Economics GDP Test Review questions and answers well illustrated.

Economics GDP Test Review questions and answers well illustrated. Gross domestic product - correct amount of goods and services sold in a national economy in a given year How is GDP different from GNP? - correct answers.GDP is domestic meaning that it is only within a country's borders. GNP is measured by looking at what all people from that country do worldwide in a given year. EX: A U.S. factory producing things in Germany counts for GNP but not GDP What is and what is not included in GDP? - correct answers.GDP is consumer spending + government spending + business investments/spending + net exports What is the expenditure method? - correct answers.Adding up all the things sold in the U.S. economy in a given year. (see last slide) What is an intermediate good and are they included in GDP? - correct answers.Intermediate goods are goods used in creation of new good and services. They are NOT included in GDP! EX: Windows in a new house, the windows are not counted because they are included in the price of the house. What are underground/black market goods? Are they included in GDP? - correct answers.Goods bought without government supervision. Resale items. Stolen or counterfeit goods. They are not included in GDP. What is real GDP? - correct answers.Real GDP is adjusted for inflation What is nominal GDP? - correct answers.Nominal GDP is not adjusted for inflation What is the business cycle? - correct answers.A cycle of economic expansion and contraction What causes a business cycle? - correct answers.Changes in spending do to various reasons cause the business cycle What are the four phases of the business cycle and what stage are we in? - correct answers.Expansion (this is where we currently are) Peak Contraction Trough What is recession? - correct answers.A period of economic contraction that lasts for 2 quarters(six months) What are some leading indicators and some examples of them? - correct answers.Leading indicators help show which direction the economy is going. EX: Interest rate, New Home Sales, Stock market Performance, and New building permits When was the longest period of GDPR growth in the US? - correct answers. What does full employment mean? - correct answers.There is no cyclical unemployment Identify different types of unemployment - correct answers.Frictional, structural, seasonal, and cyclical What is frictional unemployment? - correct answers.People are between jobs for a variety of reasons, just out of college, taking some time off, finding a new contract. What is structural unemployment? - correct answers.People lack the skills for available jobs what is seasonal unemployment? - correct answers.Unemployment based on seasons What is cyclical unemployment? - correct loyment based on the business cycle What is inflation? - correct answers.a general rise in the cost of goods and services What are the effects are inflation? - correct answers.Purchasing power decreases as the cost goes up. Will affect people on fixed budgets more than anyone else. What are the 3 theories of inflation? - correct answers.Cost push, demand pull, and quantity theory What is the cost push theory? - correct answers.Rising input costs cause business to charge more money for their products