Money Making
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1. What is GDP: Gross domestic product-The dollar amount of all goods and services produced within a country’s border.
2. How is GDP computed: All the goods and services produced in a 12-month period are multiplied by their price.
3. Why do economist use sampling methods to measure GDP: Because it would be extremely diffucult to compile a complete list of goods and services produced.
4. Why are intermediate products and second hand sales excluded from GDP: Intermediate products are excluded so they are not counted twice; second hand sales are excluded because they do not create new wealth.
5.What are 5 factors to take in account when considering GDP? 1) Reporting Delay 2) Composition of input 3) Quality of life 4) exclusion of non-market activities 5) exclusion of illegal activities
6. What are two aspects of the economy that GDP measures: 1) Performance 2) General Wealth
1. What are five measures of national income: 1) Gross National Product 2) Net national income 3) National income 4) personal income 5) Disposable income
2. How is Gross Domestic Product (GDP) translated into Gross National Product: All payments received outside of the United States are added and all payments made to the foreign-owned resources in the United States are Subtracted.
3. How is GNP translated into Net National Product (NNP): Capital consumption allowances are subtracted from the GNP.
4. How is NNP into National income (NI): All taxes that a business must pay as a cost of doing business, except the corporate profits tax, are subtracted.
5. How is personal income determined: Total amount of income going to an individual before taxes are deducted.
6. How is disposable personal income determined: Individual income taxes are subtracted from personal income
7.What are 4 main sectors of the Economy: 1) Consumer sector 2) Investment sector 3) Government Sector 4) Foreign Sector
C + I + G + ( x – 1) = GDP
1. What is price index: A statistical series that can be used to measure changes in price over time.
2. What are the three basic steps in constructing a price index: 1) Base year is chosen 2) A market basket of Goods are selected 3) The prices of the market basket goods in the base year are totaled and assigned a value of 100% .
3. What are three major price indices? 1) Consumer Price index 2) Producer price index 3) implicit GDP price deflation.
4. What is the difference between real GDP and current GDP: REal GDP is adjusted for inflation, where as current GDP is not.
5. How are price indices used in analyzing GDP: They are used to adjust GDP figures for inflations.
1. What is the censes: An official count of the population.
2. NAme and describe two ways that the Census Bureau tabulates and presents its data. Urban population – people living in incorporated villages or towns with 2,500 or more inhabitants. Rural population makes up the remainder of the population.
3. List 3 significant changes in the population of the United States since colonial times. 1) The growth rate has declined 2) tend toward smaller house holds 3) Change in were the population is living.
4. What are 3 major factors affecting the growth of population in the United States: 1) Fertility Rate 2) Life expectancy 3) Net immigration
5. How will the baby boomers affect the growth of population in the United States: The large number of baby boomers who reach retirement years will place a heavy burden on the relatively smaller working population, causing the dependency ratio to sire sharply.
1. What is a good measure of economic growth in the short run: Real GDP
1b. What is a good measure of economic growth in the long run? Real GDP per capital
2. What are five ways in which economic growth in the long run: 1) Economic growth increases the standard of living 2) Increase the tax base 3) helps alleviate Social problems 4) helps the economics of other nations 5) provides a role model for other countries
3. What are 4 factors that influence economic growth: 1) Land 2) Capital 3) Labor 4) Entrepreneurs
4. What must the United States do to keep its land resources from dwindling: Conserve them
5. How does declining productivity hurt the American economy: Productivity