EC ECON CH12 4/10

Why would the sale of a secondhand car not be included in a calculation of GDP?

• The car is an intermediate product.

• The sale is a free-market transaction.

• The car does not represent new production.

• The transaction occurs in the underground economy.

Match the following

• the annual value of goods and services

• ​real GDP

• unreported money not in GDP

• underground economy

• gross domestic product with inflation

• current GDP

• gross domestic product "snapshot"

• ​gross national product (GNP)

Why are intermediate products excluded from macroeconomic calculations of GDP?

• because those products are goods, not services

• because their value is included in that of the final product

• because the GDP is a measure of market output on a local level

• 
  because the GDP is a measure of market output on a national level

Which of these is an example of a nonmarket transaction?

• maintaining a newspaper route

• babysitting as a favor to a friend

• paying a consultant for ideas on how to improve a product

• working at Taco Bell

Which of these best describes how a business's creation of output affects individuals?

• It results in the establishment of a base year.

• 
  It increases the number of nonmarket transactions.

• It generates jobs and therefore increases income.

• It reduces the number of secondhand sales and therefore decreases income.

Which of these is used by macroeconomists to measure inflation?

• 
  the establishment of a base year

• the calculation of GDP in current dollars

• 
  the creation of an output-expenditure model

• 
  the calculation of the number of households in a country

What is the primary reason for adjusting GDP for inflation?

• To reflect changes in the quantity of goods produced.

• To provide a more accurate measure of economic growth over time.

• To increase the nominal value of GDP.

• To account for changes in population.