Week 4- Measuring nation's income problem set

Question 1

Inflation: When economy’s overall price is____

Answer 1

Rising.

Question 2

Inclusion in the investment component of GDP: Spending on___

Answer 2

New business equipment such as power tools but not spending on stocks and bonds.

Question 3

Real GDP includes___

Answer 3

yearly production of final goods valued at constant prices.

Question 4

Recession occurs when___

Answer 4

real GDP declines for 2 consecutive quarters.

Question 5

Transfer payment is a form of___

Answer 5

gov’t spending that is not made in exchange for a currently produced goods.

Question 6

Department of Commerce computes US GDP___

Answer 6

every 3 months.

Question 7

GNP____

Answer 7

GDP + income earned by US citizens abroad – income that foreign citizens earned in US.

Question 8

GDP includes___

Answer 8

o Value of all goods produced w/I a country
o Including foreigners working in US; excluding production by US residents by foreign countries.
o Used to monitor performance of overall economy

Question 9

In 2009, consumption

Answer 9

represented 70% of GDP.

Question 10

Nominal GDP values production at___

Answer 10

current prices.

Question 11

Real GDP values production at___

Answer 11

constant prices.

Question 12

Gov’t purchases include spending on goods by___

Answer 12

federal, state, and local gov’t.

Question 13

In a Simple circular flow diagram, firms use money they get from sale to___

Answer 13

pay workers, rent, and firm owners.

Question 14

Basic tool of supply and demand are___

Answer 14

central to macroeconomics analysis as well as microeconomic analysis.

Question 15

When studying changes in economy over time, economists want to study___

Answer 15

real GDP.

Question 16

In Simple Circular flow diagram, household buy goods w/ income they get from___

Answer 16

wages, rents, and profits.

Question 17

National income measures the total income of____

Answer 17

a nation’s permanent residents in production of goods.

Question 18

Inflation rate measures the____

Answer 18

% change in price level from 1 period to another.

Question 19

Depreciation is the____

Answer 19

consumption of fixed capital.

Question 20

Change in GDP deflator reflects___

Answer 20

only changes in prices.

Question 21

GDP per person tells us income and expenditure of___

Answer 21

average person in the economy.