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Cards In This Set
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How do you measure gross domestic product?
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Adding together the market value of all final goods and services produced within the borders of a nation.
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How does a sizable underground economy affect GDP?
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The GDP will be underestimated.
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How is national income derived?
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From GDP by subtracting an allowance for depreciation of capital equipment.
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What is national income?
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Total income earned by households
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What is personal income?
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Total income received by households including transfer payments.
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What is disposable income?
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Personal income minus personal taxes
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Two ways of calculating GDP are:
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Expenditures approach and the income approach
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What does personal consumption expenditures include?
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All goods and services bought by households.
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Purchasing a gucci purse from Italy would be classified as:
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An import and an export
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Using the income approach, an estimate of the value of capital worn out producing GDP is called
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Capital consumption allowance or depreciation.
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What is included when calculating GDP using the resource-cost-income approach?
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Compensation of employees, rental income, profits, net interest, indirect business taxes and depreciation.
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Which is higher; nominal GDP or real GDP?
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Nominal, because of the effects of inflation as measured by the GDP deflator.
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What is GNP?
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The value of all goods and services produced by the citizens of a nation.
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If the CPI at the end of year one is 100 and 108 and the end of year two, what was the inflation rate?
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8 percent.
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What is a major problem of the CPI?
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Doesn't acknowledge the introduction of new goods.
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