GDP and Business Cycle

Gross Domestic Product measures the value of...

• Goods and services produced in the United States.

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

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

• Good or service produced in Germany and sold in the United States

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)

East Dublin 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 Dublin. 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 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

The Lowest point in the business cycle

• Peak

• Trough

• Expansion

• Contraction

Which letter represents the Contractionary (Recession) Phase?

• A

• B

• C

• D