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GDP
Measuring GDP
GDP continued
Business Cycle
Misc.
100
is the total dollar value of all final goods and services produced within the country’s borders in a given year.
What is GDP
100
The approach used to calculate GDP by adding up the spending on everything included in GDP
What is the Expenditure Approach
100
The values each good at the dollar price it actually sold for in the year it which it was produced.
What is nominal GDP
100

Lowest level of Real GDP.  Characterized by high unemployment.  After this Stage:  the business cycle proceeds into an expansion.

What is a Trough

100

Which GDP calculation approach is most direct.  Income approach or the expenditure approach?

What is the expenditure approach.

200
True/False: Dollar Value Example: a good with a higher price (computer chip) will contribute more to GDP than a good with a lower price (a tortilla chip)
What is True
200
Part of the expenditure approach is C + I + G + (X - M). It is the category of household purchases made by families and individuals. (largest component of GDP)
What is Consumption.
200
Measures the total production in dollars after removing the distorting effect of price changes.
What is real GDP
200

Highest level of Real GDP.  Characterized by low unemployment and high personal income.  After this Stage:  the business cycle proceeds into a contraction.

What is the peak.

200

alternating periods of rising and falling real GDP is known as?

What is the business cycle?

300
True/False: Does GDP include both tangible goods and intangible services?
What is True
300
Part of the expenditure approach is C + I + G + (X - M). It is business spending on physical capital (equipment), new homes, and inventories (any goods produced but not sold during the year)
What is Investment.
300
When converting nominal GDP to real GDP, it takes into account the affect of what?
What is Inflation.
300

After the Peak.  An economy enter into.... (characterized by declining GDP and elevated unemployment.)

What is a recession/contraction.

300

What is the basic difference between an economic recession and a depression?

Recessions are shorter and less severe.

400
What is a product that becomes part of a final good or service, or is used up in the production process. It is not counted in GDP because they are already included in the dollar value of the final good.
What is an Intermediate Product
400
The income approach is less direct method used to calculate GDP. It adds up all the income earned during the year by people who are involved in the production of goods and services. The income approach adds up four categories. What are they?
What is wages, rent, interest, and profit.
400
True/False: A change in Real GDP is always caused by a change in price and output.
What is False: Real GDP is always caused by a change in output only.
400

GDP is rising, unemployment is falling and personal incomes are rising are characteristics of which phase of the business cycle?

What is an expansion.

400

What is included in the government spending (G) component of Real GDP?


a). Social security

b). Military purchases

c) food stamps

d) Unemployment benefits

What is B) Military purchases

500
Provide an example of something not included in GDP.
What is: the production of a new scarf that your grandmother knitted for you and gave you for your birthday. Goods produced by an American company at their facility in Asia. The value of the steel used in car manufacturing when it is produced at the steel mill.
500
Name 2 examples of what may not be counted as part of GDP.
What is: Unpaid work (household chores, volunteer work) Purely financial transactions (purchase of corporate stock , bonds, gold, or real estate), Sale of used goods (secondhand cars, furniture, or homes, already counted in GDP), Foreign production, and Transfer Payments (such as social security payments)
500
When we hear reports of changes in GDP, most often we mean changes in what? Real GDP or Nominal GDP
What is real GDP
500

2 consecutive quarters (6 months) of declining GDP is called:

a recession.

500

What does (X-M) represent in the expenditure formula?

a)  Net taxes

b) net investments

c) net exports

d) net consumption

What is c) net exports.