Objective Sheets Chapter 15 16 & 20

Objective Sheets Chapter 15 16 & 20 - Asch Hawthorn...

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Asch Hawthorn Economics T-Th A. Ordonez Objective Sheet chptr.15,16,20 809-195-3K1C 3/23/10 Chapter 15 Define the following: GDP : is a measure of the income and expenditure of an economy, includes all items produced in the economy and sold legally in markets. Consumption (C): The spending by households on goods and services, with the exception of new housing. Investment (I): The spending on capital and capital equipment, inventories and structures, including new housing. Government Purchases (G): The spending on goods and services by local, state, and federal government. DOES NOT INCLUDE: transfer payments because they are not made in exchange for currently made goods and services. Net Exports (NX): Exports minus imports. Explain why an economy's income must equal it's expenditure. For an economy as a whole, income must equal expenditure because: - Every transaction has a buyer and a seller. - Every dollar of spending by some buyer is a dollar of income for some seller. A Farmer sells wheat to a Baker for $2, The Baker uses the wheat to make bread which is then sold for $3. What is the total contribution of these transactions to GDP? $1 because products used to produce goods are not counted as a GDP contribution. List the four components of GDP, example of each. Consumption (C) - The spending by households on goods and services, with the exception of purchases of new housing. Investment (I)
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Asch Hawthorn Economics T-Th A. Ordonez Objective Sheet chptr.15,16,20 809-195-3K1C 3/23/10 - The spending on capital equipment, inventories, and structures, including new housing. Government Purchases (G) - The spending on goods and services by local, state, and federal governments. - Does not include transfer payments because they are not made in exchange for currently produced goods or services. Net Exports (NX)
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Objective Sheets Chapter 15 16 & 20 - Asch Hawthorn...

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