🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeTextbook Notes300,000US110,000

Economics 10b Chapter Notes - Chapter 23: Retained Earnings, Intermediate Good, Net National Product

95 views7 pages
School
Harvard University
Department
Economics
Course
Economics 10b
Professor
Gregory Mankiw

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Rental housing value: rent equals both the tenant"s expenditure and the landlord"s income. The government includes owner-occupied housing in gdp by estimating rental value, intimating that the owner is renting to himself rent here is included in both the homeowner"s expenditure and in his income, so it adds to. Unless the intermediate good is added to a firm"s inventory of goods for use or sale at a later date. Additions to inventory add to gdp and reductions in inventory subtract from. Unadjusted data show that the economy produces more goods and services during some times of year than during others. Household spending on education is also included in consumption of services: investment (i): spending on capital equipment, inventories, and structures, including household purchases of new housing; purchases of goods to produce other goods. Inventory accumulation by a company instead of just selling a good is included under investment because it is like the company bought it for itself.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

Economics 10b Chapter 23: Chapter 23 Notes
emeraldraccoon202
Economics 10b Chapter 23: Chapter 23 - Measuring a Nation's Income
ivoryelephant662
Economics 10b Lecture Notes - Lecture 2: Classical Dichotomy, Greg Mankiw, Money Supply
fuchsiamole391

Related Questions

Which of the following statements about GDP is correct

A) Money continuously flows from households to firms and then back to households, and GDP measures this flow of money

B) GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy’s output of goods and services.

C) While not perfect, GDP is generally regarded as the best single measure of a society’s economic well-being.

D) All of the above are correct.

What is the market for factors of production?

  1. What is the market for factors of production?

    1. The market for factors of production is where households and firms interact to trade factors of production for factor payments. For example this is where people provide firms with labor and firms pay them with wages. 

  2. What is the money market?

    1. The money market is where households, firms, and the government may save and/or invest their money to earn interests. Money market includes banks, stock market, bonds market, and other financial institutions where economic actors can buy and sell financial assets to earn interests and/or dividends.

  3. Who are the three economic actors in the circular flow model?

    1. In a circular flow model, the three main economic actors are the households, firms, and the government. Households include the typical individual consumers. Firms include businesses and similar producers in the economy. Finally, the government refers to the whole government system from federal to local level.

  4. How is the national income of an economy determined?

    1. The national income of an economy is determined by measuring the total value of the output produced in an economy or the total income earned by the actors in the economy. In a circular flow model, we can see that the value of total output produced should equal the total value of income generated and earned in the economy. This is because every dollar spent by someone in the economy is received by another person in the economy as income.

  5. What is GDP?

    1. The gross domestic product or GDP represents the sum total of the value of the final goods and services produced within the economy for a given year. It is the most commonly used measure of its economy’s productivity and income.

6. To study the macroeconomy we must combined prices and quantities generated in single-product markets into broad aggregates.

a) True
b) False

7. An economist who favored expanded government would recommend:

a) tax cuts during recession and tax increases during inflation
b) tax increases during recession and tax cuts during inflation.
c) tax cuts during both recession and inflation
d) increases in government spending during a recession and tax increases during inflation.
e) tax cuts during recessions and reduction in government spending during inflation.

8. If Government tax revenue exceeds Government spending the result of the budget is

a) an increase in investment
b) a shortage
c) an increase in the deficit
d) a decrease in savings
e) a surplus

9. Which of the following statements is true?

a) In the US economy, the net export sector is positive.
b) Aggregate demand is the sum of total output produced by all firms in the US.
c) The aggregate supply curve is vertical if the price level is equal to the per-unit cost of production
d) Aggregate production sums up the four major components C+I+G+Xn in the US economy.
e) Government spending is the largest component of aggregate demand.

10. Which of the following statements is true?

  a) When unemployment is rising then real GDP is rising.
b) The required reserve ratio is a tool used by the government to control the demand for money.
c) The four components of aggregate supply are the same as aggregate demand.
d) when an imported resource such as oil has decreased that is an increase in aggregate demand.
e) The four components of aggregate demand---Households, Business, Government, and Net Exports.