ECON 200 EXAM 3 UNL QUESTIONS AND ANSWERS
Describe how gross domestic product (GDP) is measured - CORRECT ANSWER✅✅measures the current
dollar value of production
identify GDP's major components - CORRECT ANSWER✅✅consumption + gross investment +
government purchases + net exports
consumption - CORRECT ANSWER✅✅all expenditures made by households on goods and services like
clothing, food, electronics, and recreation
what is included in consumption? - CORRECT ANSWER✅✅durable goods + nondurable goods + services
Government expenditure - CORRECT ANSWER✅✅all final goods purchased by federal, states and local
governments like police officers/tanks and labor resources like police officers/teachers
gross invesetment - CORRECT ANSWER✅✅the dollar value of all new capital purchased and the
expansion of inventories in an economy
categories of gross investment - CORRECT ANSWER✅✅business fixed investment, residential
investment, inventory investment
business fixed investment - CORRECT ANSWER✅✅purchases by firms of new capital goods (ex: offices,
factories, tools, machinery)
residential investment - CORRECT ANSWER✅✅purchases of new homes + home improvements
inventory investment - CORRECT ANSWER✅✅changes in inventories from one year to the next
net investment - CORRECT ANSWER✅✅gross investment - depreciation (represents the net change in
capital stock during a year)
, net exports - CORRECT ANSWER✅✅exports - imports
exports - CORRECT ANSWER✅✅produced domestically and sold abroad
imports - CORRECT ANSWER✅✅produced abroad and sold domestically
calculating gross domestic product using expenditures approach - CORRECT ANSWER✅✅adding up
consumption + gross investment + gov purchases + net exports
real gross domestic product - CORRECT ANSWER✅✅sames as nominal GDP but uses prices from a base
year instead of current prices
real GDP per capita - CORRECT ANSWER✅✅real GDP divided by the total population
how to measure a country's standard of living - CORRECT ANSWER✅✅use real GDP per capita
(standard of living measures the wealth of material things it citizens have)
limitations of GDP as a measure of output - CORRECT ANSWER✅✅- transactions through barter,
informal markets, or illegal means aren't included
- activities in the underground economy aren't included
- doesn't include happiness
economic growth in a historical context - CORRECT ANSWER✅✅economic growth has led to faster
increases in standards of living; sustained economic growth is not the norm in every country
PPF shifts to the right when - CORRECT ANSWER✅✅growth occurs from an increase in the amount of
resrouces available, new tech, or improvement,
a point on PPF shifts when - CORRECT ANSWER✅✅growth occurs when idle resources are put to use
Describe how gross domestic product (GDP) is measured - CORRECT ANSWER✅✅measures the current
dollar value of production
identify GDP's major components - CORRECT ANSWER✅✅consumption + gross investment +
government purchases + net exports
consumption - CORRECT ANSWER✅✅all expenditures made by households on goods and services like
clothing, food, electronics, and recreation
what is included in consumption? - CORRECT ANSWER✅✅durable goods + nondurable goods + services
Government expenditure - CORRECT ANSWER✅✅all final goods purchased by federal, states and local
governments like police officers/tanks and labor resources like police officers/teachers
gross invesetment - CORRECT ANSWER✅✅the dollar value of all new capital purchased and the
expansion of inventories in an economy
categories of gross investment - CORRECT ANSWER✅✅business fixed investment, residential
investment, inventory investment
business fixed investment - CORRECT ANSWER✅✅purchases by firms of new capital goods (ex: offices,
factories, tools, machinery)
residential investment - CORRECT ANSWER✅✅purchases of new homes + home improvements
inventory investment - CORRECT ANSWER✅✅changes in inventories from one year to the next
net investment - CORRECT ANSWER✅✅gross investment - depreciation (represents the net change in
capital stock during a year)
, net exports - CORRECT ANSWER✅✅exports - imports
exports - CORRECT ANSWER✅✅produced domestically and sold abroad
imports - CORRECT ANSWER✅✅produced abroad and sold domestically
calculating gross domestic product using expenditures approach - CORRECT ANSWER✅✅adding up
consumption + gross investment + gov purchases + net exports
real gross domestic product - CORRECT ANSWER✅✅sames as nominal GDP but uses prices from a base
year instead of current prices
real GDP per capita - CORRECT ANSWER✅✅real GDP divided by the total population
how to measure a country's standard of living - CORRECT ANSWER✅✅use real GDP per capita
(standard of living measures the wealth of material things it citizens have)
limitations of GDP as a measure of output - CORRECT ANSWER✅✅- transactions through barter,
informal markets, or illegal means aren't included
- activities in the underground economy aren't included
- doesn't include happiness
economic growth in a historical context - CORRECT ANSWER✅✅economic growth has led to faster
increases in standards of living; sustained economic growth is not the norm in every country
PPF shifts to the right when - CORRECT ANSWER✅✅growth occurs from an increase in the amount of
resrouces available, new tech, or improvement,
a point on PPF shifts when - CORRECT ANSWER✅✅growth occurs when idle resources are put to use
