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Questions and Answers
In Utopia's economy for 2020, given consumption expenditures of $5,000, wages of $3,500, gross private domestic investment of $1,200, government expenditures of $2,000, exports of $900, and imports of $1,100, what is the Gross Domestic Product (GDP) using the expenditure approach?
In Utopia's economy for 2020, given consumption expenditures of $5,000, wages of $3,500, gross private domestic investment of $1,200, government expenditures of $2,000, exports of $900, and imports of $1,100, what is the Gross Domestic Product (GDP) using the expenditure approach?
- $6,200
- $8,000 (correct)
- $8,400
- $11,500
Which of the following is NOT an example of a nondurable consumer good?
Which of the following is NOT an example of a nondurable consumer good?
- A pizza delivered to your home.
- A dinner table. (correct)
- A movie ticket.
- A cup of coffee.
Which of the following is NOT typically classified as a service?
Which of the following is NOT typically classified as a service?
- Payment for a restaurant meal.
- Payment for a doctor's visit.
- The face value of a corporate bond. (correct)
- School tuition.
Which of the following transactions is included in the gross private domestic investment component of GDP?
Which of the following transactions is included in the gross private domestic investment component of GDP?
Which of the following activities are considered part of gross private domestic investment?
Which of the following activities are considered part of gross private domestic investment?
If the quantity of unsold new Tesla Model 3 vehicles increases from 40,000 to 45,000, what impact does this have on the economy?
If the quantity of unsold new Tesla Model 3 vehicles increases from 40,000 to 45,000, what impact does this have on the economy?
What best describes depreciation?
What best describes depreciation?
What is the defining characteristic of a capital good?
What is the defining characteristic of a capital good?
Assuming all other factors remain constant, what effect does an increase in imports have on GDP?
Assuming all other factors remain constant, what effect does an increase in imports have on GDP?
Wages increase by 10% due to improved productivity, leading to an increase in gross domestic income. What is most likely to happen to Gross Domestic Product?
Wages increase by 10% due to improved productivity, leading to an increase in gross domestic income. What is most likely to happen to Gross Domestic Product?
What is the effect of an increase in a U.S. resident's income earned in Japan on the GDP of both countries?
What is the effect of an increase in a U.S. resident's income earned in Japan on the GDP of both countries?
Given the following data (in billions of dollars): Compensation of employees = 1,400, Net interest = 150, Rental income of persons = 75, Profits = 840; what is the Gross Domestic Product (GDP)?
Given the following data (in billions of dollars): Compensation of employees = 1,400, Net interest = 150, Rental income of persons = 75, Profits = 840; what is the Gross Domestic Product (GDP)?
Based on the provided table, how is Gross Domestic Product (GDP) calculated using the income approach, considering the following components (in billions): Compensation of employees: 8,000; Net interest: 600; Rental income: 300; Profits: 2,000; Indirect business taxes: 1,525; Depreciation: 2,500?
Based on the provided table, how is Gross Domestic Product (GDP) calculated using the income approach, considering the following components (in billions): Compensation of employees: 8,000; Net interest: 600; Rental income: 300; Profits: 2,000; Indirect business taxes: 1,525; Depreciation: 2,500?
Based on the income approach, Net Domestic Product (NDP) is calculated by subtracting depreciation from GDP. If the GDP is $14,925 billion and depreciation is $1,833 billion, what is the NDP?
Based on the income approach, Net Domestic Product (NDP) is calculated by subtracting depreciation from GDP. If the GDP is $14,925 billion and depreciation is $1,833 billion, what is the NDP?
Given the following data (in billions of dollars): Consumption = 8,000, Investment = 2,500, Government Spending = 3,000, Exports = 1,800, Imports = 1,100; what is the Gross Domestic Product (GDP)?
Given the following data (in billions of dollars): Consumption = 8,000, Investment = 2,500, Government Spending = 3,000, Exports = 1,800, Imports = 1,100; what is the Gross Domestic Product (GDP)?
If Gross Domestic Product (GDP) is $14,140 and Depreciation is $1,775, what is Net Domestic Product (NDP)?
If Gross Domestic Product (GDP) is $14,140 and Depreciation is $1,775, what is Net Domestic Product (NDP)?
Among the following options, which statement is TRUE?
Among the following options, which statement is TRUE?
What term describes the income households have available to spend or save after paying personal income taxes?
What term describes the income households have available to spend or save after paying personal income taxes?
How is national income defined?
How is national income defined?
Given the following data: Consumption = 200, Gross Private Investment = 50, Government Purchases = 70, Exports = 40, Imports = 306, Statistical Discrepancy = 0, what is the Gross Domestic Product (GDP) for the country?
Given the following data: Consumption = 200, Gross Private Investment = 50, Government Purchases = 70, Exports = 40, Imports = 306, Statistical Discrepancy = 0, what is the Gross Domestic Product (GDP) for the country?
Given a Gross Domestic Product (GDP) of 338 and Depreciation of 10, what is the Net Domestic Product (NDP)?
Given a Gross Domestic Product (GDP) of 338 and Depreciation of 10, what is the Net Domestic Product (NDP)?
Given a Net Domestic Product (NDP) of 328, Statistical Discrepancy of 0, and Indirect Business Taxes of 10, what is the National Income (NI)?
Given a Net Domestic Product (NDP) of 328, Statistical Discrepancy of 0, and Indirect Business Taxes of 10, what is the National Income (NI)?
Given a National Income (NI) of 318, Corporate Profits Taxes of 52, Social Security Taxes of 71, Net Interest of 37, Dividends of 24, Government Transfer Payments to Individuals of 118, Personal Interest Income Received by Households of 15, and Personal Dividend Income Received by Households of 13, what is the Personal Income (PI)?
Given a National Income (NI) of 318, Corporate Profits Taxes of 52, Social Security Taxes of 71, Net Interest of 37, Dividends of 24, Government Transfer Payments to Individuals of 118, Personal Interest Income Received by Households of 15, and Personal Dividend Income Received by Households of 13, what is the Personal Income (PI)?
Personal Income (PI) is 306 and Personal Taxes are 8, what is the Disposable Personal Income (DPI)?
Personal Income (PI) is 306 and Personal Taxes are 8, what is the Disposable Personal Income (DPI)?
Using the provided table, determine the Real GDP in 2017, given a Nominal GDP of 524.1 and a GDP Deflator of 105.
Using the provided table, determine the Real GDP in 2017, given a Nominal GDP of 524.1 and a GDP Deflator of 105.
Based on the provided table, calculate Real GDP in 2019, given a Nominal GDP of 700 and a GDP Deflator of 102.5.
Based on the provided table, calculate Real GDP in 2019, given a Nominal GDP of 700 and a GDP Deflator of 102.5.
Given a Nominal GDP of 800 and a GDP Deflator of 103.1 in 2020, calculate the Real GDP for that year.
Given a Nominal GDP of 800 and a GDP Deflator of 103.1 in 2020, calculate the Real GDP for that year.
Which of the following items is most likely to be exchanged in the product markets?
Which of the following items is most likely to be exchanged in the product markets?
What fundamental principle underlies the circular flow model?
What fundamental principle underlies the circular flow model?
Which of the following incomes is NOT typically earned in the factor market?
Which of the following incomes is NOT typically earned in the factor market?
Households in an economy receive a total income of $5 million, consisting of $3.5 million in wages, $1 million in rental payments, and $250,000 in interest payments. Assuming that costs of production equal the total income, what are the total business profits?
Households in an economy receive a total income of $5 million, consisting of $3.5 million in wages, $1 million in rental payments, and $250,000 in interest payments. Assuming that costs of production equal the total income, what are the total business profits?
What are the two primary sectors represented in the simple circular flow model?
What are the two primary sectors represented in the simple circular flow model?
Which of the following activities is included when calculating Gross Domestic Product (GDP)?
Which of the following activities is included when calculating Gross Domestic Product (GDP)?
Which of the following transactions is included in the calculation of Gross Domestic Product (GDP)?
Which of the following transactions is included in the calculation of Gross Domestic Product (GDP)?
How is wheat used for producing bread classified?
How is wheat used for producing bread classified?
Which of the following is considered a final good?
Which of the following is considered a final good?
Which of the following items would be considered a final good?
Which of the following items would be considered a final good?
Flashcards
Gross Domestic Product (GDP)
Gross Domestic Product (GDP)
The total market value of all final goods and services produced within a country in a specific time period.
Durable consumer goods
Durable consumer goods
Goods that are purchased by consumers that are expected to last for more than three years.
Nondurable consumer goods
Nondurable consumer goods
Goods purchased by consumers that are expected to last for fewer than three years.
Services
Services
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Gross private domestic investment
Gross private domestic investment
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Depreciation
Depreciation
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Capital good
Capital good
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GDP Income Approach
GDP Income Approach
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National Income (NI)
National Income (NI)
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Disposable Personal Income
Disposable Personal Income
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Real GDP
Real GDP
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Product markets
Product markets
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Circular flow model
Circular flow model
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Factor market incomes
Factor market incomes
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Intermediate good
Intermediate good
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Final good
Final good
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Value added
Value added
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Study Notes
- Gross Domestic Product (GDP) for Utopia in 2020, using the expenditure approach, is $6,200, calculated by adding consumption ($5,000), investment ($1,200), government expenditures ($2,000), and net exports ($900 - $1,100).
- A dinner table is NOT an example of a non-durable consumer good.
- The face value of a corporate bond is NOT considered a service.
- Dell buying an office desk is part of gross private domestic investment.
- Gross private domestic investment includes both the purchase of production equipment and an increase in finished goods inventory.
- An increase in unsold Tesla Model 3 vehicles indicates an increase in inventory investment.
- Depreciation is the reduction in the value of capital goods due to wear and tear.
- A capital good is purchased to make other goods and services.
- An increase in imports causes GDP to decrease, all other factors being constant.
- A 10 percent increase in wages due to improved productivity increases gross domestic income, which leads to an increase in GDP since consumption expenditures would rise.
- An increase in a U.S. resident's income earned in Japan means that there is an increase in Japan’s GDP.
GDP Calculation
- Based on provided data, GDP is $2,465.
- Based on provided data, GDP calculated via the income approach is $14,925 billion.
- Net Domestic Product (NDP), based on provided data, is $13,092 billion.
GDP and NDP
- Based on provided data, GDP is $14,140.
- Based on provided data, net domestic product is $12,365.
- GDP is equal to Gross Domestic Income (GDI).
- Disposable personal income is the income households receive after paying personal income taxes.
- National income is equal to the sum of all factor payments to resource owners.
GDP & Related Figures
- Based on provided data, the GDP for the country is 338.
- Based on provided data, the Net Domestic Product (NDP) for the country is 328.
- Based on provided data, National Income (NI) for the country is 318.
- Based on provided data, Personal Income (PI) for the country is 306.
- Based on provided data, Disposable Personal Income (DPI) for the country is 298.
Real GDP
- Based on provided data, Real GDP in 2017 is 524.1
- Based on provided data, Real GDP in 2019 is 682.9
- Based on provided data, Real GDP in 2020 is 775.9
- A portable power bank would most likely be sold in product markets.
- A core principle of the circular flow is that in every economic exchange, the seller receives the same amount that the buyer spends.
- Prices of goods and services are NOT incomes earned in the factor market.
- In an economy where households receive $5 million in total income ($3.5 million wages, $1 million rental payments, $250,000 interest payments), the costs of production are $5 million, and profits equal $250,000.
- The two sectors of the economy in the simple circular flow model are households and businesses.
- The purchase of a newly built house is included in determining GDP.
- Buying a used car, or receiving social security checks are NOT included when calculating GDP.
- Wheat used for producing bread is an intermediate good.
- A lawn mower purchased by a household is a final good.
- A smartphone would most likely be defined as a final good.
- A car sold from a used car lot is NOT counted in GDP.
- Purchase of a share of General Motors stock is NOT included in the calculation of GDP.
- A farmer buys seed for 15 cents that is used to grow wheat. The farmer sells the wheat to the miller for 30 cents, who makes flour. The flour is sold to the baker for 75 cents and the baker makes bread, which is sold to the grocer for 90 cents. The grocer sells the bread for $1.25. The value added for the miller is 45 cents.
- A positive change in business inventories is part of gross private domestic investment.
- A tablet device is a durable consumer good.
- Food and gasoline are classified as nondurable goods.
- If GDP is $900 billion, gross private investment is $200 billion, exports equal imports, and government spending is $400 billion, then consumption expenditures are $300 billion.
- Given interest payments, wages, rental receipts, business profits, depreciation, and indirect business taxes, gross domestic income is $13,350.
- Tuition expenditures at college are classified as consumer expenditures on services when calculating GDP.
- A decrease in net exports causes GDP to decrease.
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Description
Explanation of Gross Domestic Product (GDP). GDP in 2020 for Utopia is $6,200, calculated by adding consumption, investment, government expenditures, and net exports. Gross private domestic investment includes the purchase of production equipment and increases in finished goods inventory.
