The three approaches to measuring economic activity are the
product, income, and expenditure approaches
The value of a producer's output minus the value of the inputs it purchases from the other producers is called the producer's
value added
The Bigdrill company drills for oil, which it sells for $200 million to the Bigoil company to be made into gas. The Bigoil company's gas is sold for a total of $600 million. What is the total contribution to the country's GDP from companies Bigdrill and B
$600 million
Sam's Semiconductors produce computer chips, which it sells for $10 million to Carl's Computer Company (CCC). CCC's computers are sold for a total of $16million. What is the value added to CCC?
$6 million
The Compagnie Naturelle sells mounted butteflies, using butterfly bait it buys from another firm for $20,000. It pays its workers $35,000, pays $1000 in taxes, and has profits of $3,000. What is the value added?
$39,000
To ensure that the fundamental identity of national income accounting holds, changes in inventories are
treated as party of expenditure
To what extent are homemaking and child-rearing accounted for in the governments GDP accounts?
Only to the extent that they are provided for pay
The measurement of GDP includes
estimated values of activity in the underground economy
Which of th following is included in U.S. GDP?
a newly constructed house
Because government services are not sold in markets
they are valued at their cost of production
Intermediate goods are
goods that are used up in the production of other goods in the same period that they were produced
Capital Goods are
final goods because they are not used up during a given year
Marvin's Metal Company produces screws that it sells to Ford, which uses the screws as a component of its cars. In the national income accounts, the screws are classified as
intermediate goods
Fred the farmer purchased 5 new tractors at $20,000 each. Fred sold his old tractors to other farmers for $50,000. The net increase in GDP of these transactions was
$100,000
Inventories include each of the following EXCEPT
office equpment
GDP differs form GNP because
GDP=GNP - net factor payments from abroad
If an American construction company build a roda in Kuwait, this activity would be
included in U.S. GNP only for that portion that was attributable to American capital and labor
Nations such as Egypt and Turkey may have wide differences between GNP and GDP because both the countries
have a large number of citizens working abroad
If C = 500 I = 150 G = 100 NX = 40 and GNP = 800, how much is NFP?
10
The income expenditure identity says that
Y = C+I+G+NX
Which of the following is no a category of consumption spending in the national income accounts?
Housing purchases
Consumer spending is spending by ____ households on final goods and services produced ______
domestic;domestically and abroad
In the expenditure approach to GDP, which of the following would be excluded form measurements of GDP?
Government payments for welfare
Net national product equals
gross national product minus depreciated
Monica grows coconuts and catches fis. Last year she harvested 1500 coconuts and 600 fish. She values one fish as having a worth of 3 coconuts. She gave Rachel 300 coconuts and 100 fish for helping her harvest coconuts and catch fish, all of which were co
900 fish
Monica grows coconuts and catches fis. Last year she harvested 1500 coconuts and 600 fish. She values one fish as having a worth of 3 coconuts. She gave Rachel 300 coconuts and 100 fish for helping her harvest coconuts and catch fish, all of which were co
1100 fish
Private disposable income equals
GNP - taxes + transfers + interest
The value of a household's assets minus the value of its liabilities is called
wealth
If a local government collects taxes of $500,000, has $350,000 of government consumption expenditures, makes tranfer payments of $100,000, and has no interst payments or investment, its budget would
show a surplus of $50,000
The government budget surplus equals
net government receptis minus government purchases
National savings equals private saving plus government saving, which in turn equals
GDP + NFP - C - G
The uses-of-saving identity says that an economy's private saving is used for
investment, the government budget deficit and the current account
The uses-of-saving identity shows that if they government budget deficit rises, then one of the following must happen
Private saving must rise, investment must fall, and/or the current account must fall
In 2002, private saving was $1590 billion, investment was $1945 billion, and the current account balance was -$489 billion. From the uses-of-saving identity, how much was government saving?
-$134 billion
In 2002, national saving was $1456 billion, investment was $1945 billion, and private saving was $1590 billion. How much was the current account balance?
-$489 billion
In the mid-to-late 1980's, the United States had "twin deficits" because both _____ and ____ were negative
government saving; the current account
The country of Old Jersey produced milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon.
Between 2003 and 2004 nominal GDP grew by
190.0%
The value of real GDP in the current year equals
The value of current-year output in prices of the base year
The country of Old Jersey produced milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon.
Between 2003 and 2004, the percent change in real GDP (based on 2003 as a base ye
60%
The country of Old Jersey produced milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon.
Between 2003 and 2004, the GDP deflator (based on 2003 as a base year) was
81.25%
Currently, the US national income and product accounts (NIPA) use what type of price index to calculate real GDP?
Chain-weight
If nominal GDP for 2003 is $6400 billion and ral GDP for 2004 is $6720 billion (in 2003 dollars), then the growth rate of real GDP is
5%
If the price index was 100 in 1990 and 120 in 2000, and nominal GDP was $360 billion in 1990 and $480 billion in 2000, then the value of 200 GDP in terms of 1990 dollars would be
$400 billion
Nominal GDP in 1970 was $1,035.6 billion, and in 1980 it was $2,784.2 billion. The GDP price index was 30.6 for 1970 and 60.4 for 1980, where 1992 was the base year. Calculate the percent in real GDP in the decade from 1970 to 1980. Round off to the neare
36%
Nominal personal consumption expenditure in the United States wer $1760.4 billion in 1980 and rose to $3839.3 billion in 1990. The price index for personal consumption expenditures was 58.5 for 1980 and 92.9 for 1990, where 1992 was the base year. calcula
37%
A chain-weight price index
is an average of fixed-weight and variable-weight indexes
A disadvantage of chain-weighting is that
the components of real GDP dont sum to real GDP
The U.S. inflation rate ____ in the 1960s and 1970s, _____ in the 1980s, and _____ in the 1990s
rose; fell sharply; remained low
In 2002 GDP delator for Old York was 300, and in 2004 it had risen to 330.75. Based on this information the annual average inflation rate for the two years was
5%
If the price index last year was 1.0 and today it was 1.4, what is the inflation rate over this period?
40%
You are given information on the consumer price index (CPI), where the values given are those fro December 31 of each year
In which year was the inflation rate the highest?
1990
The consumer price index (CPI) was 180 for 2002 when using 2983 as a base year (1983=100). Now suppose we switch and use 2002 as the base year (2002 = 100). What is the CPI for 1983 with the new base year?
55.6
The Boskin commission included that eh CPI overstates increase in the cost of living by _____ percentage point(s) per year
1 to 2
The CPI may overstates inflation for all the following reason EXCEPT
changes in Social Security benefits
The nominal interest rate minus the inflation rate is the
real interest rate
By Marks buys a one-year German government bond (called a bund) for $400. He receives principal and interest totaling $436 on year later. During the CPI rose from 150 to 162. The nominal interest rate on the bod was ____ and the real interest rate was ___
9%; 1%
The expected real interest rate (r) is equal to
nominal interest rate minus expecte inflation rate
By Marks buys a one-year German government bond (called a bund) for $400. He receives principal and interest totaling $436 on year later. During the CPI rose from 150 to 162, but he had though the CPI would bet at 159 by the end of the year. By Marks had
3%; 1%
Historical analysis of real interest rates in the United States shows that
real interest rates were unusually low in the 1970s and unusually high in the 1980s