Econ 104 Quiz 1 SG - Bill Goffe Latest Update

Econ 104 Quiz 1 SG - Bill Goffe Latest Update

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___ GDP is used to track the economy since it ___ correct for the impact of inflation (rising prices).Nominal, does Nominal, does not Real, does

Real, does not - CORRECT ANSWER: Real, does

A basic difference between a capital good and an intermediate good is that an intermediate good is used up or transformed in the production process while a capital good is not.

true

false - CORRECT ANSWER: true

A report on GDP says that income fell. Then spending measured by GDP __.might have risen must have risen might have fallen

must have fallen - CORRECT ANSWER: must have fallen

Business cycle - CORRECT ANSWER: alternating periods of expansion and recession

that the U.S. economy has experienced since at least the early 19th century

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Capital (K) - CORRECT ANSWER: manufactured goods owned by firms to produce

other goods and services

(Capital goods generally last for years and can be used many times)

Capital goods are final goods, but their production is NOT part of GDP.

true

false - CORRECT ANSWER: false

Consumption - CORRECT ANSWER: spending by households on goods and services,

not including spending on new houses *largest component of GDP Expenditures on services (haircuts, education) Expenditures on nondurable goods (food, clothing) Expenditures on durable goods (cars, furniture)

Current Nominal GDP - CORRECT ANSWER: Nominal GDP: $19.2 trillion

Current Real GDP - CORRECT ANSWER: Real GDP: $17.0 trillion

Economic growth - CORRECT ANSWER: ability of an economy to produce increasing

quantities of goods and services

Expansion - CORRECT ANSWER: period during which total production and total

employment are increasing

Final good - CORRECT ANSWER: is purchased by the final user 2 / 3

Final good or service - CORRECT ANSWER: a good or service purchased by a final

user

For the sake of this question, say that total inventories in the U.S. was $1 trillion in one year and then $1 trillion the next year. Would there be any inventory investment?yes no

cannot tell with the given information - CORRECT ANSWER: no

GDP = ? - CORRECT ANSWER: C + I + G + NX

GDP by Expenditures (flip side of production) Consumption ( C ) Investment (I)

Government purchases (G):

Net exports (NX) - CORRECT ANSWER: Consumption ( C ) - purchases by households

Investment (I) - as before

Government purchases (G):Smaller than government "expenditures"

Government expenditures = purchases + transfers + interest payments (on its debt)

Net exports (NX) - exports - imports

GDP by Production - CORRECT ANSWER: when measured by production, GDP for a

nation's economy is the market value of all final goods and services produced domestically in that year

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