Gross Domestic Product (GDP) Calculation

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What is excluded from government purchases in the calculation of GDP?

Government office buying

Production of part facilities (correct)

Space spending

Purchases of local goods and services

What is the broadest measure of the total incomes of sampling agents in a economy?

Gross National Income (GNI)

Gross Domestic Product (GDP)

Gross Domestic Income (GDI) (correct)

Net Domestic Income (NDI)

What is the term for the discrepancy between the income and expenditure approaches to calculating GDP?

Statistical discrepancy (correct)

Balance of trade discrepancy

GDP surplus

national income discrepancy

What do households represent in the economy?

The consumption side of the economy Signup and view all the answers

What is the assumption about households in the representative household model?

They are identical Signup and view all the answers

What is the goal of the competitive equilibrium?

To find the optimal wages and rental rates for goods and labor Signup and view all the answers

What is the component of GDP that includes exports and imports?

Trade Balance Signup and view all the answers

What determines the complete solution of the fundamentals?

Both allocations and policies change when prices change Signup and view all the answers

What is the purpose of normalizing the household?

To simplify the analysis Signup and view all the answers

What is the term for the income received by labor in the form of wages and salaries?

Labor Share Signup and view all the answers

How do households behave in the representative household model?

They take prices and interest rates as given Signup and view all the answers

What is the condition for the market to clear in each period?

Labor supply equals labor demand Signup and view all the answers

What is the household's problem?

To maximize utility subject to the budget constraint Signup and view all the answers

What is the purpose of the lifetime utility function in the representative household model?

To determine the household's consumption and savings decision Signup and view all the answers

What is the time period assumption in the representative household model?

Discrete time Signup and view all the answers

What is the firm's problem?

To maximize profit subject to the production function Signup and view all the answers

What is the relationship between the capital and labor?

The labor is a function of capital Signup and view all the answers

What is the role of the Social Planner in the economy?

To decide how much firms produce and households consume. Signup and view all the answers

What is the condition for a steady state in the economy?

The market interest rate is equal to the rate of time preference. Signup and view all the answers

What is the implication of the Euler equation in the economy?

Households save a portion of their income. Signup and view all the answers

What is the function of Walras' Law in the economy?

To ensure that the market clears at all prices. Signup and view all the answers

What is the assumption about the households' behavior in the economy?

Households are rational and make optimal consumption and saving decisions. Signup and view all the answers

What is the objective of the Social Planner in the economy?

To allocate resources in a way that is Pareto Optimal. Signup and view all the answers

What is the relationship between ga and gy in the context of the Key Point?

ga = gy - Sk Signup and view all the answers

What is the method used to measure capital in the perpetual inventory method?

k(t + 1) = (1 - b)k(t) + I Signup and view all the answers

What did Griliches argue in his 1967 study?

A large fraction of the residual can be explained by the quality of labor Signup and view all the answers

What is the Dual Approach in growth accounting?

An approach that uses the dual function to estimate growth rates Signup and view all the answers

What is the assumption of the primal approach in growth accounting?

Profit rates are constant over time Signup and view all the answers

What is the purpose of the notation gy xgk in the context of the Key Point?

To make the notation clearer and more measurable Signup and view all the answers