[MACRO] 02 - National Output and National Income

Question 1

Definition: National Income and Product Accounts

Answer 1

Data collected and published by the government describing the various components of national income and output in the economy.

Question 2

Definition GDP (Gross Domestic Product)

Answer 2

The total market value of all final goods and services produced within a given period by factors of production located within a country. It can give us an idea of the purchasing power of a household.

Question 3

Definition: Value Added

Answer 3

The difference between the value of goods as they leave a stage of production and the cost of the goods as they entered that stage.

Question 4

Calculating the GDP for a Product

Answer 4

A product is priced by summing up all of the value added. This price is also factored into GDP calculations for that product.

Question 5

Definition: GNP (Gross National Product)

Answer 5

The total market value of all final goods and services produced within a given period by factors of production owned by a country’s citizens, regardless of where the output is produced. For example a German Company producing in Tukey = GNP for Germany but counts for the Turkish GDP

Question 6

Definition: Expenditure Approach (GDP)

Answer 6

A method of computing GDP that measures the amount spent on all final goods during a given period.

Question 7

Definition: Income Approach (GDP)

Answer 7

A method of computing GDP that measures the income-wages, rents, interest, and profits-recieved by all factors of production in producing final goods.

Question 8

4 Expenditure Categories

Answer 8

1) Personal Consumption (C)
2) Gross private domestic Investment (I)
3) Gov. Consumption and Gross Investment (G)
4) Net Exports (EX-IM)

Question 9

Aggregate Expenditure Function

Answer 9

AE = C + I + G + (EX-IM)

Question 10

Definition: Durable Goods

Answer 10

Goods that last a relatively long time, such as cars and household appliances.

Question 11

Definition: Nondurable Goods

Answer 11

Goods that are used up fairly quickly, such as food and clothing. They are classed as such if they perish within a year.

Question 12

Definition: Gross Private Domestic Investment (I)

Answer 12

Total investment in capital (by firms and households). This includes the purchase of new housing, plants, equipment and inventory by the private sector.

Question 13

Definition: Personal Consumption Expenditures (C)

Answer 13

A major component of GDP: expenditures by consumers on goods and services.

Question 14

Definition: Gross Investment

Answer 14

The total value of all newly produced capital goods (plant, equipment, housing, and inventory) produced in a given period).

Question 15

Definition: Net Investment

Answer 15

Gross Investment minus depreciation

Question 16

Definition: Gov. Consumption and Gross Investment (G)

Answer 16

Expenditures by federal, state, and local governments for final goods and services.

Question 17

Definition: Compensation of Employees

Answer 17

Includes wages, salaries, and various supplements- employer contributions to social insurance and pension funds, for example - paid to households by firms and by the gov.

Question 18

Definition: Proprietors’ Income

Answer 18

The income of unincorporated businesses.

Question 19

Definition: NNP (Net National Product)

Answer 19

Gross national product minus depreciation; a nation’s total product minus what is required to maintain the value of its capital stock.

Question 20

Household Expenditure Categories (3)

Answer 20

1) Durable Goods
2) Nondurable Goods
3) Services

Question 21

Firm Expenditure Categories (3)

Answer 21

1) Non-residential
2) Residential
3) Change in Business Inventories

Question 22

Government Expenditure Categories (2)

Answer 22

1) Federal (Central)

2) State and Local