks does to GDP