GDP

Question 1

GDP (definition)

Answer 1

market value of all final goods and services produced within a country in a year

Question 2

GDP as total spending (formula, another name)

Answer 2

consumption + investment + government purchases + net exports (exports – imports)
- gross domestic product

Question 3

GDP as total output (formula, another name)

Answer 3

revenue - cost of direct inputs (not labor) - value added

Question 4

GDP as total income (formula, another name)

Answer 4

wages + profit (not capital gains)
- gross domestic income

Question 5

Limitations of using GDP as a measure of well-being

Answer 5

• market value (not use value) of purchased goods
• non-market activities – home production
• shadow economy – illegal and unreported economy
• environmental degradation
• leisure
• distribution of incomes or spending

Question 6

chain-weighting (real GDP)

Answer 6

use average prices over two years to calculate real GDP

Question 7

base year pricing

Answer 7

= decide the base year and compare everything back to it

Question 8

How to calculate real GDP from nominal GDP

Answer 8

real GDP = nominal – inflation of price

Question 9

rule of 70

Answer 9

time to double = 70/(growth rate)