Calculating GDP quiz #1 Flashcards
Calculating GDP quiz #1
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What does Gross Domestic Product (GDP) measure? GDP measures the value of final goods and services produced within a country during a specific period, usually a year. Which of the following are components of government purchases in GDP? Government purchases include spending by local, state, and federal governments on goods and services, such as salaries, infrastructure, and equipment, but exclude transfer payments like welfare. What is the total value of final goods and services produced in a country in a given year called? It is called Gross Domestic Product (GDP). For the purposes of GDP accounting, which goods and services are included? Only final goods and services produced within the country during the year are included; intermediate goods and secondhand sales are excluded. Gross Domestic Product is equal to which of the following? GDP equals the sum of Consumption, Investment, Government Purchases, and Net Exports (GDP = C + I + G + NX). What is the correct definition of Gross Domestic Product (GDP)? GDP is the total market value of all final goods and services produced within a country in a given period. What are the components of GDP? The components are Consumption (C), Investment (I), Government Purchases (G), and Net Exports (NX). Which of the following by definition directly adds to a country’s GDP (Gross Domestic Product)? Spending on final goods and services produced domestically during the year directly adds to GDP. Which of the following will be counted in this year’s GDP? Only the value of final goods and services produced and sold to the end user within the country during the year will be counted. Why do Gross Domestic Product calculations count only final goods and services? Counting only final goods and services avoids double counting, since intermediate goods are used to produce final goods. Which of the following statements best describes how economists calculate GDP? Economists calculate GDP by summing expenditures on final goods and services in the categories of consumption, investment, government purchases, and net exports. Which of the following would be included in the Gross Domestic Product (GDP) of the United States? Goods and services produced within the United States and sold to the final user during the year are included. What data do economists use to calculate the real GDP of a nation? Economists use the value of final goods and services produced, measured at base year prices, to calculate real GDP. How is GDP per person (per capita) for Country A calculated? GDP per capita is calculated by dividing the country’s total GDP by its population. Which of the following is used to calculate the potential level of GDP? Potential GDP is calculated using the maximum sustainable output of final goods and services an economy can produce, given its resources and technology. How do intermediate goods factor into the calculation of GDP? Intermediate goods are excluded from GDP to prevent double counting; only final goods and services are included. What does GDP measure? GDP measures the total market value of final goods and services produced within a country during a specific period. Roughly how much of Gross Domestic Product is used for investment? Investment typically accounts for a smaller portion of GDP compared to consumption, but the exact percentage varies by country and year. The Gross Domestic Product (GDP) of the United States is defined as the Total market value of all final goods and services produced within the United States in a given year. Which of the following is the correct calculation of real Gross Domestic Product? Real GDP is calculated by valuing final goods and services produced in a year using base year prices. If nominal GDP is 1800 and the money supply is 450, then what is velocity? Velocity = Nominal GDP / Money Supply = 1800 / 450 = 4. Which of the following is included in the calculation of GDP? Spending on final goods and services produced domestically during the year is included. What is the largest expenditure component of GDP? Consumption is the largest expenditure component of GDP. Real GDP is the yearly production of final goods and services valued at Base year prices, to account for inflation. Match the use of GDP data to the appropriate situation. GDP data is used to assess economic growth, compare living standards, and analyze changes in production over time. The expenditure approach to measuring GDP sums The expenditure approach sums Consumption, Investment, Government Purchases, and Net Exports. GDP does not directly include: GDP does not include intermediate goods, secondhand sales, financial transactions like stocks and bonds, or transfer payments. In the GDP accounts, production equals Production equals the total value of final goods and services produced within the country during the year.
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