Econ 214 Test 1 Actual with Questions
and correct/verified Answers
Gross Domestic Product: - ANSWER-The market value of all final goods and services produced within a
country during a specific period.
Intermediate Goods: - ANSWER-Goods purchased for resale or for use in producing another good or
service.
Final market goods and services: - ANSWER-Goods and services purchased by their ultimate user.
What counts towards GDP? - ANSWER-1. Only final goods and services count
2. Only transactions involving production count (produced)
3. Only production within the country is counted
4. Only goods produced during the current period are counted
What are the common denominators for GDP? - ANSWER-Dollars (market value)
Dollar flow of expenditures on final goods = - ANSWER-The dollar flow of income (and indirect cost) from
final goods.
GDP is measured by both... - ANSWER-1. The mareket value of the output produced
2. The income generated by those who produced the output.
**Increases in output and growth of income are linked**
Expenditure Approach to calculating GDP: - ANSWER-1. Personal consumption expenditures
2. Gross private domestic investment
3. Government consumption and gross investment
4. Net exports of goods and services.
Personal Consumption expenditures: - ANSWER-(largest)
Consumption of nondurable goods (Short term): Food, clothing, recreation, medical, legal services, and
fuel
Consumption of durable goods(Long term): appliances and cars etc...
Gross private domestic investment: - ANSWER-Production or construction of capital goods that provide
"flow" to future services (helps make other products that contribute to increasing the GDP):
Business plants and equipment (investment goods)
Government consumption and gross investment: - ANSWER-Government components: 1. expenditures
on items like office supplies, law enforcement, veterans hospitals.
2. Long lasting capital goods like missiles, highways, dams for flood control.
Net exports of goods and services: - ANSWER-Total exports - total imports
Exports: - ANSWER-domestically produced goods and servieces sold to forigners
Imports: - ANSWER-Foreign produced goods and servies purchased domestically.
Personal Consumption: - ANSWER-Household spending on consumer goods and services during the
current year period. Consumption is a flow concept.
and correct/verified Answers
Gross Domestic Product: - ANSWER-The market value of all final goods and services produced within a
country during a specific period.
Intermediate Goods: - ANSWER-Goods purchased for resale or for use in producing another good or
service.
Final market goods and services: - ANSWER-Goods and services purchased by their ultimate user.
What counts towards GDP? - ANSWER-1. Only final goods and services count
2. Only transactions involving production count (produced)
3. Only production within the country is counted
4. Only goods produced during the current period are counted
What are the common denominators for GDP? - ANSWER-Dollars (market value)
Dollar flow of expenditures on final goods = - ANSWER-The dollar flow of income (and indirect cost) from
final goods.
GDP is measured by both... - ANSWER-1. The mareket value of the output produced
2. The income generated by those who produced the output.
**Increases in output and growth of income are linked**
Expenditure Approach to calculating GDP: - ANSWER-1. Personal consumption expenditures
2. Gross private domestic investment
3. Government consumption and gross investment
4. Net exports of goods and services.
Personal Consumption expenditures: - ANSWER-(largest)
Consumption of nondurable goods (Short term): Food, clothing, recreation, medical, legal services, and
fuel
Consumption of durable goods(Long term): appliances and cars etc...
Gross private domestic investment: - ANSWER-Production or construction of capital goods that provide
"flow" to future services (helps make other products that contribute to increasing the GDP):
Business plants and equipment (investment goods)
Government consumption and gross investment: - ANSWER-Government components: 1. expenditures
on items like office supplies, law enforcement, veterans hospitals.
2. Long lasting capital goods like missiles, highways, dams for flood control.
Net exports of goods and services: - ANSWER-Total exports - total imports
Exports: - ANSWER-domestically produced goods and servieces sold to forigners
Imports: - ANSWER-Foreign produced goods and servies purchased domestically.
Personal Consumption: - ANSWER-Household spending on consumer goods and services during the
current year period. Consumption is a flow concept.
