Chpater 1

Question 1

Define GDP

Answer 1

The market value of goods and services produced within a country in a given time

Question 2

Why does GDP equal aggregate expenditure and aggregate income

Answer 2

GDP can be measured in 2 ways
Expenditure approach -Y=C+I+G+(X-M)
income approach- the sum of all income that firms pay households for the services of factors of production they hire

Question 3

Distinguish between final and intermediate goods

Answer 3

Final- goods that are bought by the users and in their final state not needing to go through more production
Intermediate -goods that aren’t 8n their final stats and can still undergo or be in the stage of production

Question 4

What is gross

Answer 4

Means before subtracting depreciation

Question 5

What is net

Answer 5

After subtraction capital depreciation

Question 6

What is gross investment

Answer 6

The total amount spent both buying and replacing depreciated capital

Question 7

What is gross investment

Answer 7

The total amount spent both buying and replacing depreciated capital