the value of all final goods and services produced domestically.
question
Consumption in the United States is about ____________ of GDP, and it moves
relatively little over time.
answer
68%
question
The demand measure of GDP accounting adds together:
answer
consumption, investment, government purchases, and trade balance.
question
Which of the following are most likely classified by economists as consumer durable
goods?
answer
automobiles, furniture
question
Gross Domestic Product equals $1.2 trillion. If consumption equals $690 billion,
investment equals $200 billion, and government spending equals $260 billion, then:
answer
exports exceed imports by $50 billion
question
In order to avoid double counting, statisticians just count the __________________.
answer
final goods and services
question
Which of the following is not counted as a part of GDP?
answer
the purchase of 100 shares of AT&T stock by your grandfather.
question
_________ are now the largest single component of the supply side of GDP,
representing over half of GDP.
answer
services
question
_________ is calculated by taking _________ and then subtracting the value of how
much physical capital is worn out, or reduced in value because of aging, over the course
of a year.
answer
NNP GNP
question
GDP does not directly include:
answer
the value of intermediate goods sold during a period
question
A business cycle reflects changes in economic activity, particularly real GDP. The
stages of a business cycle are:
answer
expansion, peak, recession, trough
question
If imports exceed exports, as in recent years, then __________ exists.
answer
a trade deficit
question
In 1980 Denmark had a GDP of $70 billion (measured in U.S. dollars) and a
population of 5.1million. In 2000, Denmark had a GDP of $160 billion (measured in U.S.
dollars) and a population of 5.3 million. By what percentage did Denmark's GDP per
capita rise between 1980 and 2000?
answer
120%
question
India has a GDP of 23,000 billion Indian rupees, and a population of 1.1 billion. The
exchange rate is 50 rupees per U.S. dollar. Calculate the GDP per capita of India as
measured in U.S. dollars.
answer
$418
question
In 1990, the GDP of Canada was $680 billion as measured in Canadian dollars, and
the exchange rate was that $1 Canadian was worth 85 U.S. cents. In 2000, the GDP of
Canada was $1000 billion as measured in Canadian dollars, and the exchange rate was
that $1 Canadian was worth 69 U.S. cents. By what percentage did the GDP of Canada
increase from 1990 to 2000 in Canadian dollars?
answer
47%
question
The gap between exports and imports in a nation's economy is called the
answer
trade balance
question
. _______________, which can be approximated by the growth of gross domestic
product, ultimately determines the prevailing standard of living in a country.
answer
economic growth
question
Which of the following statements is true?
A. GDP includes spending on recreation and travel, but it does not cover leisure time.
B. GDP does not include production that is exchanged in the market, but it does cover
production that is not exchanged in the market.
C. GDP does not include newly produced goods and services, but counts the buying and
selling of previously existing assets
D. GDP includes production that is not exchanged in the market
answer
GDP includes spending on recreation and travel, but it does not cover leisure time.
question
The difference between nominal GDP and real GDP is:
answer
real GDP adjusts for inflation
question
The nominal value of any economic statistic refers to the number that is actually
announced at that time, while the ________________ refers to the statistic after it has
been adjusted for inflation.
answer
real value
question
Gross Domestic Product (GDP)
answer
is the value of the final
output of all goods and services produced within a country in
a year.
question
Double Counting
answer
is a potential mistake to be avoided in
measuring GDP, in which output is counted more than once
as it travels through the stages of production.
question
Intermediate Good
answer
is output provided to other businesses at
an intermediate stage of production, not for final users
question
Investment
answer
refers to the purchase of new capital goods, i.e., new
commercial real estate (e.g. buildings, factories, stores) and
equipment, residential housing construction, and inventories,
NOT the purchase of stocks and bonds or the trading of financial
assets. Inventories that are produced this year are included in
this year's GDP, even if not sold yet.
question
Trade Balance
answer
is the gap between exports and imports
question
Trade Deficit
answer
exists when a nation's imports exceed its exports
and is calculated as imports minus exports.
question
Trade Surplus
answer
exists when a nation's exports exceed its imports
and is calculated as exports minus imports.
question
how to calculate GDP
answer
GDP = Consumption + Investment + Government Spending + (export - import)
question
Gross National Product
answer
includes what is produced
domestically and what is produced by domestic labor and
business abroad in a year.
question
Net National Product
answer
GNP subtracts the value of how much
physical capital is worn out, i.e., depreciation.
question
National Income
answer
includes all income earned: wages, profits,
rent, and profit income.
question
nominal value
answer
the economic statistic actually announced
at that time, not adjusted for inflation; measured in terms
of actual prices that exist at the time.
question
real value
answer
an economic statistic after it has been
adjusted for inflation.
question
Base Year
answer
is the year whose prices are used to compute
the real statistic.
question
adjusting nominal values to real values
answer
nominal GDP = gdp deflator x real gdp
question
how to calculate real GDP
answer
Real gdp = 100 x Nominal GDP/Price Index
question
business cycle
answer
the relatively short-term movement of
the economy in and out of recession.
question
Recession
answer
a significant decline in national output.
question
Depression
answer
an especially lengthy and deep decline in
output.
question
Peak
answer
during the business cycle, the highest point of
output before a recession begins.
question
trough
answer
during the business cycle, the lowest point of
output in a recession, before a recovery begins.
question
when comparing the GDP of different nations
answer
1) First, the GDP of a country is measured in its own
currency, and comparing GDP between two countries
requires converting to a common currency.
2) A second issue is that countries have very different
numbers of people.
question
exchange rate
answer
the price of one currency in terms of
another currency.
question
Market Exchange Rates
answer
vary on a day-to-day basis
depending on supply and demand in foreign exchange
markets.
question
PPP-Equivalent Exchange Rates
answer
provide a longer run
measure of the exchange rate, which is typically used for
cross country comparisons of GDP.
question
how to convert GDP to a common currency
answer
brazils GDP in $ US = brazil's GDP in reals/ exchange rate (reals/$ US)
question
GDP per capita
answer
the GDP per person in a country.
GDP per capita = GDP ÷Population
question
Standard of Living
answer
all elements that affect people's
happiness, whether these elements are bought and sold in
the market or not, a broader term than GDP.
question
Limitations of GDP as a Measure of the Standard of Living:
answer
-GDP does not cover leisure time;
-GDP does not include actual environmental cleanliness,
health, and learning;
- GDP does not count home production or underground
economy;
-GDP has no saying about the level of inequality;
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