Chapter 8 Flashcards
GDP may be defined as:
the monetary value of all final goods and services produced within a nation in a given year
GDP can be calculated by adding:
gross investment, government purchases, consumption, and net exports
If Holmes pays Weiss $190, then:
we need more information to determine whether GDP has changed or not
National income accountants can avoid double counting by:
counting only final products
“Value added” refers to:
the difference between the value of a business’s output and the value of the resources that it has purchased from others
GDP includes:
final, but not intermediate, products
BGF Corporation buys $100 000 of sand, rock, and cement to produce ready-to-mix concrete. It sells 10 000 cubic meters of concrete at $30 per cubic meter. The value added by BGF Corporation is:
$200 000
Suppose that the total market value of all final goods and services produced in a particular country in a given year is $500 billion, and the total market value of final goods and services sold is $450 billion. We can conclude that:
inventories have increased by $50 billion
By adding up the dollar value of all sales in the economy during a given year, we would:
obtain a sum substantially larger than GDP
Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is:
$30
The term “final products” refers to:
products to be purchased by ultimate users that are not intended for resale or further processing
If intermediate goods and services were included in GDP, then:
GDP would be overstated
Which of the following is a final product?
a haircut
Which of the following is an intermediate product?
the purchase of pencils by a politician who is writing her memoirs
Economists define investment to include:
any increase in business inventories
If depreciation exceeds gross investment, it can be concluded that:
net investment is negative
When an economy’s capital stock is expanding:
gross investment exceeds depreciation
In 1933, net investment was -$5.8 billion. This meant that:
the production of 1933’s GDP used up more capital goods than were produced in that year
A nation’s capital stock will decline when:
depreciation exceeds gross investment
Which of the following is not considered to be part of gross investment?
the purchase of 100 shares of BMO by a retired business executive
