Show:
Economy's income and expenditure
Measurement Of Gross Domestic Product
Components of GDP
Real Versus Nominal GDP
Is GDP a good measure of economic well-being?
100
What does GDP stand for?
Gross Domestic Product
100
What is the market value of all final goods and services produced within a country in a given period of time?
GDP
100
What are the four components of GDP?
Consumption, Investment, government purchases, and net exports
100
What is the production of goods and services valued at current prices?
Nomial GDP
100
GDP per person tells us the income and expenditure of the ________ person in the economy
average
200

What two things does GDP measure?

The total income of everyone in the economy and total expenditure on the economy's output of goods and services

200
What does GDP exclude from measuring because it is so difficult?
Items produced and sold illicitly (illegal drugs), items produced and consumed at home that never enter the marketplace
200
Is buying a house an investment or consumption?
The purchase of a new house is considered an investment. Hopefully, the money you spend on the house will in turn generate you more money when you sell, rent out, or use the house for your financial gain.
200
What is the production of goods and services valued at constant prices?
Real GDP
200
Why should policy makers care about GDP?
Although GDP is not a perfect measure of well-being, policymakers should care about it because a larger GDP means that a nation can afford better healthcare, better educational systems, and more of the material necessities of life.
300
GDP measures the flow of ________.
Money
300
Give an example of a tangible good and intangible service that GDP includes
food, clothing, cars; haircuts, housecleaning, doctor visits
300

What are government purchases? Give an example. 

Spending on goods and services by local, state, and federal governments; salaries of government workers and spending on public works

300
What is a better measure of economic well being? Why?
Real GDP is a better measure of economic well being because it is corrected for inflation
300
Why is GDP a good measure of economic well being for most-but not all- purposes?
GDP includes many things, but it also leaves out a lot of things as well. Example. 100 people with an annual income of $50,000 has a GDP of $5 million. A society in which 10 people earn $500,000 and 90 suffer still have a GDP of $5 million, but they are not equivalent.
400
How can an economy's income be the same as its expenditure?
Every transaction has two parts to it: a buyer and a seller. If someone spends a dollar, that dollar is an income for someone else.
400
What is the difference between intermediate goods and final goods?
Intermediate goods are goods that go into the production of final goods An example of such would be the wool (intermediate good) that goes into the production of the final good (sweater)
400
What are Net Exports? Give an example that would increase net exports.
Net exports are spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports). A domestic firm's sale to a buyer in another country, such as the Boeing sale to British Airways, increases net exports.
400
What is the goal in computing GDP?
GDP is used to measure how well the overall economy is performing. Because GDP measures the economy's production of goods and services, it reflects the economy's ability to satisfy people's needs and desires.
400
Larger GDP is correlated with a _______ higher standard of living such as ________.
Higher; life expectancy, adult literacy rate, internet usage
500
Which contributes more to GDP -- the production of an economy car or the production of a luxury car? Why?
The production of a luxury car contributes more to GDP because it would require more money and resources to produce compared to those required to produce an economy car.
500
What contributes more to GDP- the production of a pound of hamburger or the production of a pound of caviar? Why?
A pound of caviar contributes more to GDP because it costs more than a pound of hamburger. The contribution to GDP is measured by market value and the price of a pound of caviar is much higher than the price of a pound of hamburger.
500
What is the equation for finding GDP?
Y = C + I + G + NX
500
What is GDP deflator and how is it calculated?
A measure of the price level calculated as the ratio of nomial GDP to real GDP times 100; reflects the prices of goods and services but not the quantities produced
500
List four things that GDP excludes the value of
Leisure, clean environment, beauty of poetry, quality of education, health of children, intelligence, etc.