measures total income of everyone in the economy and total expenditure on the economy's output of goods and services correct answers gross domestic product (GDP)
Every dollar of you spend is a dollar of _________________ for someone else. correct answers income
the market value of all final g...
EC 111 Exam 2 || A+ Verified Solutions.
measures total income of everyone in the economy and total expenditure on the economy's
output of goods and services correct answers gross domestic product (GDP)
Every dollar of you spend is a dollar of _________________ for someone else. correct answers
income
the market value of all final goods and services produced within a country in a given period of
time correct answers gross domestic product (GDP)
What is the formula for GDP? correct answers Y=C+I+G+NX
what is the formula for NX? correct answers exports-imports (EX-IM)
what are the four components of GDP? correct answers consumption, investment, government
purchases, and net exports
what is the biggest component of GDP? correct answers consumption
total spending by households on goods and services correct answers consumption
how is housing included in consumption? correct answers For renters, monthly rent is included
in GDP because it is a current service.
For homeowners, consumption includes the imputed rental value of a house, but not the purchase
price or mortgage payments.
(owning and living in a house IS a current consumption, but most houses sold on the market are
used, so they look at a house that is similar to your house that is being rented and compute that)
the money we pay for APLIA is an example of what GDP component? correct answers
consumption
what business spend on goods and services and use them to produce more goods correct answers
investment
how are inventories counted in the investment component of GDP? correct answers only count
going into inventory, but not coming out because it would be double counting
goods produced, but not yet sold correct answers inventory
what does the investment component include? correct answers capital equipment (machines,
tools, technology), structures (factories, office buildings), inventories, houses (called residential
fixed investment)
T or F: Investment means the purchase of financial assets like stocks and bonds in economics.
correct answers false
, How are houses included in the investment component of GDP? correct answers the house must
be brand new, recently constructed, and never been lived in
If a mechanic buys a wrench, it falls under ________________. If I bought a wrench, it falls
under ______________. correct answers investment; consumption
all spending on goods and services purchased by the government at the federal, state, and local
levels correct answers government purchases
when the government spends money on defense or highways it is included under what
component of GDP? correct answers government purchases
why does the government purchase component of GDP exclude transfer payments, such as social
security, welfare, and unemployment? correct answers because they are not goods or services
represent foreign spending on the economy's goods and services correct answers exports
the portions of C,I, and G that are spent on goods and services produced abroad correct answers
imports
why is the U.S.'s net exports always negative? correct answers U.S. imports outweigh our
exports
What happens when: Debbie spends $200 to buy her husband dinner at the finest restaurant in
Boston. correct answers consumption and GDP rise by $200
What happens when: Sarah spends $1,800 on a new laptop to use in her publishing business. The
laptop was built in China. correct answers investment rises by $1,800, net exports fall by $1,800,
so GDP remains unchanged
What happens when: Jane spends $1,200 on a computer to use in her editing business. She got
last year's model for a great price from her local manufacturer. correct answers current GDP and
investment do not change because computer was built last year
What happens when: General Motors builds $500 million worth of cars, but consumers only buy
$470 million worth of them. correct answers consumption rises by $470 million, inventory
investment rises by $30 million, and GDP rises by $500 million
why does GDP exclude the unpaid housework you do for yourself? correct answers goods are
valued at their market prices and it excludes any goods or services that don't have a market value
would going out to eat be included in GDP? correct answers yes
intended for the end user correct answers final goods
are final goods counted in GDP? correct answers yes
used as the components or the ingredients of other goods correct answers intermediate goods
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller FullyFocus. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.89. You're not tied to anything after your purchase.
