chapter 4

Question 1

what is the largest component of GDP using the expenditure approach?

Answer 1

consumption expenditure

Question 2

GDP (income approach)

Answer 2

wages & salaries + other factor incomes + (indirect taxes - subsidies) + depreciation

Question 3

positive output gap

Answer 3

The economy is producing more than it could at full capacity, which can be a sign of high demand

Question 4

negative output gap

Answer 4

The economy is producing less than it could at full capacity, which can be a sign of weak demand