AP Macroeconomics: Unit 2 UPDATED
ACTUAL Questions and CORRECT
Answers
national income accounting - CORRECT ANSWER - The techniques used to measure the
overall production of the economy and other related variables for the nation as a whole.
gross domestic product - CORRECT ANSWER - The total market value of all final goods
and services produced annually within the boundaries of the United States, whether by U.S. or
foreign-supplied resources.
intermediate goods - CORRECT ANSWER - products that are purchased for resale or
further processing or manufacturing.
final goods - CORRECT ANSWER - goods that have been purchased for final use and not
for resale or further processing or manufacturing.
multiple counting - CORRECT ANSWER - wrongly including the value of intermediate
goods in the gross domestic product; counting the same good or service more than once.
value added - CORRECT ANSWER - The value of the product sold by a firm less the
value of the produces (materials) purchased and used by the firm to produce the product.
expenditures approach - CORRECT ANSWER - the method that adds all expenditures
made for final goods and services to measure the gross domestic product.
income approach - CORRECT ANSWER - the method that adds all the income generated
by the production of final goods and services to measure the gross domestic product.
personal consumption expenditures (C) - CORRECT ANSWER - the expenditures of
households for durable and nondurable consumer goods and services.
, gross private domestic investment (Ig) - CORRECT ANSWER - Expenditures for newly
produced capital goods (such as machinery, equipment, tools, and buildings) and for additions to
inventories.
net private domestic investment - CORRECT ANSWER - gross private domestic
investment less consumption of fixed capital; the addition to the nation's stock of capital during a
year.
government purchases (G) - CORRECT ANSWER - expenditures by government for
goods and services that government consumes in providing public goods and for public (or
social) capital that has a long lifetime; the expenditures of all governments in the economy for
those final goods and services.
net exports (Xn) - CORRECT ANSWER - Exports minus imports
national income - CORRECT ANSWER - total income earned by resource suppliers for
their contributions to gross domestic product; equal to the gross domestic product minus
nonincome charges, minus net foreign factor income.
indirect business taxes - CORRECT ANSWER - such taxes as sales, excise, and business
property taxes, license fees, and tariffs that firms treat as costs of producing a product and pass
on (in whole or in part) to buyers by charging higher prices.
consumption of fixed capital - CORRECT ANSWER - an estimate of the amount of capital
worn out or used up (consumed) in producing the gross domestic product; also called
depreciation.
net domestic product (NDP) - CORRECT ANSWER - gross domestic product less the part
of the year's output that is needed to replace the capital goods worn out in producing the output;
the nation's total output available for consumption or additions to the capital stock.
ACTUAL Questions and CORRECT
Answers
national income accounting - CORRECT ANSWER - The techniques used to measure the
overall production of the economy and other related variables for the nation as a whole.
gross domestic product - CORRECT ANSWER - The total market value of all final goods
and services produced annually within the boundaries of the United States, whether by U.S. or
foreign-supplied resources.
intermediate goods - CORRECT ANSWER - products that are purchased for resale or
further processing or manufacturing.
final goods - CORRECT ANSWER - goods that have been purchased for final use and not
for resale or further processing or manufacturing.
multiple counting - CORRECT ANSWER - wrongly including the value of intermediate
goods in the gross domestic product; counting the same good or service more than once.
value added - CORRECT ANSWER - The value of the product sold by a firm less the
value of the produces (materials) purchased and used by the firm to produce the product.
expenditures approach - CORRECT ANSWER - the method that adds all expenditures
made for final goods and services to measure the gross domestic product.
income approach - CORRECT ANSWER - the method that adds all the income generated
by the production of final goods and services to measure the gross domestic product.
personal consumption expenditures (C) - CORRECT ANSWER - the expenditures of
households for durable and nondurable consumer goods and services.
, gross private domestic investment (Ig) - CORRECT ANSWER - Expenditures for newly
produced capital goods (such as machinery, equipment, tools, and buildings) and for additions to
inventories.
net private domestic investment - CORRECT ANSWER - gross private domestic
investment less consumption of fixed capital; the addition to the nation's stock of capital during a
year.
government purchases (G) - CORRECT ANSWER - expenditures by government for
goods and services that government consumes in providing public goods and for public (or
social) capital that has a long lifetime; the expenditures of all governments in the economy for
those final goods and services.
net exports (Xn) - CORRECT ANSWER - Exports minus imports
national income - CORRECT ANSWER - total income earned by resource suppliers for
their contributions to gross domestic product; equal to the gross domestic product minus
nonincome charges, minus net foreign factor income.
indirect business taxes - CORRECT ANSWER - such taxes as sales, excise, and business
property taxes, license fees, and tariffs that firms treat as costs of producing a product and pass
on (in whole or in part) to buyers by charging higher prices.
consumption of fixed capital - CORRECT ANSWER - an estimate of the amount of capital
worn out or used up (consumed) in producing the gross domestic product; also called
depreciation.
net domestic product (NDP) - CORRECT ANSWER - gross domestic product less the part
of the year's output that is needed to replace the capital goods worn out in producing the output;
the nation's total output available for consumption or additions to the capital stock.
