Chapter 6 GDP Flashcards
The long run average growth rate of real GDP in the U.S. Economy is about :
3%
GDP is a good, but not the best, measure of:
Changes in the average living standards.
The percentage change in the overall level of prices in the economy is called :
The growth rate of GDP.
The three main uses for GDP data are:
1) estimate living standards
2) measure economic growth
3) measure business cycles
What spending is included in government purchases?
- salaries of govt employees
- govt buildings and equipment
- public works projects
What does government purchases not include?
Transfer payments
Real GDP increases if:
Current quantities increase.
Real GDP is GDP adjusted for changes in:
Overall price levels.
A shortcoming of nominal GDP is that:
An increase in nominal GDP can be caused by changes in either price or quantity.
A shortcoming of real GDP is:
It does not include the underground economy.
The GDP deflator is a measure of the price level that includes prices of:
Final goods and services.
Impact of Inflation
% Nominal GDP = %change Real GDP + %change Price Level
Growth Rate (or Inflation rate)
((Current Value - Previous Value)/Previous Value) x 100
Real GDP
(Nominal GDP/Price Level) x 100
