Which of the following items is included in gross private domestic investment
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an increase in business inventories
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Goods that are produced in a particular period but not sold in current period
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end up in inventories and are included in gross private investment
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in the U.S., since the 1950s, the share of employee benefits as a percentage of total employee compensation
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has been increasing
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Which of the following is included in gdp
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used care sales, new truck purchased by a building contractor, telephone service purchased for a home
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Disposable personal income
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is the income households have availability to spend on goods and services
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Which of the following is counted as consumption?
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the purchase of new car
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goods and services produced in the domestic economy and sold abroad are called
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exports
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Government expenditure is the largest single category of GDP
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False
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GDP includes ___expenditures but does not include ___ expenditures
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national defense; transfer payment
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Which of the following is an example of a transfer payment?
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a pension payment to a retired military person
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A trade deficit means that
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imports are larger than exports and GDP is thus lower
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gross domestic product
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is a flow variable
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The difference between gross investment and net investment is
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depreciation
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A measure of degree to which capital wears out or becomes obsolete during a period is
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depreciation
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In the generation of GDP, pollution often occurs, As a result
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GDP is not always a good measure of economic or social welfare
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Private investment plays a crucial role in the macro economy because it is
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an expenditure that adds to the economy's productivity capacity
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GDP is the sum of
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personal consumption, private investment, government purchases, and net exports
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The value of gross domestic product (GDP) differs from the value of gross national product (GNP) when
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production in one country employs factors of production owned by residents of other countries
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The value of an economy's total output of goods and services is called
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gross domestic product
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Transfer payments are
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payments that do not require a good or service in exchange.
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Which of the following would be included in the measurement of GDP?
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A federal government payments for jeeps, a purchase of California firm, employers' payments for employee's medical insurance
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As households eat out more, purchase more prepared foods at the grocery store, hire out child care services that they once performed themselves, what is likely to happen to the value of GDP
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the value of gdp is likely to increase
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Goods and services produced abroad and sold in the domestic economy are called
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imports
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Dividing real GDP by the population equals
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real GDP per capita
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The total volume of business sales in the economy is much larger than the value of GDP because
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the output approach to measuring GDP excludes intermediate transaction
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Which of the following is the best indicator of a nations overall economic performance
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A real GDP
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In the calculation of GDP, the value of a new house is included in
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private investment
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Which of the following items is part of private inestment
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new factory, inventory increase
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Which of the following is an example of a flow variable
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the interest rate you pay on your auto loan
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Changes in nominal GDP
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are due to changes in output and price while changes in real GDP are attributed to movements in output only.
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What is a value-added tax (VAT)?
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It is a tax placed on a product whenever is added at a stage of production and a final sale.
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Which of the following is the best measure for comparing the standard of living across countries?
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real gross national product per person
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GDP can be calculated by totaling either the
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market values of all final goods and services or the values added at all stages of production
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The official measure of private investment in computing GDP is
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gross private domestic investment
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An increase in real GDP from 2002 to 2006 necessarily indicates that
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quantities of goods and services produced increase between 2002 and 2006
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Social Security payments to U.S. citizens are called
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transfer payments and are not included in GDP
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Value added is defined as
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the amount by which the value of a firm's output exceeds the value of the goods and services the firm purchases from other firms.
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The amount by which the value of a firm's output exceeds the value of the goods and services the firm purchases from other firms is called
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value added
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GDP increases if you purchase General Motors stock
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False
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The largest component of factor income is
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employee compensation
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GDP is the total market value of all newly produced final goods and services produced within an economy during a year
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True
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Which of the following is true of the circular flow model?
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personal consumption spending flows from households to firms, the production of goods and services generates income to households. Consumers finance their personal consumption spending by supplying factors of production to firms
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For a homeowner, the rental value of the home is estimated and included in GDP
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True
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Government purchases include transfer payments
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False
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if we add up all the values added at every stage of production for a good, we will get
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the final value of the good
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All of the following are included in gross domestic income
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wages, welfare payments, rental income
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Which of the following is the best example of a final good or service?
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a song you downloaded for a fee from amazon.com
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The largest expenditure category in GDP is
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personal consumption
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A trade deficit occurs when
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exports are less than imports
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suppose a personal income in a nation equals $5 billion, and personal income taxes equal $1 billion. Disposable personal income equals
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$4 billion
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