LESSON 3 FINALS Flashcards
is the total market value of all final goods and services
produced annually within a country’s borders
GDP
is a good in the hands of the final user, the ultimate
consumer.
final good
is an input to the production of a final
good
intermediate good
refers to counting a good more than once
when computing GDP.
Double counting
If a family hires a person to clean, this is counted in GDP. If
the children do the cleaning, that doesn’t count.
Certain nonmarket goods and services.
Illegal goods and services are not counted in GDP
because no record exists of the related transaction. T OR F
TRUE
A used car sale does enter into the current year statistics because the car was counted when it was originally produced. T or F
FALSE
Trading of stocks and bonds is counted in GDP because it represents the production of new assets. T or F
FALSE
is a payment to a person that is not made in
return for goods currently supplied.
Government Transfer
Leisure is counted in GDP.T or F
FALSE
Goods expected to last for more than 3 years
Durable Goods
Goods that are not expected to last for more
than 3 years
Nondurable Goods.
Total domestic spending on foreign goods
Imports
Total foreign spending on domestic goods
Exports
is the value of the entire output produced annually
within a country’s borders, adjusted for price changes
Real GDP
has occurred if Real GDP in one
year is higher than Real GDP in the previous year. The growth
rate is computed as follow
Annual economic growth
Formula for % change in Real GDP
[(Real GDPlater year – Real GDPearlier year )/Real GDPearlieryear ] x100
Expenditure in the household sector is called
Consumption
Expenditure in the foreign sector is called
Net Export
Expenditure in the government sector is called
Government Purchases
Expenditure in the business sector is called
Investment
These refer to intangible items such as car repair, entertainment, etc.
Service
