National ______ accounting measures the overall performance of the economy.

income

What is it called when there is a transfer of funds from one private individual to another?

Private transfer payments

A final good is:

1. counted as part of GDP
2. a good directly consumed by individuals or businesses

Gross domestic product

The market value of all final goods and services produced within the borders of a given country during a given period of time.

Gross domestic product calculations count only final goods and services because:

counting all intermediate goods and services would lead to double-counting of many activities.

True or false: Intermediate goods are included in the calculation of GDP.

False: Only final goods are included in the calculation of GDP. They are, of course, counted indirectly as part of the value of the final products.

An intermediate good is
a. a good directly consumed by individuals
b. counted as part of GDP
c. a good used only in the production of other products

c

Only _____ are included in the calculation of GDP in order to avoid multiple counting of goods and services.

final goods and services

Value added

the market value of a firm's output less the value of the inputs the firm has bought from others

The market value of a firm's output minus the value of the inputs the firm has bought from others is called

value added

The sale of _____ is excluded from the calculation of GDP because they contribute nothing to current production.

used (secondhand sales)

Expenditures Approach (output approach)

view GDP as the sum of all the money spent in buying it

Income Approach (allocations approach)

view GDP in terms of the income derived or created from producing it.

What is included in the compensation of employees?

1. Wages and salaries
2. Salary supplements: payments by employers into social insurance and into a variety of private pension, health, and welfare funds for workers.

The _____ and _____ of stocks (and bonds) is not included in GDO because it is just a matter of swapping bits of paper.

selling; buying

Formula for GDP

C+Ig+G+Xn

After calculating national income, what is added to national income to obtain GDP?

1. Statistical discrepancy
2. Consumption of fixed capital

GDP may be understated because ______.

non market activities are not included in GDP

True or false: In general, GDP does not include unpaid work.

True

Social Security payments, welfare payments, and veterans' payments that the government makes directly to households are called government ___________.

public transfer payments

What are the benefits of national income accounting

1. Track the long-run course of the economy
2. Enables formulation of policies to improve or safeguard the economy's health
3. Assesses the health of the economy

What is the agency that compiles statistics about the economy?

Bureau of Economic Analysis

The primary measure of the economy's performance is its annual total output of goods and services, which is called:

Aggregate output