Questions and Answers
A measure of a country's production is its _____.
For the purpose of calculating GDP, investment is spending on _____.
GDP is defined as _____.
If a price index such as GDP deflator changes from 120 to 125 between December 2007 and December 2008, the ____.
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In the circular-flow diagram, ____.
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Spending on financial assets ________ counted as part of GDP ________.
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The economy's inflation rate is the _____.
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Which of the following statements is not correct?
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What is the value of C?
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What is the value of GDP?
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Which of the following is not correct?
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Which of the following is correct?
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From 2013 to 2014, Dachsland's real GDP grew _____.
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In 2013, Dachsland's GDP deflator was ____.
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In 2015, Dachsland's GDP deflator was ___.
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Dachsland's inflation rate from 2014 to 2015 was ____.
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What is the value of G?
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What is the value of I?
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What two things does GDP measure?
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When economists talk about growth in the economy, they measure that growth as the _____.
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Which one of the following is true regarding the measurement of GDP?
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Which of the following statements about GDP is correct?
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Which of the following statements is correct?
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Which one of the following transactions is included in a current year's GDP as investment spending?
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Study Notes
Gross Domestic Product (GDP)
- GDP measures a country's production and economic health.
- Defined as the market value of all final goods and services produced within a country during a specific time period.
- Key components of GDP include consumption, investment, government spending, and net exports.
Investment in GDP
- Investment spending refers to capital equipment, inventories, and structures, including residential housing.
- Purchases of financial assets like stocks and bonds do not count as GDP spending.
Inflation and Price Indexes
- Inflation rate measures the percentage change in the price level from one period to another.
- The GDP deflator is an important index to calculate inflation, showing price changes for goods and services.
Circular-Flow Model
- Households act as sellers in the markets for factors of production.
- Firms are buyers in markets for goods and services, creating a cyclical exchange of money.
Nominal vs. Real GDP
- Nominal GDP is valued at current prices, while real GDP is adjusted for inflation and valued at constant prices.
- The base year serves as a reference point for calculating real GDP.
Economic Growth Measurement
- Growth is measured by the percentage change in real GDP, indicating the economy's performance over time.
GDP Deflator
- The GDP deflator reflects the average price change of all goods and services included in GDP.
- A deflator of 100 indicates that prices have remained the same as the base year.
Expenditure Approach vs. Income Approach
- GDP can be measured via the expenditure approach, which focuses on spending by households and firms, and the income approach, which focuses on wages and profits.
- Both methods should yield the same GDP value.
Investment Purchases
- Certain purchases, such as new homes and equipment for businesses, are classified as investment spending when calculating GDP.
Economic Transactions and GDP
- Only new goods and services contribute to GDP; transactions such as buying used items or financial shares do not count.
- Household spending reflects both consumption and investment, impacting GDP measurements directly.
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Description
Test your knowledge on key terms and definitions from Economics 222, Chapter 5. This quiz covers important concepts such as Gross Domestic Product and the components of investment. Sharpen your understanding and prepare for your exams with these flashcards.