GDP

Question 1

What is Macroeconomics?

Answer 1

The study of the behavior of the economy as a whole, includes regional, national, or global economy. It’s also used by the government and industries to predict trends, identity economic growth, and improve economic performance.

Question 2

What are the 3 economic goals and how are they measured?

Answer 2

1. Steady economic growth - measured using GDP
   ( Gross Domestic Product )
2. Stable prices - Measured using inflation/CPI
   ( Consumer Price Index )
3. Full employment - measured using unemployment numbers.

Question 3

What is the definition of GDP?

Answer 3

The dollar value of all federal goods services, and structures produced within a country’s borders during a 1 year period. It also measures a country’s total output.

Question 4

What does GDP tell us?

Answer 4

Year-to-year GDP data id used to tell us if a country’s economy is growing or shrinking.

Question 5

What is the ideal growth for GDP?

Answer 5

Between 2% and 3%

Question 6

What is the formula for GDP?

Answer 6

GDP = C + I + G ( x - m )

Question 7

What is C?

Answer 7

Consumer Spending - Household Purchases or FINAL goods.

Question 8

What is I?

Answer 8

Business Investment - Spending on capital investments, production processes, new employees.

Question 9

What is G?

Answer 9

Government Spending - On goods and services.

Question 10

What is ( X - M) ?

Answer 10

Net Exports also known as Xn.
[Net Exports = Exports - Imports].

Question 11

What is not included in GDP?

Answer 11

• Second hand sales (ex. a used car)
• Intermediate products (ex.Hour used to bake cake)
• Non-market transactions (ex. summer job, babysitting)
• Financial transactions (ex. buying and selling stock)
  -Underground economy (ex. drugs, illegal gambling)