Macroeconomics Exam 2
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the relationship between real GDP and potential GDP over the business cycle can best be summarized by which of the following statements?
real GDP fluctuates around potential GDP
a recession is defined as
a decrease in real GDP that lasts more than six months
real GDP measures the value of goods and services produced in a given year valued using
base year prices
total expenditure equals total income
because firms pay out everything they receive as income to the factors of production
consumption expenditure includes spending
by households
goods and services such as environmental quality, leisure time, and household production are not included in GDP because
they are not bought in markets