Chapter 5 - Measuring a Nation's Income

Question 0

Consumption

Answer 0

Consumption is spending by households on goods and services, with the exception of purchases of new housing.

Question 1

Gross Domestic Product (GDP)

Answer 1

The gross domestic product is the market value of all final goods and services produced within a country in a given period of time.

Question 2

Investment

Answer 2

Investment is spending on capital equipment, inventories, and structures, including household purchases of new housing.

Question 3

Government Purchases

Answer 3

Government purchases are spending on goods and services by local, state, and federal governments.

Question 4

Net Exports

Answer 4

Net Exports are spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestics residents (imports).

Question 5

Nominal GDP

Answer 5

Nominal GDP is the production of goods and services valued at current prices.

Question 6

Real GDP

Answer 6

Real GDP is the production of goods and services valued at constant prices.

Question 7

GDP Deflator

Answer 7

The GDP deflator is a measure of the price level calculated as the ratio of nominal GDP to real GDP times 100.