Intro to Econ Reasoning Unit 1 Questions and Answers (100% Correct Answers) Already Graded A+

gross domestic product (GDP) [ Ans: ] a measure of the market value of the output of the economy in a given period GDP per captia [ Ans: ] GDP divided by population - average income of people in a country disposable income [ Ans: ] income available after paying taxes and receiving transfers from the government - amount of wages or salaries, profit, rent, interest and transfer payments from the government (such as unemployment or disability benefits) or from others (for example, gifts) received over a given period such as a year, minus any transfers the individual made to others (including taxes paid to the government) What disposable income leaves out [ Ans: ] 1. quality of social and physical environment (ie friendships and clean air) 2. free time 3. goods/services we don't buy (healthcare/education provided by the gov) 4. goods/services produced within household (meal, childcare) why GDP isn't accurate [ Ans: ] better than disposable income but: 1. goods difficult to value because measure by how much it cost to produce 2. goods by gov. not typically sold 3. income distribution affects wellbeing (ex. high avg bc wide inequality) GDP at constant prices [ Ans: ] Price corrected for increases in prices (inflation) or decreases in prices (deflation) so represents same buying power at diff. times purchasing power parity (PPP) [ Ans: ] statistical correction allow comparisons of amount of goods people can buy in different countries that have different currencies EQ: growth rate? [ Ans: ] growth rate = (change in income)/(original level of income) or (Y2-Y1)/Y1) ratio scale [ Ans: ] chart y axis GDP per captia doubles (ex. ) *Steeper line on ratio scale graph indicates growth rate of economy's GDP per capita Q1.3: Imagine that the GDP per capita of a country had doubled every 100 years. You