Transcript Ch. 6 Review PPT (Fill-In)

Chapter 6 Review
Measuring Domestic Output &
National Income
A nation's GDP:
•
value of the total
output
produced within the borders of the
, in
a
.
A nation's GDP:
• can be found by summing
+
+
+
.
What we don’t count:
•
•
•
•
•
-market transactions
items
goods
/bonds
payments
To avoid multiple counting:
• only count
goods.
Final goods and services:
• goods and services purchased by
users,
rather than for
or
processing.
good:
• purchase of taco shells by Taco Bell (Live Mas!)
consumption expenditures include:
•
spending (NOT new home sales)
Net exports are negative when:
• a nation's
exceed its
.
investment includes:
•
expenditures, e.g. on machinery and
equipment.
largest component of total
expenditures in the United States is:
•
.
In the treatment of U.S. exports and
imports:
• add
, but subtract
calculating GDP.
, in
G stands for:
•
purchases.
GDP excludes:
• the market value of
work in the home.
disposable income:
• income received by households
taxes
personal
Nominal GDP:
• the sum of all monetary transactions involving
final goods and services that occur in the
economy of a country in a year, NOT adjusted
for changes in
.
Real GDP:
• GDP data that have been
changes in the price level.
for
•
?
=
Nominal x 100
Real
If real GDP in a particular year is $80
billion and nominal GDP is $240 billion,
the GDP price index for that year is:
•
.
If nominal GDP rises:
• real GDP may either
or
.
The price index for the base year is
always:
•
.
•
=
Nominal GDP
Price Index
x 100
If nominal GDP has risen faster than
real GDP:
• the general price level has
.
The underground economy:
•
GDP.
GDP:
• understates economic welfare because it does
not take into account increases in
.
• does NOT include environmental
.
Would a hurricane HELP or HARM a
country’s GDP? Why?
Does fixing your own car add to GDP?
Is marrying your housekeeper good for
GDP?
If an American tourist spends money
in Mexico, whose GDP benefits?