10.1: GDP, Income, and Expenditures

Question 1

· Aggregate output is…

Answer 1

The value of all the goods and services produced during a specified period.

Question 2

· Aggregate income is…

Answer 2

The value of all the payments earned by the suppliers of factors used in the production of goods and services.

Question 3

· Real GDP - real GDP that measures…

Answer 3

The total economic output of a country and is adjusted for changes in price.

Question 4

Real GDP is equal to nominal GDP divided by the GDP deflator scaled by 100:

Answer 4

Real GDP = Nominal GDP/(GDP deflator/100)

Question 5

· Nominal GDP is…

Answer 5

The value of goods and services measured at current prices (includes inflation).

Question 6

Nominal and real GDP can be expressed as:

Answer 6

Nominal GDPt = Pt × Qt

Question 7

· GDP deflator is a measure (gauge) of..

Answer 7

Prices and inflation that measure the aggregate changes in prices across the overall economy

*Also can be used to convert nominal GDP into real GDP).

Question 8

Formula for the GDP Deflator:

Answer 8

GDP deflator = Value of current year output at current year prices / Value of current year output at base year prices × 100

Question 9

· Relationship between saving, investment, the fiscal balance, and the trade balance is calculated as:

Answer 9

(S − I) = (G − T) + (X − M)

Question 10

An expression for GDP, based on the expenditure approach, is:

Answer 10

GDP = C + I + G + (X − M) = (C + G^C) + (I + G^I) + (X − M) 1

Question 11

Income approach:

Answer 11

GDP = Gross domestic income (GDI) = Net domestic income + Consumption of fixed capital (CFC) + Statistical discrepancy

Question 12

Household disposable income (HDI) = …

Answer 12

(HDI) = Household primary income - Net current transfers paid.

Question 13

· Household net saving = …

Answer 13

Household net saving = HDI - Household final consumption expenditures + Net change in pension entitlements.