Question 1 Briefly define the following terms:

a.    Business cycle

b.    Real GDP

2. Why are intermediate goods, such as Intel CPUs used to produce Dell computers sold to consumers, not directly included in GDP?

3.  Measured as the long-term growth of potential GDP, how has economic growth in the United States changed over the decades since 1962? There was a slowdown in growth-when was it and what is it called?

4. What is the difference between real GDP and nominal GDP? Which better measures changes in production rather than changes in prices?

5.  The United States is in what phase of the business cycle?

Answer the following multiple choice questions.

6.         Which of the following relationships is correct?

                              i.        GDP = aggregate expenditure

                            ii.        GDP =aggregate income

                           iii.        GDP = market value of the final goods and services produced within a country in a given time period.

a.    iii only

b.    ii and iii only

c.    i and iii only

d.    i, ii, and iii

7.    The largest component of GDP in the expenditures approach is

a.    personal consumption expenditures.

b.    gross private domestic investment.

c.    government spending on goods and services.

d.    net exports.

8.    Which of the following correctly states the order of the business cycle?

a.    recession, peak, expansion, trough

b.    recession, trough, expansion, peak

c.    recession, expansion, peak, trough

d.    expansion, peak, trough, recession

9.    Which of the following is currently included in GDP?

                                  i.        the underground economy

                                ii.        the value of leisure time

                               iii.        the value of household production

a.    iii only

b.    i and iii only

c.    i, ii, and iii

d.    None of the above