GDP (Lecture)

Open Ended

Why is GDP considered an important measure for a country's economy?

Open Ended

Why is sustained growth in GDP per capita considered desirable for a country?

Multiple Select

Which of the following are reasons why GDP is useful for economic analysis?

• It measures aggregate output

• It helps compare countries over time

• It includes intermediate products

• It eliminates double counting

Open Ended

Explain why GDP only measures final products and not intermediate ones.

Open Ended

What do you think are some types of economic activity that GDP does NOT measure?

Multiple Select

Select all items that are NOT included in GDP measurement.

• Used goods

• Financial assets

• Imports

• Government spending

• Household production

Open Ended

Why do you think underground markets or unreported economic activity not measured in GDP?

Multiple Choice

Which formula do economists use to calculate the value added by each producer in the production approach to GDP?

• Value Added = (Sales Price) - (Price of Inputs)

• Value Added = (Sales Price) + (Price of Inputs)

• Value Added = (Sales Price) x (Price of Inputs)

• Value Added = (Sales Price) / (Price of Inputs)

Multiple Choice

Based on the example provided, what is the total value added in the economy after the bread is sold by the grocer bread for $9?

• $17

• $3

• $5

• $9

Multiple Choice

Which category of spending is described as the largest in the expenditure approach to GDP?

• Investment

• Government

• Consumption

• Net Exports

Match

Match the following are categories of spending included in the expenditure approach to GDP.

• Consumption

• Investment

• Government

• Net Exports

Consumer spending/ largest category

Businesses spend money on final products

The gov't spends money on final products

Imports minus exports

• Consumer spending/ largest category

• Businesses spend money on final products

• The gov't spends money on final products

• Imports minus exports

Open Ended

Describe the role of 'Net Exports' in the expenditure approach to calculating GDP. Why must imports be subtracted from exports?

Match

GDP: Income Approach

• money paid to workers

• money paid to banks who lent money to the firm

• money paid for the use of land production

• money left after wages, interest, and rent are paid

wages

interest

rent

profit

• wages

• interest

• rent

• profit

Multiple Choice

Which is more useful for measuring economic output?

• nominal GDP

• real GDP

Multiple Choice

Why is real GDP a more useful measure of aggregate output?

• includes the unemployment rate

• it's corrected for inflation

• it includes price level rises

• it accounts for stock market values