Chapter 5 – Measuring The Economy's Output

Question 0

GDP

Answer 0

The total market value of all final goods and services produced annually within the boundaries of Canada.

Question 1

National income accounting

Answer 1

The techniques used to measure the overall production of the economy and other related variables for the nation as a whole.

Question 2

Intermediate goods

Answer 2

Products purchased for resale or further processing or manufacturing.

Question 3

Final goods

Answer 3

Goods and services purchased for final used and not for resale or further processing or manufacturing.

Question 4

Multiple counting

Answer 4

Wrongly including the value of intermediate goods in the GDP.

Question 5

Value added

Answer 5

The value of the product sold by a firm, less the value of the product purchased and used by the firm to produce the product.

Question 6

Expenditures approach

Answer 6

The method to measure GDP that adds up all the expenditures made for final goods and services.

Question 7

Income approach

Answer 7

The method to measure GDP that adds up all the income generated by the production of final goods and services.

Question 8

Personal consumption expenditures

Answer 8

The expenditures of household for durable and nondurable consumer goods and services.

Question 9

Durable goods

Answer 9

Product with expected lives of three years or more.

Question 10

Nondurable goods

Answer 10

Product with expected lives of less than three years.

Question 11

Services

Answer 11

The work done by service providers.

Question 12

Gross investment

Answer 12

Expenditures for newly produced capital goods such as machinery, equipment, tools, and buildings, and for additions to inventories.

Question 13

Noninvestment transaction

Answer 13

An expenditure for stocks, bonds, or secondhand capital goods.

Question 14

Net investment

Answer 14

Gross investment - consumption of fixed capital.

Question 15

Capital consumption allowance

Answer 15

Estimate of the amount of capital worn-out are used up in producing the GDP; also called depreciation.

Question 16

Capital shock

Answer 16

The total available capital in the nation.

Question 17

Government purchases

Answer 17

The expenditures of all government and the economy for final goods and services.

Question 18

Government Transfer payment

Answer 18

The disbursement of money by government which government receives no currently produced a good or service in return.

Question 19

Exports

Answer 19

Goods and services produced in a nation and sold to customers in other nations.

Question 20

Imports

Answer 20

Spending by individuals, friends, and government for goods and services produced in foreign nations.

Question 21

Net exports

Answer 21

Exports minus imports.

Question 22

National income

Answer 22

Total income earned by resource suppliers for the contributions to gross national product; equal to the GDP minus non income charges, minus net foreign factor in town.

Question 23

Corporate income tax

Answer 23

A tax levied on the net income of corporations.

Question 24

Undistributed corporate profits

Answer 24

After-tax corporate profits not distributed as dividends to shareholders; corporate or business savings; also called retained earnings

Question 25

Interest income

Answer 25

Payments of income to those who supplied the economy with capital.

Question 26

Indirect taxes

Answer 26

Sales taxes, business property taxes, and customs duties, which firms treat as cost of producing a product.

Question 27

Sales tax

Answer 27

A tax levied on the cost of a broad group of products.

Question 28

Consumption of fixed capital

Answer 28

Estimate of the amount of capital worn-out or used up in producing the gross domestic product; also called depreciation.

Question 29

Personal income or PI

Answer 29

The earned and unearned income available to reserve suppliers and others before the payment of personal income taxes

Question 30

Personal income tax

Answer 30

The tax levied on the taxable income of individuals, households, and unincorporated firms.

Question 31

Disposable income or DI

Answer 31

Personal income minus personal taxes.

Question 32

The value of money

Answer 32

The quantity of goods and services for which a unit of money can be exchanged; the purchasing power of the unit of money; the reciprocal of the price level.

Question 33

Nominal GDP

Answer 33

GDP measured in terms of the price level at the time of measurement.

Question 34

Real GDP

Answer 34

Nominal GDP adjusted for inflation.

Question 35

Price Index

Answer 35

And index number that shows how the weighted average price of the market basket of goods and services changes through time.

Question 36

Base year

Answer 36

The year with which other years are compared when an index is constructed; for example, the base year for a price index.

Question 37

Deflating

Answer 37

Finding the real GDP by increasing the dollar value of the GDP for year in which prices were higher than in the base year.

Question 38

Inflating

Answer 38

Determining real GDP by increasing the dollar value of the nominal GDP in the year in which prices are lower than in the base year.

Question 39

GDP deflator

Answer 39

An implicit price index calculated by dividing nominal GDP by real GDP and multiplying by 100