Chapter 2

14 October 2022
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The agency responsible for compiling the National Income Product Accounts for the U.S. economy is the:
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Bureau of Economic Analysis
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The system that measures the economy's overall performance is formally known as:
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National income accounting
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GDP is the:
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monetary value of all final goods and services produced within the borders of a nation in a particular year.
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National income accountants can avoid multiple counting by:
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only counting final goods.
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Gross domestic product (GDP) measures and reports output:
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in dollar amounts.
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Final goods and services refer to:
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goods and services purchased by ultimate users, rather than for resale or further processing.
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The concept of net domestic investment refers to:
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total investment less the amount of investment goods used up in producing the year's output
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GDP can be calculated by summing
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consumption, investment, government purchases, and net exports.
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In national income accounting, consumption expenditures include:
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consumer durable goods, consumer nondurable goods, and services.
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Net exports are:
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exports less imports.
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The largest component of total expenditures in the United States is:
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consumption.
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Government purchases include government spending on:
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government consumption goods and public capital goods.
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Transfer payments are:
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excluded when calculating GDP because they do not reflect current production.
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Corporate profits are found by:
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summing corporate income taxes, dividends, and undistributed corporate profits.
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The largest component of national income is:
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compensation of employees.
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Which of the following best defines disposable income?
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income received by households less personal taxes
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The amount of after-tax income received by households is measured by:
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disposable income.
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Nominal GDP is:
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he sum of all monetary transactions involving final goods and services that occur in the economy in a year.
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Real GDP refers to:
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GDP data that have been adjusted for changes in the price level.
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A price index is:
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a comparison of the current price of a market basket to a fixed point of reference.
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Historically, real GDP has increased less rapidly than nominal GDP because:
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the general price level has increased.
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If nominal GDP rises:
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real GDP may either rise or fall.
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Real GDP is:
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the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.
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In determining real GDP, economists adjust the nominal GDP by using the:
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GDP price index.
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Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being?
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the child-care services provided by stay-at-home parents
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Which of the following activities is excluded from GDP, causing GDP to understate a nation's production?
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goods and services produced in the underground economy
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The GDP tends to:
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understate economic welfare because it does not take into account increases in leisure.