Exam 5: Measuring a Nation's Production and Income

When differences between nominal GDP and real GDP result due to price changes and nothing else is compared, an index is created called the

"Nominal GDP" is a measure of GDP that adjusts for price changes.

Exports ________ GDP and imports ________ GDP.

The data presented in the text shows that in the period from 1930-2011, real GDP in the United States has

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

Use the following information to answer the next several questions: Scenario 1: Imagine that an economy produces two goods, flashlights and fishing lures. In 2011, the economy produced 70 flashlights and 40 fishing lures, and the prices of flashlights and fishing lures were $5 and $12, respectively. In 2012, the economy produced 85 flashlights and 50 fishing lures, and the prices of flashlights and fishing lures were $7 and $15, respectively. -Based on the information in Scenario 1, real GDP grew by about ________ percent from 2011 to 2012.

The manner in which a nation's economy reacts when the measured factors are changed affects almost every individual.

What is the chain-weighted price index for GDP in the base year?

Wages paid to teachers, police personnel, and postal workers are not transfer payments because they are payments for services and not simply "transfers" of money.

What are the two critical measures of a nation's economic health?

For the purposes of GDP accounting, government purchases

Define transfer payments and explain why they are not included in the government purchases section of the GDP accounts.

Define GDP.

If in the third quarter of 2012 total investment spending was $4,768 billion and depreciation was $3,292 billion, then net investment was equal to

Recall the Application about the size of Wal-Mart to answer the following question(s). During 2008, Wal-Mart's sales were approximately $374 billion, or roughly 2.6 percent of U.S. GDP, and its cost of sales was $286 billion. -According to this Application, what was the approximate value of Wal-Mart's value added in 2008?

In the determination of production of goods or services with respect to GDP, transfer payments are included.

In the circular flow model, firms sell the services of factors of production to households.

Why is GDP only an imperfect valid measure of the value of output produced by an economy?

List four things considered to be shortcomings in the determination of GDP in relation to the use of GDP as a measure of welfare..

Recall the Application about the time it took to recover from the recession of 2007-2009 to answer the following question(s). -According to this Application, GDP did not return to its pre-recession peak until