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| Question | Answer |
| Who is responsible for calculating the GDP? | National Economic Accounts (NEA) |
| What does the GDP measure? | The dollar value of production within the nation's borders |
| How does BEA keep make "flash" estimates of GDP? | A small group of statisticians and analysts keep track of production and sales over a wide variety of goods and services. |
| What are the 4 expenditures? | Consumer, government, investment, exports & imports |
| What is the formula for GDP? | GDP = C + I + G + X |
| Another name for real GDP? | Constant-dollar GDP |
| Another name for nominal GDP? | Current dollar GDP |
| Underground economy | Anything households do for themselves and does not go through a market |
| What are other things that are not counted in the GDP? | Second hand sales Transactions that are purely financial Intermediate sales |
| GNP | GDP except also includes production by American workers abroad and excludes production by foreign workers in America |
| National Income (NI) | Measures income earned by households and profits earned by firms after adjusting for depreciation and indirect business taxes. Also known as income earned by all FOPs. |
| Personal Income (PI) | Income received by households only |
| Disposable Personal Income (DPI) | Income of households after taxes have been paid. Derived from subtracting personal taxes from PI. Also represents discretionary income of households (they can save/spend) |
| 3. B 4. C | |
| E | |
| C | |
| 12. E 13. C | |
| 14. A 15.C | |
| If production and prices rise while population stays constant then all three statistics will rise. | |
| Is GDP an under- or over-statement? | |
| Explain the difference between nominal GDP, real GDP, and GDP per capita. | Nominal GDP measures the production of goods and services within a nation's borders. Nominal GDP could increase because of an increase in output or an increase in the prices of the good sand services produced. Real GDP measures production, but adjusts for any price changes. Real GDP does not change if prices change because it values current output in terms of prices of the given base period. Only one thing can cause the real GDP to change and that is a change in output. GDP per capita is production per person. |
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