Microeconomics - Chapter 24 - Assignment Essays %

question

The primary measure of the economy's performance is...

answer

It's annual total output of goods and services or aggregate output.

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Gross domestic product

answer

Defines aggregate output as the dollar value of all final goods and services produced within the borders of a country during a specific period of time.

question

GDP includes only the market value...

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Of final goods and ignores intermediate goods altogother

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Intermediate Goods

answer

Products that are purchased for resale or further processing or manufacturing. Ex. Crude oil

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Final Goods

answer

Products that are purchased by their end users.

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Value added

answer

The market value of a firm's output less the value of the inputs the firm has bought from others.

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Public transfer payments

answer

These are the social security payments, welfare payments and veterans' payments that the government makes directly to households. Not part of GDP

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Private transfer payments

answer

Money that parents give children during the holidays. Not part of GDP

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Stock Market Transactions

answer

Buying and selling of stocks are not part of GDP

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Expenditures approach

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The sum of all the money spend in buying

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Income approach

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Income derived from producing product

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Personal consumption expenditures

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Covers all expenditures by household on goods and services

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Durable goods

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10 percent of person consumption expenditures. Three years or more. Ex. cars, furniture

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Nondurable goods

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30 percent, products less than three years of expected life. Food gasoline

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Services goods

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60 percent, work done by lawyers etc.

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Gross private domestic investment

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All final purchases of machinery, equipment and tools by business enterprises. All construction, changes in inventories

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Net private domestic investment

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Includes only investment in the form of added capital. Net investment = gross investment - depreciation

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Depreciation

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The amount of capital that is used up over the course of the year

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Government purchases

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Expenditures for goods and services that government consumes in providing public services and expenditures for publicly owned capital such as schools and highways

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Exports

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Goods and services produced within the borders of the United States.

question

Must foreign spending on US exports be included in GDP

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True

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Net Exports

answer

Exports minus imports

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Corporate Income Taxes

answer

Taxes are levied on corporation's profits. They flow to the government.

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Dividends

answer

Profits that are chosen to be paid out to stockholders

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Undistributed corporate profits

answer

After tax money held by companies for future investment

question

Taxes on production and imports

answer

Includes general sales taxes, excise taxes, business property taxes, license fees, and customs duties.

question

Are taxes on production a imports that are for government income considered part of GDP

answer

Yes

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National Income

answer

The total of all sources of private income plus government revenue from taxes on production and imports.

question

Consumption of fixed capital

answer

Depreciation charge made against private and publicly owned capital each year.

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Net domestic product

answer

GDP minus consumption of fixed capital or depreciation

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Personal Income

answer

All income received whether earned or unearned. income received only by households

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Disposable Income

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Personal income less personal taxes

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Nominal GDP

answer

GDP not adjusted for inflation

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Real GDP

answer

GDP ajdusted for inflation. Shows same purchasing power

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Price Index

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A measure of the price of a specified collection of goods and services called a market basket in a given year, as compared to the price in a reference year.

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Are stay at home parents and carpenters who repair their own homes included in GDP?

answer

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Shortcomings of GDP

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Nonmarket activities, Leisure time, Improved product quality, underground economy,

1 of 37

question

The primary measure of the economy's performance is...

answer

It's annual total output of goods and services or aggregate output.

question

Gross domestic product

answer

Defines aggregate output as the dollar value of all final goods and services produced within the borders of a country during a specific period of time.

question

GDP includes only the market value...

answer

Of final goods and ignores intermediate goods altogother

question

Intermediate Goods

answer

Products that are purchased for resale or further processing or manufacturing. Ex. Crude oil

question

Final Goods

answer

Products that are purchased by their end users.

question

Value added

answer

The market value of a firm's output less the value of the inputs the firm has bought from others.

question

Public transfer payments

answer

These are the social security payments, welfare payments and veterans' payments that the government makes directly to households. Not part of GDP

question

Private transfer payments

answer

Money that parents give children during the holidays. Not part of GDP

question

Stock Market Transactions

answer

Buying and selling of stocks are not part of GDP

question

Expenditures approach

answer

The sum of all the money spend in buying

question

Income approach

answer

Income derived from producing product

question

Personal consumption expenditures

answer

Covers all expenditures by household on goods and services

question

Durable goods

answer

10 percent of person consumption expenditures. Three years or more. Ex. cars, furniture

question

Nondurable goods

answer

30 percent, products less than three years of expected life. Food gasoline

question

Services goods

answer

60 percent, work done by lawyers etc.

question

Gross private domestic investment

answer

All final purchases of machinery, equipment and tools by business enterprises. All construction, changes in inventories

question

Net private domestic investment

answer

Includes only investment in the form of added capital. Net investment = gross investment - depreciation

question

Depreciation

answer

The amount of capital that is used up over the course of the year

question

Government purchases

answer

Expenditures for goods and services that government consumes in providing public services and expenditures for publicly owned capital such as schools and highways

question

Exports

answer

Goods and services produced within the borders of the United States.

question

Must foreign spending on US exports be included in GDP

answer

True

question

Net Exports

answer

Exports minus imports

question

Corporate Income Taxes

answer

Taxes are levied on corporation's profits. They flow to the government.

question

Dividends

answer

Profits that are chosen to be paid out to stockholders

question

Undistributed corporate profits

answer

After tax money held by companies for future investment

question

Taxes on production and imports

answer

Includes general sales taxes, excise taxes, business property taxes, license fees, and customs duties.

question

Are taxes on production a imports that are for government income considered part of GDP

answer

Yes

question

National Income

answer

The total of all sources of private income plus government revenue from taxes on production and imports.

question

Consumption of fixed capital

answer

Depreciation charge made against private and publicly owned capital each year.

question

Net domestic product

answer

GDP minus consumption of fixed capital or depreciation

question

Personal Income

answer

All income received whether earned or unearned. income received only by households

question

Disposable Income

answer

Personal income less personal taxes

question

Nominal GDP

answer

GDP not adjusted for inflation

question

Real GDP

answer

GDP ajdusted for inflation. Shows same purchasing power

question

Price Index

answer

A measure of the price of a specified collection of goods and services called a market basket in a given year, as compared to the price in a reference year.

question

Are stay at home parents and carpenters who repair their own homes included in GDP?

answer

question

Shortcomings of GDP

answer

Nonmarket activities, Leisure time, Improved product quality, underground economy,

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Microeconomics – Chapter 24

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