GDP and Business Cycle.

Gross Domestic Product measures the value of...

• Good produced in the United States.

• Goods produced by any American owned company anywhere in the world.

• Services performed in the United States.

• Any product produced in the United States during a 3 year period

What is the formula for GDP?

• C + I + G + (X-M)

• C + I + G / (X-M)

• C + I + G + (population)

• C + I + G + (Reserve Ratio)

Indianapolis purchases a new fire truck. Where would this show up in GDP formula? (GDP=C+I+G+(X-M))

• Consumption (Consumer)

• Investment (Business)

• Government Spending

• Exports-Imports

Costco builds a new store in Noblesville, Indiana. Where would this show up in the GDP formula? (GDP=C+I+G+(X-M))

• Consumption (Consumer)

• Investment (Business)

• Government Spending

• Exports-Imports

John went to Sports Clips and purchased a haircut. Where would this show up in the GDP formula?

• Consumption (Consumer)

• Investment (Business)

• Government Spending

• Exports-Imports

The Nation of Nardrupia has a very high GDP. If that is the case, which of the following concerning life in the country is true?

• People have a great standard of living.

• Everyone in the country is wealthy.

• The country has a market economy.

• A high GDP tells you nothing about life in the country.

Lauren coaches softball and gets paid in cash each week.  Is this included in GDP?

• Yes - Consumer Spending
• Yes - Investment 
• No - Underground Economy
• No - Purely financial transaction 

The total dollar value of all final goods and services produced within the country’s border in a given year after inflation is taken out of the data.

• Nominal GDP

• GDP/capita

• Gross GDP

• Real GDP

Why is real GDP more accurate than nominal GDP?

• It's adjusted for price changes
• It's adjusted for depreciation
• It includes unpaid and paid work.
• It includes unrecorded business.

If you graph Real GDP, then you have created...

• An economic forecast

• An Inflation Index

• The Business Cycle

• Labor Output Graph