Econ Ch. 12 Test

Question 1

The total dollar value of all final goods and services a nation’s industries produce within its borders in one year

Answer 1

Gross domestic product (GDP)

Question 2

goods and services that producers sold to ultimate users

Answer 2

final goods and services

Question 3

how the government reports the basic GDP figure

Answer 3

Nominal GDP

Question 4

Nonfinal goods, someone purchases to resell immediately or to incorporate into other goods

Answer 4

intermediate goods

Question 5

Goods with a life expectancy of more than one year (vehicles, furniture, major appliances)

Answer 5

Durable goods

Question 6

Items that consumers expect o go through or use within one year (shoes, soap, gas)

Answer 6

Nondurable goods

Question 7

Include purchaces such as haircuts, tax prep, education

Answer 7

Consumer Services

Question 8

The sum of all business spending on capital investment and unplanned inventories

Answer 8

Gross Private Domestic Investment (GPDI)/business investment

Question 9

The difference between the dollar amount a nation takes in from the sale of exports and the dollars remaining for the nation to purchase imports

Answer 9

Net exports

Question 10

Formula for calculating GDP

Answer 10

GDP = C + I + G + NX

Question 11

Price index that rises as the price of all goods and services rises

Answer 11

GDP Implicit Price Deflator (GDP Deflator)

Question 12

How to calculate real GDP

Answer 12

real GDP = GDP Deflator x100

Question 13

Four economic groups that determine GDP

Answer 13

House, Business, Government, Foreign Exports

Question 14

negative balance of trade

Answer 14

Trade deficit

Question 15

positive balance of trade

Answer 15

Trade surplus

Question 16

Government’s payment to producer to help with manufacturing costs

Answer 16

Subsidy

Question 17

Claims policies will protect domestic manufacturing and jobs

Answer 17

Protectionist

Question 18

Claims policies are best way to move the economy forward

Answer 18

Free TRade

Question 19

6 reasons for a trade deficit

Answer 19

Domestic inability to produce goods, better quality of foreign goods, cheaper foreign materials, lower foreign wages, lower foreign capital cost, foreign subsidies

Question 20

2 ways protectionists propose accomplishing goals

Answer 20

Trade quotas and tariffs

Question 21

4 ways economists determine GDP

Answer 21

nominal GDP, Sale of final goods, produced past year, produced domestic goods