GDP

Question 1

Investment includes:

Answer 1

New homes, Business capital, surplus inventories (S=I)

Question 2

Government Purchases:

Answer 2

Do NOT = government spending

Question 3

NDP=

Answer 3

GDP - depreciation of fixed K

Question 4

GPI:

Answer 4

Includes health, education & pollution markers

Question 5

Real GDP:

Answer 5

Nominal GDP/Price level

Question 6

gRGDP=

Answer 6

gGDP - Inflation

Question 7

CPI Biases:

Answer 7

New goods, Quality change, Commodity substitution, Outlet substitution

Question 8

Consequences of CPI Bias:

Answer 8

Distorts private contracts linked to CPI, Increases government outlays linked to CPI, Biases estimates of real figures (over time substantially)

Question 9

RDGP of China in US$ =

Answer 9

(P.L.usa / P.L.china) x GDPchina (in US$)

Question 10

Benefits of growth:

Answer 10

Health, Higher incomes, Range of G&S, Lower G Borrowing (higher taxes)

Question 11

Costs of growth:

Answer 11

Environment, Income inequality, Loss of job types

Question 12

Rule of 70:

Answer 12

y grows at g per year then 2y in 70/g

Question 13

Computing average growth rate:

Answer 13

(yt/y0)^1/t - 1

Question 14

When growth is negative we should use…

Answer 14

(Yt-1 - Yt) / Yt-1