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Understanding GDP, Unemployment, and Economic Measurements: A Comprehensive Review

This review delves into critical concepts such as GDP, real vs. nominal GDP, the unemployment rate, and the economic implications of intermediate goods inclusion in GDP calculations. It addresses whether ignoring intermediate goods is a mistake and explores public interest in GDP growth. Moreover, it clarifies the unemployment rate's definition and its policy implications, discusses leakages in the circular flow of economic activity, and examines primary measures of national income. Understanding these economic metrics is vital for analyzing a country's economic health.

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Understanding GDP, Unemployment, and Economic Measurements: A Comprehensive Review

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Presentation Transcript

  1. Unit 2 Review

  2. Explain if this statement is True, False or Uncertain • “To ignore the production of intermediate goods when measuring the total production of a country means ignoring the work, the efforts, & the incomes of millions of citizens. This is a mistake & can be rectified only by including intermediate goods production in the GDP figures.” #1

  3. Explain the statement • “A man diminishes GDP by marrying his cook.” #2

  4. You read this headline: “Real GDP Rises 3% This Year: Further Increases Likely” • What does this headline mean? Be specific • Why do people care about the growth rate of real GDP? • What is the difference between Real & Nominal GDP? #3

  5. In a year, the annual Unemployment rate is 6.1%. • Define the term “Unemployment Rate” & explain its meaning • What other information will you need to know before recommending a policy change to reduce the UR? Explain why you need that info. #4

  6. Which of the following is a LEAKAGE from the Circular Flow of Economic Activity? • Saving • Investment • Export • Government Spending • Income #5

  7. If the Price Index of a country were 100 for 2010 & 120 for 2015 & NGDP in 2015 were $480 billion, then RGDP for 2015 in 2010 dollars would be • $360 bill • 380 bill • $400 bill • $600 bill • Indeterminate #6

  8. The value of GDP in 2010, in terms of 200 prices was • $600 • $700 • $1000 • $1200 • $1300 #7

  9. If 2010 were made the base year for the GDP deflator, the value of the GDP deflator in 2000 (rounded to the nearest whole number) would be • 0 • 42 • 142 • 212 • 256 #8

  10. What is the best measure of the production (output) of an economy? #9

  11. The largest dollar amount of national income is • Rental payments • Gov’t expenditures on G/S • Profit • Net Interest • Wages & Salaries of employees #10

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