1. a. What is the difference between a final good and an intermediate good? Give one example of each. How are they treated in GDP calculations?

b. Give some reasons why real GDP is not an adequate measure of a nation's well being. Despite these limitations, do you think real GDP is a useful statistic? Explain your answer.

2. Carefully explain the different sorts of expenditures made by the Federal government. What is the difference between discretionary spending and transfer payments? Give examples of each. Why has transfer payments increased so significantly in recent years?

3. Look carefully at the business cycles that occurred over the past fifty years.