Macroeconomics quiz 1

Consumption/Business investments/Net Exports/Government Purchases C+BI+GP+(E-I)= TOTAL GDP

What are the components of GDP ?

GROSS DOMESTIC PRODUCT the total market value of the final goods and services produced by a country's economy during a specified period of time

What is GDP? Definition

GDP refers to and measures the domestic levels of production in a country GNP measures the levels of production of all the citizens or corporations from a particular country working or producing in any country.

What is the difference between GDP and GNP?

real GDP is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, expressed in base-year prices, and is often referred to as "constant-price," "inflation-corrected" GDP or "constant dollar GDP." Unlike nominal GDP, real GDP can account for changes in price level and provide a more accurate figure of economic growth.

What is the difference between nominal and real GDP?

Gross domestic product is a measure of "value added" at the countrywide level. Economic output (gross output) measures the value of all sales of goods and services. GDP = gross output minus intermediate inputs (spendings) Examples: Clothes-> cotton (output 100 GDP 0)-> Manufacturer (total output 400 GDP 300)-> Retailer (output 300 GDP 300)

What's the difference between Gross Output and GDP? Give examples

GDP it's a sign the economy is strong. In fact, businesses will adjust their expenditures on inventory, payroll, and other investments based on GDP output.

GDP is considered as most important, but not universal indicator of economic activity. Why?

Since GDP is measured in a country's currency, in order to compare different countries' GDPs, we need to convert them to a common currency. One way to compare different countries' GDPs is with an exchange rate, the price of one country's currency in terms of another. Another - use GDP per capita is GDP divided by population.

How to compare GDP among countries ?

Using real GDP- Real gross domestic product is a macroeconomic measure of the value of economic output adjusted for price changes (i.e. inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output.

How to compare GDP over the time?