midterm 1 Flashcards

1
Q

What is GDP

A

the market value of all final goods and services produced in a country in a given year

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2
Q

What kind of flow is goods and services

A

income flow from firms to households

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3
Q

What is included in current measure of GDP

A

A professional gardener regularly cuts your lawn.

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4
Q

Model A is superior to model B if..

A

Its predictions are closer to facts than model b

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5
Q

If we compare Canadas GDP and Chinese GDP

A

Chinas real GDP per person is less than real GDP per person in Canada

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6
Q

Stock and bonds are not included in GDP because

A

they are not goods and services

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7
Q

Intermediate goods, used goods, and purchases of stocks and bonds

A

are not included in calculating GDP

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8
Q

Opportunity cost is

A

highest valued alternative we give up to get something

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9
Q

If Saskatchewan closes hospitals

A

The marginal benefit from one of these hospitals was less than marginal cost

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10
Q

If the economy capital increases over the year

A

net investment was positive

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11
Q

economic model is

A

useful if it predicts well, even if assumptions are not realistic

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12
Q

if you begin with 24 million of capital and end the year with 20 million of capital

A

depreciation exceeded gross investment by 4 million

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13
Q

Scarcity exists…

A

in all economics

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14
Q

The purchase of a new car by a household is an example of

A

consumption expenditure

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15
Q

Definition of economics

A

The study of how individuals, businesses, governments, and entire societies make choices as they cope with scarcity and incentives that influence and reconcile choices

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16
Q

Air travel has increased since sept 11 and greatest number of accidents are caused by drunk drivers are examples of…

A

positive statements

17
Q

Why are intermediate goods not counted in GDP

A

to avoid counting their value twice and overstating GDP

18
Q

Statements about “what ought to be” are..

A

normative statements

19
Q

The rich should face higher income tax than the poor is an example of…

A

a normative statement

20
Q

What is a necessary consequence of scarcity

A

the requirement of making choices

21
Q

What is an example of a macroeconomic issue

A

Japans stagnant economy

22
Q

Final goods and services produced in Canada by foreigners are part of Canadas GDP T or F

A

True

23
Q

For the aggregate economy, income=…

A

Expendature=GDP

24
Q

T or F, Y= C+I+G+M-X

A

True

25
Q

Marginal cost is..

A

The cost of an increase of an activity

26
Q

The purchase of a van by a potter who uses it to travel to art shows is considered

A

an investment in the national income and expenditure accounts.

27
Q

Why dos GDP give an underestimated value of total output in the economy

A

Underground economy

28
Q

Capital is

A

tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services

29
Q

Government expenditure refers to..

A

federal, provincial, and local governments