Sunday, January 23, 2011

Post 20: test corrections

Reviewing facts
Q1: B; H, National income accounting tracks assumption, income, and production in a nation’s economy. (pg. 229)
Q2: (blank); A, nominal GDP is current GDP (pg. 232).
Q4: A; B, Real GDP is used as the primary measure of the U.S. economy until1991 (pg. 232).
Q5: (blank); I, the business cycle explains changes in economic activity that occur in a market system, measured in terms of increases and decreases in the GDP.(pg. 236).
Q7: F; G, coincident indicators are economic variables that occur along with changes in the economy. (pg. 240)
Q8: G; F, lagging indicators are economic variables that occur months after changes in the economy. (pg. 240)

Identifying ideas
Q2: business cycle; product market, four sectors of the product market combine to make up GDP. (pg. 230)
Q5: (blank); gross, because it does not include depreciation, gross domestic product is a more representative measure of a nation’s actual output of new goods than GDP.
Q9: (blank);tax base, an expanded tax base is a benefit of economic growth that gives government more money to spend on such things as education. (pg242)

Understanding ideas
Q4: B; A, GDP figures are sometimes inaccurate because gathering data is a slow process. (pg233)
Q7: B; A, personal income is an example of a coincident indicator. (my blog)

Q1: B; D, the process of tracking production, income, and consumption in a nations economy is national income accounting. (pg229)
Q2: (blank); B, GDP expressed in the current prices of the period being measured is nominal GDP. (pg232)
Q4: G; F, the total dollar value of all final output produced with factors of production owned by residents of a given country during one year. (pg231)
Q12: N; S, an increase in the amount of capital goods available per worker is capital deepening. (pg245)

Open ended
GDP   =  Consumption
  + Investment
  + Government Purchases
  + Net Exports
Consumption is the largest component of the GDP. In the U.S., the largest and most stable component of consumption is services. Consumption is calculated by adding durable and non-durable goods and services expenditures. It is unaffected by the estimated value of imported goods.
Investment includes investment in fixed assets and increases in inventory.
Government purchases are equal to the government expenditures less government transfer payments (welfare, unemployment payouts, etc.)
Net exports are exports minus imports. Imports are subtracted since GDP is defined as the output of the domestic economy.

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