Econ-Chapter 9

Question 1

Free markets work to max the value the creation of a nation

Answer 1

this value is :
consumed quickly
consumed slowly
saved for future use

Question 2

wealth

Answer 2

is a stock, accumulated past value that you have saved

Question 3

income

Answer 3

is a flow, reflects value creation

Question 4

in macroeconomics each unit of a good or service is valued at its

Answer 4

price

Question 5

final goods

Answer 5

those sold to a final user

Question 6

intermediate goods

Answer 6

those not sold to a final user

Question 7

gross domestic product, GDP

Answer 7

is the current market value of all final goods and services produced within the country’s borders in one year

Question 8

the largest GDP is the US with

Answer 8

over 16.8 tril

Question 9

GDP does not count all transactions that take place because there are no records or market values for some production, and

Answer 9

because other transactions would cause double counting

Question 10

GDP does NOT include

Answer 10

• production of underground illegal goods
• production of underground legal goods
• production that does not enter the markets
• sales of used goods (but the services of the middleman are)
• financial transactions
• government transfer payments
• value of leisure
• subtract bads

Question 11

transfer payments

Answer 11

taking from one person and giving to another but not in return for any good or service

Question 12

bads

Answer 12

unwanted phenomena

Question 13

the expenditure approach

Answer 13

to discuss GDP, we add up the current market value of all final goods and services

Question 14

the income approach

Answer 14

adds up all the payments to factors of production-the wages, interest, rents, and profits-generated by production

Question 15

in macroeconomics

Answer 15

input=output

Question 16

consumption

Answer 16

spending by consumers on nondurable goods, durable goods, and services

Question 17

investment

Answer 17

spending by business on capital (plant, equipment, tools, etc.), changes in business inventories, and spending on new residential housing

Question 18

government purchases

Answer 18

spending by all levels of government on goods and services

Question 19

net exports

Answer 19

exports-imports

Question 20

real GDP

Answer 20

which is what GDP would be if prices had remained the same as they were in a base year. this reflects only quantity changes

Question 21

economic growth

Answer 21

is the percentage change in real GDP

Question 22

we only look at..

Answer 22

growth rates in real GDP, which are the same, no matter which base year is used

Question 23

recession

Answer 23

two successive quarters of negative economic growth

Question 24

the business cycle

Answer 24

describes the ups and downs of the economy

Question 25

expansion

Answer 25

an increase in real GDP

Question 26

peak

Answer 26

real GDP is at a temporarily high

Question 27

contraction

Answer 27

when real GDP falls the economy suffers

Question 28

trough

Answer 28

real GDP is at a temporarily low

Question 29

recovery

Answer 29

when real GDP grows from the trough

Question 30

GDP tells us

Answer 30

the size of an economy for comparison, and is used to examine economic growth over time

Question 31

per capita GDP

Answer 31

GDP divided by the population, helps us measure the wellbeing of different countries

Question 32

per capita GDP does not take into account..

Answer 32

the distribution of income within a country