GDP

Question 1

What is GDP?

Answer 1

a measure of the value of all the goods and services newly produced in a country during some period of time.

Question 2

What are the factors which make up GDP?

Answer 2

Consumption (C), Investments (I), Government Purchases (G), Net Exports (X)

Question 3

What is the Spending approach to calculating GDP

Answer 3

Y(GDP)= C + I + G + X

Question 4

What is real GDP?

Answer 4

a measure of production that corrects for inflation.

Question 5

To calculate the real GDP of 2012 in reference to 2008 we must __________.

Answer 5

use the same prices for both years.

Question 6

What is the nominal GDP?

Answer 6

GDP without any correction for inflation

Question 7

What is a GDP deflator ? How do you calculate it ?

Answer 7

a measurement of the level of prices of Good and Services included in real GDP relative to a given base year.

GDP deflator = Nominal GDP / real GDP

Question 8

how does knowing the GDP deflator help us find the Real GDP

Answer 8

Real GDP = nominal GDP / GDP deflator

Question 9

the percentage change in GDP from one year to another is a measure of the ___________?

Answer 9

rate of inflation.

Question 10

what is CPI

Answer 10

Consumer Price Index, a price index equal to the current price of a fixed market basket of consumer goods and services relative to a base year.