Exam 10: Measuring a Nations Income: Part B

If total spending rises from one year to the next,then the economy must be producing a larger output of goods and services.

The GDP deflator can be used to take inflation out of nominal GDP.

In years of economic contraction,firms throughout the economy increase their production of goods and services,employment rises,and jobs are easy to find.

New home construction is included in the consumption component of GDP.

When you purchase a run-down 1965 Ford Mustang to restore and resell,the purchase of the vehicle and all restoration expenditures are included in current GDP.

The government purchases component of GDP includes salaries paid to soldiers but not Social Security benefits paid to the elderly.

U.S.GDP includes the market value of rental housing,but not the market value of owner-occupied housing services.

When real GDP increases,this implies that the production of goods and services has risen. ​

GDP excludes the value of intermediate goods because their value is included in the value of final goods.

If nominal GDP is $12,000 and the GDP deflator is 80,then real GDP is $15,000.

The government's purchases of goods but not its purchases of services are included in GDP.

Consumption expenditures were previously the largest component of GDP,but with the growth of government and government expenditures,this is no longer true. ​

Nominal GDP uses constant base-year prices to place a value on the economy's production of goods and services,while real GDP uses current prices to place a value on the economy's production of goods and services.

GDP can measure either the total income of everyone in the economy or the total expenditure on the economy's output of goods and services,but GDP cannot measure both at the same time.

In 2015,government purchases were the largest component of U.S.GDP.

GDP is the most closely watched economic statistic because it is thought to be the best single measure of a society's economic well-being.

GDP does not directly measure those things that make life worthwhile,but it does measure our ability to obtain many of the inputs into a worthwhile life.

If the GDP deflator in 2009 was 150 and the GDP deflator in 2010 was 175,then the inflation rate in 2010 was 25%.

If exports are $500,GDP is $8000,government purchases are $1200,imports are $700,and investment is $800,then consumption is $6200.

The advantage of real GDP as a measure is the fact that it only increases. ​