Chapter 5: Measuring Economic Activity: GDP and Unemployment

question

The market value of all final goods and services produced within the borders of a given country during a given period of time is

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gross domestic product

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When attempting to measure total output, economists add up the ______ of different goods and services.

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market value

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By aggregating the market values of goods and services, more expensive, economy-wide items

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Receive a higher weighting than less expensive items

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Which of the following goods or services is NOT included in an aggregate measure of market values and, therefore, GDP?

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-under the table child care
- the contribution of homemakers
- black market/illegal products

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A good used in the production of other goods is called a(n) _____ good. A good that is consumed by its ultimate user is called a(n) _____ good.

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intermediate; final

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A nation's gross domestic product (GDP) is

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the total market value of all final goods and services produced in a country in a given period.

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The selling prices of goods and service in the open market is called the _____ value.

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market

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Goods and services that are used up in the production of final goods are called ______ goods.

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intermediate

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We measure gross domestic product by multiplying the quantities of goods and services by their respective prices because it allows us to

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aggregate the values of products in a common unit of measurement

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______ goods are included in the calculation of GDP, while ______ goods are not included.

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Final; intermediate

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Some goods and services that are not sold in markets ARE included in aggregated measures of GDP. The most important of these includes goods and services provided by the

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government

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A long-lived good that is used in the production of other goods and services is called a(n) _____.

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capital good

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Consumption goods, capital goods and services purchased by their ultimate users are called ______ goods.

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final

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Which of the following would be considered a capital good?

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-The oven in a restaurant
-The building in which a restaurant is located

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An intermediate good is _____.

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a good used only in the production of other products

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True or false: Intermediate goods are included in the calculation of GDP.

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False

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Which of the following are counted in GDP?

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Newly produced capital goods, final goods and services

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A(n) _____ good is a long-lived good that is used in the production of other goods and services.

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capital

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A final good is _____.

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-A good directly consumed by individuals or businesses
-Counted as part of GDP

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Gross domestic product calculations count only final goods and services because

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counting all intermediate goods and services would lead to double-counting of many activities.

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Which of the following would be considered a capital good?

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-The truck used by a landscaping company
-The lawnmower used by a landscaping company

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The market value of a firm's output minus the value of the inputs the firm has bought from other firms is called

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value added.

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Goods and services that are used up in the production of final goods are called _____ goods.

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intermediate

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Which of the following would positively contribute to U.S. GDP?

answer

-A Toyota Camry produced in Kentucky
-A meal purchased by a Japanese tourist in Chicago
-A Ford Escape produced in Kentucky

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True or false: Newly produced capital goods are included in GDP.

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True

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Secondhand sales are excluded from the calculation of GDP because they:

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are not produced in the current year

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Including the value of ______ (Enter one word in the blank.) goods along with the value of final goods in the calculation of GDP would amount to multiple counting of goods and distort GDP

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intermediate

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The _____ method of calculating GDP adds together the total amount spent by households, firms, the government and the foreign sector and subtracts the amount spent on imported goods and services.

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expenditure

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For any firm, value added refers to

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the difference in the market value of the firm's output and the cost of inputs purchased from other firms

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Which of the following would positively contribute to U.S. GDP?

answer

-Pizza made by an Italian family who owns a pizzeria in New York.
-A Hershey's chocolate bar made in the U.S. and purchased by an American while on vacation in Italy.

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Consumption expenditure ______.

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represents the largest component of GDP

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Indicate which of the following goods or services is included in the calculation of GDP for the year 2015.

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-Maple syrup produced by a Canadian company in Vermont.
-The fee paid to a salesperson who sold you a 2010 truck in 2015.

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___________ contains three basic subcategories.

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Consumption expenditure

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Which method of calculating GDP adds up consumption, investment, government purchases and net exports?

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The expenditure method

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Long-lived goods, such as appliances, are considered consumer _____

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durables

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Accountants, lawyers, and acupuncturists all fall into which of the following "consumption" categories?

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Services

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Which of the following is the largest category of GDP, as a percentage?

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consumption expenditure

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For the purposes of calculating GDP, the construction of new homes and apartment buildings is treated as

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an investment by the business sector.

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Spending by households on goods and services such as food, clothing and entertainment is known as ______ (one word) expenditure.

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consumption

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Suppose an auto manufacturer has 5,000 light-duty trucks left over on its lot at the end of the year 2016. In early 2017, the auto manufacturer sells the trucks to a dealer. How will the value of these trucks be added to GDP?

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The value of the trucks is included in GDP for 2016, since that is when they were produced.

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The expenditure method of calculating GDP adds together

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the total amount spent by households, firms, the government and the foreign sector and subtracts spending on imposed goods and services.

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Which of the following is NOT included in investment spending in calculating GDP?

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The purchase of stocks and bonds

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Short-lived goods such as food and clothing are considered consumer _____ (one word).

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nondurables

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Which of the following is NOT an example of a consumption expenditure?

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A fighter jet

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True or false: Government purchases include only federal purchases of final goods and services.

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False

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Residential ______ includes construction of new homes and new apartments.

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investment

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The addition of unsold goods and services to company inventories is _____.

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-included in GDP
-known as inventory investment

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For the purposes of GDP accounting, government purchases include:

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-the purchase of new military equipment
-spending on highway construction

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The purchase of financial assets such as stocks and bonds

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is NOT considered part of investment spending in calculating GDP.

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What are the three categories of consumption expenditure?

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-Nondurable consumer goods
-Services
-Durable consumer goods

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_____ include(s) all federal, state, and local government purchases of final goods and services.

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Government purchases

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Transfer payments are not included in GDP because they

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are not made in exchange for current goods and services.

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Which of following are components of government purchases in GDP?

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Expenditures for goods and services that government consumes in providing public services

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Which of the following would be considered government transfer payment?

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-Social security benefits
-Veteran's benefits
-Unemployment insurance benefits

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Transfer payments are not included in GDP because they do not generate ______ (one word).

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output

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Residential investment includes which of the following?

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-Construction of new homes
Construction of new apartments buildings

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Net exports include goods produced

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domestically that are sold abroad, less goods that are produced abroad that are sold domestically.

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Government transfer payments include all of the following except

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wage payments to police officers

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_____ should be subtracted from GDP because they were not produced in the United States.

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imports

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C + I + G + NX =

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Gross Domestic Product

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True or false: GDP can be viewed as the sum of labor income and capital income.

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True

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Net exports is exports minus

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imports

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Wages, salaries and the income of the self-employed are known as

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labor income.

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Imports must be subtracted from GDP because they are goods and services _____ the borders of the United States.

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produced outside

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Gross Domestic Product (GDP) may be calculated as the sum of:

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consumer spending, investment spending, government purchases of goods and services, and net exports.

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GDP can be thought of as _____.

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capital income plus labor income

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Capital income includes the payments made to the owners of _____.

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both physical capital and intangible capital

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GDP can be expressed as _____.

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-the total amount spent by households, firms and the government in addition to net exports
-the total market value of all final goods and services that are produced domestically each year
-labor income plus capital income

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Labor income

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consists of wages, salaries and the income of the self-employed.

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Nominal GDP measures the value of all goods and services

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at current-year prices.

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_____ GDP measures the physical volume of production.

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real

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Using the expenditure approach, which of the following defines the composition of GDP in an open economy?

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C + I + G + NX

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The payments made to the owners of physical capital and intangible capital is known as _____.

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capital income

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The market value of production, total expenditure, and total income are all ways to express

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GDP

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GDP calculated using current-year prices is called

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Nominal GDP

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Real GDP is a measure of GDP that

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adjusts for inflation

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Real GPD is a measure of GDP in which the quantities produced are valued at _____.

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the prices in a base year rather than at current-year prices

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True or false: A change in people's economic well-being is always reflected in GDP.

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False

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Additional leisure time enjoyed by a workforce overall is the likely result of

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Living in a wealthy society

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In countries where non-market activities are widespread, the official measure of GDP tends to be

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understated

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A measure of GDP in which the quantities produced are valued at prices in a base year rather than at current prices is _____ GDP

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real

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True or false: An increase in GDP always implies an increase in people's economic well-being.

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False

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When we choose to work less than our grandparents did and, in exchange, spend more quality time with family and friends, it means that

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-We are living in a society that is better off than our grandparents' generation.
-The opportunity cost of foregone earnings is lower than our grandparents.
-We emphasize leisure over specified earnings.

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The underground economy contains BOTH _____ and _____ activities, such as landscapers, babysitters, and organized crime.

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-legal
-illegal

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The fact that many unpaid services, such as volunteer firefighters, are not included in GDP measures indicates that

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their market values are difficult to assess.

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Real GDP ________ the total effect of economic growth by including decreases in environmental quality associated with rapid growth.

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does not capture

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Suppose the citizens of a medium-sized mountain town oppose the construction of a new "big box" strip mall even though it would generate much-needed jobs and tax revenue. Can this opposition be justified from an economic perspective?

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Yes. It would reduce the quality of life for residents.

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GDP is an imperfect measure of well-being since

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-it only measures production, not the distribution of the wealth.
-It does not capture the effects of income inequality.

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GDP is _____.

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an imperfect but useful measure of economic well-being

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Transactions that are never reported to government officials and data collectors occur in

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the underground economy.

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Compared to countries with a low GDP per person, countries with a high GDP per person tend to have _____.

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-higher life expectancy
-higher adult literacy rates
-lower infant mortality rates

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The exploitation of finite_____ _____ tends to be overlooked in GDP. (Enter one word in each blank.)

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natural resources

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Which of the following are "quality-of-life" indicators that are left out of GDP?

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Open space
Low crime rate

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Countries A and B both have the same GDP per capita. However, country B is much worse off in terms of economic well-being. How is this possible?

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The wealth of country B is likely concentrated in the hands of very few people.

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True or false: Economic policies should be evaluated strictly in terms of whether or not they increase GDP.

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False

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Which of the following factors are NOT included in the calculation of GDP?

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Crime rates
Poverty rates
Volunteer services

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On average, people countries with a high GDP per person have a _____ life expectancy at birth than do people in countries with a low GDP per person.

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higher

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Which of the following factors are NOT included in the calculation of GDP?

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Leisure time
Economic inequality
Environmental quality

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Which of the following workers would be classified as unemployed?

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Someone who hasn't worked in over a year, but who had a job interview three weeks ago

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Which of the following workers would the Bureau of Labor Statistics classify as out of the labor force?

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A retired school teacher who volunteers 4 hours a week at a local soup kitchen

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If there are 10,000 unemployed people and 100,000 employed people, then there are ______ people in the labor force (enter a numeric value).

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110,000

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The labor force is

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the total number of workers, including both the employed and the unemployed

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Which of the following people definitely would be classified as unemployed by the Bureau of Labor Statistics?

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Someone who hasn't worked in four weeks but who sent out 3-4 resumes last week

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Which of the following most accurately describes how to calculate the unemployment rate?

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(unemployed/labor force) × 100

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If there are 150,000 unemployed people and 1,200,000 employed people, then there are _____ people in the labor force (enter a numeric value).

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1,350,000

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The labor force is the total number of ______ and ______.

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employed; unemployed

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The unemployment rate is the

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fraction of the labor force that is unemployed.

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The unemployment rate is calculated by dividing the ______ by the ______.

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number unemployed; labor force

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If there are 5,000 unemployed people and 90,000 employed people, then there are _____ people in the labor force (enter a numeric value).

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95,000

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The unemployment rate is the percentage of the _____ that is unemployed.

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labor force

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Which of the following people definitely would be classified as unemployed by the Bureau of Labor Statistics?

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Someone who didn't work during the last week and who interviewed for a job two weeks ago

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If 11,000 people are employed, 2,500 people are unemployed and 3,000 people are not in the labor force, then what is the unemployment rate?

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18.5%

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The percentage of the working age population that is in the labor force is the _____.

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labor force participation rate

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If there are 500,000 working-age people in the population, 230,000 employed people and 20,000 unemployed people, the the labor force participation rate is _____.

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50%

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If 150,000 are employed, and there are 160,000 people in the labor force, then the unemployment rate is:

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6.25%

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Which of the following most accurately describes how to calculate the labor force participation rate?

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labor force/working−age population x 100

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The labor force participation rate is

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the percentage of the working age population in the labor force.

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The costs of unemployment include:

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-the stress and loss of self-esteem that might be experienced by the unemployed worker.
-the increase in the amount of unemployment insurance benefits that the government has to pay.
-the increase in the crime rate that might accompany higher unemployment.

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An unemployment spell is a period in which an individual is _____ unemployed.

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continuously

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If there are 200,000 working-age people in the population, 140,000 employed people and 10,000 unemployed people, the the labor force participation rate is _____.

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75%

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The labor force participation rate is calculated by dividing the ______ by the ______.

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labor force; working-age population

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Which of the following could be considered as a cost of unemployment?

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-Severe psychological costs to the job loser
-Higher crime, suicide and divorce rates
-The lost income that results from being unemployed
-Lower income tax revenue for the government

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A period during which an individual is continuously unemployed is known as an unemployment _____

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spell

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The length of an unemployment spell is called its _____.

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duration

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The duration of unemployment spells typically _____ during recessions.

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increases

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By not counting discouraged workers as unemployed, some argue that the official unemployment rate ______ the true extent of unemployment.

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understates

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Discouraged workers are people who

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say they would like to have a job, but have made no effort to find one in the past four weeks.

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The length of an unemployment spell is called its

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duration

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Workers who would like to work full-time, but can find only part-time work are

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involuntary part-time workers.

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During recessions, the duration of unemployment spells ______.

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increases

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Some argue that the official unemployment rate understates the true extent of unemployment because it does not count which of the following as unemployed?

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Discouraged workers
Involuntary part-time workers

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People who say they would like to have a job but have not made an effort to find one in the past four weeks are known as _____ workers.

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discouraged

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Involuntary part-time workers are workers who

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would like to work full-time, but are able to find only part-time work.

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Quiz

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Got 320/350 91.83%

Here are the question numbers and their respective flashcard numbers that I am unsure of.

Quest. 2 Card 136
Quest. 4 Card 138
Quest. 6 Card 140
Quest. 21 Card 155
Quest. 25 Card 159
Quest 30 Card 163

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Labor income includes

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wages, salaries, and earnings of the self-employed.

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The following provides data for an economy in a certain year.

Given the data, compute the value of GDP.

answer

$150

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Kenan's Barber Shop cut 3,000 heads of hair in 2019 and 3,100 in 2020. The price of a haircut was $7 in 2019 and $8 in 2020. If 2019 is the base year, what was Kenan's contribution to real GDP in 2019?

answer

$21,000

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The following table provides data for an economy in a certain year:

Given the data, compute the investment component of GDP.

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$900

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Data for an economy shows that the unemployment rate is 10 percent, the participation rate 80 percent, and 200 million people 16 years or older are not in the labor force. How many people are unemployed in this economy?

answer

B. 1.0 billion

Since the participation rate is 80 percent, 20 percent are not participating in the labor market. So the 200 million people are not participating represent 20 percent of the working-age population, or (0.20*x) = 200,000,000, where x is the working-age population. Then x = 200,000,000/0.20 = 1,000,000,000, or 1 billion

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Assume an economy produces only footballs and baseballs and the base year is 2019.

Given the data in the table above, what is the value of real GDP in 2020?

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$12,000

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GDP can be measured as each of the following except

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total business revenues

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Although GDP is not the same as economic well-being, high levels of GDP are positively correlated with all of the following except

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higher rates of infant mortality.

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Real GDP measures the ______ of production.

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physical volume

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A measure of GDP in which quantities produced are valued at current-year prices is called

answer

nominal GDP.

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If an automobile manufacturer pays $200 for a car windshield, $400 for four car tires, $100 for a car radio, and sells cars made with these parts for $20,000, then each car the automobile manufacturer sells contributes how much to GDP?

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$20,000

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A person 16 years or older who does not work, but is actively looking for work, is officially classified as

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unemployed.

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Suppose that the total production of an economy consists of 10 oranges and 5 candy bars, each orange sells for $0.20, and each candy bar sells for $1. What is the market value of production in this economy?

answer

$7.00

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The following provides data for an economy in a certain year.

Given the data, how much did households spend on nondurables and services?

answer

$70

Investment = business fixed investment + change in inventory + construction of new homes and apartments

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Which of the following events would increase the unemployment rate, if nothing else changed?

answer

Employed workers leave the labor force

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Which of the following is not classified as a final good?

answer

Fresh vegetables purchased by a restaurant

Fresh vegetables purchased by a restaurant are intermediate goods because they are inputs to the final good, a restaurant meal.

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The duration of unemployment _____ during a recession.

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increases

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______ is/are the market value of final goods and services produced within a country during a given period of time.

answer

GDP

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Using real GDP to compare the level of economic well-being in two countries may be misleading because the value of ______ contributes to economic well-being but is excluded from real GDP.

answer

leisure

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Spending on new capital goods, new homes, and the addition of unsold goods to company inventories is included in

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investment spending.

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If an automobile manufacturer pays $250 for a car windshield, $440 for four car tires, $100 for a car radio, and sells cars made with these parts for $22,000, then each car the automobile manufacturer sells contributes how much to GDP?

answer

$22,000

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Based on the information in the table, how many people are out of the labor force?

answer

200,000

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In the base year, real GDP ______ nominal GDP.

answer

is equal to

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Capital goods are treated as ______ goods and, therefore, are ______ GDP.

answer

final; included in

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Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:

What is the value added of DeLux Popcorn Company?

answer

$2.00

question

Summing the value added of all firms yields the value of final goods and services produced because both measures

answer

exclude the value of intermediate goods and services.

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Gross domestic product (GDP) equals the ______ of final ______ produced within a country during a given period of time.

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market value; goods and services

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Factories and machines are examples of

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capital goods

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Which of the following would increase the investment component of U.S. GDP?

answer

A laundromat in Seattle purchases a new washing machine produced in the U.S.

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Two groups of workers not counted as unemployed in the official unemployment statistics are ______ workers.

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discouraged and involuntary part-time

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The greater demand for paid childcare services as women's labor force participation increases represents primarily

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a switch from non-market to market production.

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The four categories of final users of GDP are

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households, firms, governments, and the foreign sector

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Real GDP is measured in ______ prices; nominal GDP is measured in ______ prices.

answer

base-year; current

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The sum of the value added by all firms equals total

answer

value of final goods and services.

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Who from among the following would be counted as unemployed?

answer

A person who is willing to work and has looked for a job in the last week.

1 of 169

question

The market value of all final goods and services produced within the borders of a given country during a given period of time is

answer

gross domestic product

question

When attempting to measure total output, economists add up the ______ of different goods and services.

answer

market value

question

By aggregating the market values of goods and services, more expensive, economy-wide items

answer

Receive a higher weighting than less expensive items

question

Which of the following goods or services is NOT included in an aggregate measure of market values and, therefore, GDP?

answer

-under the table child care
- the contribution of homemakers
- black market/illegal products

question

A good used in the production of other goods is called a(n) _____ good. A good that is consumed by its ultimate user is called a(n) _____ good.

answer

intermediate; final

question

A nation's gross domestic product (GDP) is

answer

the total market value of all final goods and services produced in a country in a given period.

question

The selling prices of goods and service in the open market is called the _____ value.

answer

market

question

Goods and services that are used up in the production of final goods are called ______ goods.

answer

intermediate

question

We measure gross domestic product by multiplying the quantities of goods and services by their respective prices because it allows us to

answer

aggregate the values of products in a common unit of measurement

question

______ goods are included in the calculation of GDP, while ______ goods are not included.

answer

Final; intermediate

question

Some goods and services that are not sold in markets ARE included in aggregated measures of GDP. The most important of these includes goods and services provided by the

answer

government

question

A long-lived good that is used in the production of other goods and services is called a(n) _____.

answer

capital good

question

Consumption goods, capital goods and services purchased by their ultimate users are called ______ goods.

answer

final

question

Which of the following would be considered a capital good?

answer

-The oven in a restaurant
-The building in which a restaurant is located

question

An intermediate good is _____.

answer

a good used only in the production of other products

question

True or false: Intermediate goods are included in the calculation of GDP.

answer

False

question

Which of the following are counted in GDP?

answer

Newly produced capital goods, final goods and services

question

A(n) _____ good is a long-lived good that is used in the production of other goods and services.

answer

capital

question

A final good is _____.

answer

-A good directly consumed by individuals or businesses
-Counted as part of GDP

question

Gross domestic product calculations count only final goods and services because

answer

counting all intermediate goods and services would lead to double-counting of many activities.

question

Which of the following would be considered a capital good?

answer

-The truck used by a landscaping company
-The lawnmower used by a landscaping company

question

The market value of a firm's output minus the value of the inputs the firm has bought from other firms is called

answer

value added.

question

Goods and services that are used up in the production of final goods are called _____ goods.

answer

intermediate

question

Which of the following would positively contribute to U.S. GDP?

answer

-A Toyota Camry produced in Kentucky
-A meal purchased by a Japanese tourist in Chicago
-A Ford Escape produced in Kentucky

question

True or false: Newly produced capital goods are included in GDP.

answer

True

question

Secondhand sales are excluded from the calculation of GDP because they:

answer

are not produced in the current year

question

Including the value of ______ (Enter one word in the blank.) goods along with the value of final goods in the calculation of GDP would amount to multiple counting of goods and distort GDP

answer

intermediate

question

The _____ method of calculating GDP adds together the total amount spent by households, firms, the government and the foreign sector and subtracts the amount spent on imported goods and services.

answer

expenditure

question

For any firm, value added refers to

answer

the difference in the market value of the firm's output and the cost of inputs purchased from other firms

question

Which of the following would positively contribute to U.S. GDP?

answer

-Pizza made by an Italian family who owns a pizzeria in New York.
-A Hershey's chocolate bar made in the U.S. and purchased by an American while on vacation in Italy.

question

Consumption expenditure ______.

answer

represents the largest component of GDP

question

Indicate which of the following goods or services is included in the calculation of GDP for the year 2015.

answer

-Maple syrup produced by a Canadian company in Vermont.
-The fee paid to a salesperson who sold you a 2010 truck in 2015.

question

___________ contains three basic subcategories.

answer

Consumption expenditure

question

Which method of calculating GDP adds up consumption, investment, government purchases and net exports?

answer

The expenditure method

question

Long-lived goods, such as appliances, are considered consumer _____

answer

durables

question

Accountants, lawyers, and acupuncturists all fall into which of the following "consumption" categories?

answer

Services

question

Which of the following is the largest category of GDP, as a percentage?

answer

consumption expenditure

question

For the purposes of calculating GDP, the construction of new homes and apartment buildings is treated as

answer

an investment by the business sector.

question

Spending by households on goods and services such as food, clothing and entertainment is known as ______ (one word) expenditure.

answer

consumption

question

answer

The value of the trucks is included in GDP for 2016, since that is when they were produced.

question

The expenditure method of calculating GDP adds together

answer

the total amount spent by households, firms, the government and the foreign sector and subtracts spending on imposed goods and services.

question

Which of the following is NOT included in investment spending in calculating GDP?

answer

The purchase of stocks and bonds

question

Short-lived goods such as food and clothing are considered consumer _____ (one word).

answer

nondurables

question

Which of the following is NOT an example of a consumption expenditure?

answer

A fighter jet

question

True or false: Government purchases include only federal purchases of final goods and services.

answer

False

question

Residential ______ includes construction of new homes and new apartments.

answer

investment

question

The addition of unsold goods and services to company inventories is _____.

answer

-included in GDP
-known as inventory investment

question

For the purposes of GDP accounting, government purchases include:

answer

-the purchase of new military equipment
-spending on highway construction

question

The purchase of financial assets such as stocks and bonds

answer

is NOT considered part of investment spending in calculating GDP.

question

What are the three categories of consumption expenditure?

answer

-Nondurable consumer goods
-Services
-Durable consumer goods

question

_____ include(s) all federal, state, and local government purchases of final goods and services.

answer

Government purchases

question

Transfer payments are not included in GDP because they

answer

are not made in exchange for current goods and services.

question

Which of following are components of government purchases in GDP?

answer

Expenditures for goods and services that government consumes in providing public services

question

Which of the following would be considered government transfer payment?

answer

-Social security benefits
-Veteran's benefits
-Unemployment insurance benefits

question

Transfer payments are not included in GDP because they do not generate ______ (one word).

answer

output

question

Residential investment includes which of the following?

answer

-Construction of new homes
Construction of new apartments buildings

question

Net exports include goods produced

answer

domestically that are sold abroad, less goods that are produced abroad that are sold domestically.

question

Government transfer payments include all of the following except

answer

wage payments to police officers

question

_____ should be subtracted from GDP because they were not produced in the United States.

answer

imports

question

C + I + G + NX =

answer

Gross Domestic Product

question

True or false: GDP can be viewed as the sum of labor income and capital income.

answer

True

question

Net exports is exports minus

answer

imports

question

Wages, salaries and the income of the self-employed are known as

answer

labor income.

question

Imports must be subtracted from GDP because they are goods and services _____ the borders of the United States.

answer

produced outside

question

Gross Domestic Product (GDP) may be calculated as the sum of:

answer

consumer spending, investment spending, government purchases of goods and services, and net exports.

question

GDP can be thought of as _____.

answer

capital income plus labor income

question

Capital income includes the payments made to the owners of _____.

answer

both physical capital and intangible capital

question

GDP can be expressed as _____.

answer

question

Labor income

answer

consists of wages, salaries and the income of the self-employed.

question

Nominal GDP measures the value of all goods and services

answer

at current-year prices.

question

_____ GDP measures the physical volume of production.

answer

real

question

Using the expenditure approach, which of the following defines the composition of GDP in an open economy?

answer

C + I + G + NX

question

The payments made to the owners of physical capital and intangible capital is known as _____.

answer

capital income

question

The market value of production, total expenditure, and total income are all ways to express

answer

GDP

question

GDP calculated using current-year prices is called

answer

Nominal GDP

question

Real GDP is a measure of GDP that

answer

adjusts for inflation

question

Real GPD is a measure of GDP in which the quantities produced are valued at _____.

answer

the prices in a base year rather than at current-year prices

question

True or false: A change in people's economic well-being is always reflected in GDP.

answer

False

question

Additional leisure time enjoyed by a workforce overall is the likely result of

answer

Living in a wealthy society

question

In countries where non-market activities are widespread, the official measure of GDP tends to be

answer

understated

question

A measure of GDP in which the quantities produced are valued at prices in a base year rather than at current prices is _____ GDP

answer

real

question

True or false: An increase in GDP always implies an increase in people's economic well-being.

answer

False

question

When we choose to work less than our grandparents did and, in exchange, spend more quality time with family and friends, it means that

answer

question

The underground economy contains BOTH _____ and _____ activities, such as landscapers, babysitters, and organized crime.

answer

-legal
-illegal

question

The fact that many unpaid services, such as volunteer firefighters, are not included in GDP measures indicates that

answer

their market values are difficult to assess.

question

Real GDP ________ the total effect of economic growth by including decreases in environmental quality associated with rapid growth.

answer

does not capture

question

answer

Yes. It would reduce the quality of life for residents.

question

GDP is an imperfect measure of well-being since

answer

-it only measures production, not the distribution of the wealth.
-It does not capture the effects of income inequality.

question

GDP is _____.

answer

an imperfect but useful measure of economic well-being

question

Transactions that are never reported to government officials and data collectors occur in

answer

the underground economy.

question

Compared to countries with a low GDP per person, countries with a high GDP per person tend to have _____.

answer

-higher life expectancy
-higher adult literacy rates
-lower infant mortality rates

question

The exploitation of finite_____ _____ tends to be overlooked in GDP. (Enter one word in each blank.)

answer

natural resources

question

Which of the following are "quality-of-life" indicators that are left out of GDP?

answer

Open space
Low crime rate

question

Countries A and B both have the same GDP per capita. However, country B is much worse off in terms of economic well-being. How is this possible?

answer

The wealth of country B is likely concentrated in the hands of very few people.

question

True or false: Economic policies should be evaluated strictly in terms of whether or not they increase GDP.

answer

False

question

Which of the following factors are NOT included in the calculation of GDP?

answer

Crime rates
Poverty rates
Volunteer services

question

On average, people countries with a high GDP per person have a _____ life expectancy at birth than do people in countries with a low GDP per person.

answer

higher

question

Which of the following factors are NOT included in the calculation of GDP?

answer

Leisure time
Economic inequality
Environmental quality

question

Which of the following workers would be classified as unemployed?

answer

Someone who hasn't worked in over a year, but who had a job interview three weeks ago

question

Which of the following workers would the Bureau of Labor Statistics classify as out of the labor force?

answer

A retired school teacher who volunteers 4 hours a week at a local soup kitchen

question

If there are 10,000 unemployed people and 100,000 employed people, then there are ______ people in the labor force (enter a numeric value).

answer

110,000

question

The labor force is

answer

the total number of workers, including both the employed and the unemployed

question

Which of the following people definitely would be classified as unemployed by the Bureau of Labor Statistics?

answer

Someone who hasn't worked in four weeks but who sent out 3-4 resumes last week

question

Which of the following most accurately describes how to calculate the unemployment rate?

answer

(unemployed/labor force) × 100

question

If there are 150,000 unemployed people and 1,200,000 employed people, then there are _____ people in the labor force (enter a numeric value).

answer

1,350,000

question

The labor force is the total number of ______ and ______.

answer

employed; unemployed

question

The unemployment rate is the

answer

fraction of the labor force that is unemployed.

question

The unemployment rate is calculated by dividing the ______ by the ______.

answer

number unemployed; labor force

question

If there are 5,000 unemployed people and 90,000 employed people, then there are _____ people in the labor force (enter a numeric value).

answer

95,000

question

The unemployment rate is the percentage of the _____ that is unemployed.

answer

labor force

question

Which of the following people definitely would be classified as unemployed by the Bureau of Labor Statistics?

answer

Someone who didn't work during the last week and who interviewed for a job two weeks ago

question

If 11,000 people are employed, 2,500 people are unemployed and 3,000 people are not in the labor force, then what is the unemployment rate?

answer

18.5%

question

The percentage of the working age population that is in the labor force is the _____.

answer

labor force participation rate

question

If there are 500,000 working-age people in the population, 230,000 employed people and 20,000 unemployed people, the the labor force participation rate is _____.

answer

50%

question

If 150,000 are employed, and there are 160,000 people in the labor force, then the unemployment rate is:

answer

6.25%

question

Which of the following most accurately describes how to calculate the labor force participation rate?

answer

labor force/working−age population x 100

question

The labor force participation rate is

answer

the percentage of the working age population in the labor force.

question

The costs of unemployment include:

answer

question

An unemployment spell is a period in which an individual is _____ unemployed.

answer

continuously

question

If there are 200,000 working-age people in the population, 140,000 employed people and 10,000 unemployed people, the the labor force participation rate is _____.

answer

75%

question

The labor force participation rate is calculated by dividing the ______ by the ______.

answer

labor force; working-age population

question

Which of the following could be considered as a cost of unemployment?

answer

-Severe psychological costs to the job loser
-Higher crime, suicide and divorce rates
-The lost income that results from being unemployed
-Lower income tax revenue for the government

question

A period during which an individual is continuously unemployed is known as an unemployment _____

answer

spell

question

The length of an unemployment spell is called its _____.

answer

duration

question

The duration of unemployment spells typically _____ during recessions.

answer

increases

question

By not counting discouraged workers as unemployed, some argue that the official unemployment rate ______ the true extent of unemployment.

answer

understates

question

Discouraged workers are people who

answer

say they would like to have a job, but have made no effort to find one in the past four weeks.

question

The length of an unemployment spell is called its

answer

duration

question

Workers who would like to work full-time, but can find only part-time work are

answer

involuntary part-time workers.

question

During recessions, the duration of unemployment spells ______.

answer

increases

question

Some argue that the official unemployment rate understates the true extent of unemployment because it does not count which of the following as unemployed?

answer

Discouraged workers
Involuntary part-time workers

question

People who say they would like to have a job but have not made an effort to find one in the past four weeks are known as _____ workers.

answer

discouraged

question

Involuntary part-time workers are workers who

answer

would like to work full-time, but are able to find only part-time work.

question

Quiz

answer

question

Labor income includes

answer

wages, salaries, and earnings of the self-employed.

question

The following provides data for an economy in a certain year.

Given the data, compute the value of GDP.

answer

$150

question

answer

$21,000

question

The following table provides data for an economy in a certain year:

Given the data, compute the investment component of GDP.

answer

$900

question

answer

question

Assume an economy produces only footballs and baseballs and the base year is 2019.

Given the data in the table above, what is the value of real GDP in 2020?

answer

$12,000

question

GDP can be measured as each of the following except

answer

total business revenues

question

Although GDP is not the same as economic well-being, high levels of GDP are positively correlated with all of the following except

answer

higher rates of infant mortality.

question

Real GDP measures the ______ of production.

answer

physical volume

question

A measure of GDP in which quantities produced are valued at current-year prices is called

answer

nominal GDP.

question

answer

$20,000

question

A person 16 years or older who does not work, but is actively looking for work, is officially classified as

answer

unemployed.

question

answer

$7.00

question

The following provides data for an economy in a certain year.

Given the data, how much did households spend on nondurables and services?

answer

$70

Investment = business fixed investment + change in inventory + construction of new homes and apartments

question

Which of the following events would increase the unemployment rate, if nothing else changed?

answer

Employed workers leave the labor force

question

Which of the following is not classified as a final good?

answer

Fresh vegetables purchased by a restaurant

Fresh vegetables purchased by a restaurant are intermediate goods because they are inputs to the final good, a restaurant meal.

question

The duration of unemployment _____ during a recession.

answer

increases

question

______ is/are the market value of final goods and services produced within a country during a given period of time.

answer

GDP

question

Using real GDP to compare the level of economic well-being in two countries may be misleading because the value of ______ contributes to economic well-being but is excluded from real GDP.

answer

leisure

question

Spending on new capital goods, new homes, and the addition of unsold goods to company inventories is included in

answer

investment spending.

question

answer

$22,000

question

Based on the information in the table, how many people are out of the labor force?

answer

200,000

question

In the base year, real GDP ______ nominal GDP.

answer

is equal to

question

Capital goods are treated as ______ goods and, therefore, are ______ GDP.

answer

final; included in

question

Suppose a jar of DeLux popcorn that is ultimately sold to a customer at Friendly Groceries is produced by the following production process:

What is the value added of DeLux Popcorn Company?

answer

$2.00

question

Summing the value added of all firms yields the value of final goods and services produced because both measures

answer

exclude the value of intermediate goods and services.

question

Gross domestic product (GDP) equals the ______ of final ______ produced within a country during a given period of time.

answer

market value; goods and services

question

Factories and machines are examples of

answer

capital goods

question

Which of the following would increase the investment component of U.S. GDP?

answer

A laundromat in Seattle purchases a new washing machine produced in the U.S.

question

Two groups of workers not counted as unemployed in the official unemployment statistics are ______ workers.

answer

discouraged and involuntary part-time

question

The greater demand for paid childcare services as women's labor force participation increases represents primarily

answer

a switch from non-market to market production.

question

The four categories of final users of GDP are

answer

households, firms, governments, and the foreign sector

question

Real GDP is measured in ______ prices; nominal GDP is measured in ______ prices.

answer

base-year; current

question

The sum of the value added by all firms equals total

answer

value of final goods and services.

question

Who from among the following would be counted as unemployed?

answer

A person who is willing to work and has looked for a job in the last week.

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