Exam 10: Measuring a Nations Income: Part B

If a good produced this quarter goes into inventory,then it is included in this period's GDP.If it is sold in the next quarter,it will have no effect on GDP.

When the U.S.government purchases capital equipment,such as a computer,these expenditures are part of investment in GDP.

Most goods whose purchases are included in the investment component of GDP are used to produce other goods in future periods.

An economy's income is the same as its expenditure because every transaction has a buyer and a seller.

Real GDP per person tells us the income and expenditure of the average person in the economy.

While GDP includes tangible goods such as books and bug spray,it excludes intangible services such as the services provided by teachers and exterminators.

GDP excludes the purchases of sliced bread by a sandwich shop,because the bread is an intermediate good in this case.

GDP is a useful measure since it provides a single measure of the value of the entire variety of goods and services produced by an economy. ​

If real GDP and the GDP deflator both rise,then it must be that nominal GDP rose.

Microeconomics and macroeconomics are closely linked.

GDP is the market value of all final goods and services produced within a country in a given period of time.

The term real GDP refers to a country's actual GDP as opposed to its estimated GDP.

Expenditures by households on education are included in the consumption component of GDP.

U.S.GDP includes estimates of the value of items that are produced and consumed at home,such as housework and car maintenance.

GDP can be measured in terms of expenditures but not income,since income is subject to taxation.

The investment component of GDP refers to financial investment in stocks and bonds.

The output of goods and services produced in the United States has grown on average 3 percent per year since 1965.

If consumption is $1800,GDP is $4300,government purchases are $1000,imports are $700,and investment is $1200,then exports are $300.

Recessions are associated with lower incomes,rising unemployment,and falling profits.

Changes in real GDP reflect only changes in the amounts being produced.