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Directions: Please answer each question clearly, logically, and concisely.

1. Why do we start our analysis of a country's economic condition by looking at its GDP, meaning real and nominal, and its past growth and projected growth?  What are the problems of over relying on GDP to determine the condition of a society?

2. Which areas of GDP in the US today are creating growth?  Which areas are hindering growth?

3. Why is real GDP per capita important?

4. What was "great" about the "Great Recession"?  Identify and explain at least three reasons.

5. Could a country's nominal GDP shrink and its real GDP grow? If no, why not?  If yes, how?

6. In 2010, a country produced oranges, apples, and beer in units of 100, 250, and 350 each. Their prices were $1, $2, and $5 respectively.  In 2011 the same country produced 150, 300, and 500 units of each good at prices of $2, $1, and $7 respectively. Assume 2010 is the base year.

What is the real and nominal GDP in 2010 and 2011?

What is the GDP deflator in each year?

What is the percentage change in nominal and real GDP between the two years?

How do you explain the difference between the two answers in part C?

In 2010, there were 100 people living in the country. In 2011, due to heavy immigration, there were 140 people living in the country. What is real GDP per capita in each year?

What is the percentage change year-on-year? What does that tell you about this country?

7. Explain the bathtub model of Investment.  Why is it important to remember? How is it related to slow growth in many countries, including the US, all over the world today?

8. What are the three different types of unemployment?  Please give an actual hypothetical example of each type.

9. What is a discouraged worker?  Why are they not counted in U3? Are they counted in any economic measurement at all?

10. What would cause an aggregate production function to shift up?

11. What is the biggest economic misrepresentation made by Trump? What is the biggest economic misrepresentation made by Clinton?  Try to be specific.

12.Country A is a lesser developed country.  How can its government stimulate economic growth?

13. County B is a highly developed country.  What can its government do to stimulate economic growth?

14. What are three major differences between fiscal and monetary policy?

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  • Category:- Business Management
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