chapter 6.1 part 4 Flashcards
What are long lasting durable goods compared to?
They are about the same share of the economy as short lasting non-durable goods.
What does the category of inventories include?
Goods that one business has produced but has not yet sold to consumers, and are still sitting in warehouses and on shelves.
When does the inventory sitting on shelves tend to decline or increase?
Declines if business is better than expected or increases if business is worse than expected.
What is GDP a measure of?
What is produced in a nation.
What is the primary way GDP is estimated?
The Expenditure Approach.
How does the National Income Approach work?
Everything that a firm produces when sold becomes revenue to the firms. Businesses use revenues to pay their bills: wages and salaries for labor, interest and dividends for capital, rent for land, profit to the entrepreneur, etc. So, adding up all the income produced in a year is the second way for measuring GDP.
What is the total value of a nation’s output equal to?
The total value of a nation’s income.
What is GDP?
The current value of all final goods and services produced in a nation in a year.
What mistake must statisticians who calculate GDP avoid?
Double counting.
How do government statisticians avoid double counting?
They count just the value of final goods and services in the chain of production that are sold for consumption, investment, government, and trade purposes.
What are intermediate goods?
Goods that go into producing other goods.
How much GDP does the decentralized, market-oriented economy calculate?
21 trillion US dollars.
What do brigade of government statisticians do?
They have a full-time job calculating the US GDP and how it changes every couple of months.
