Reading Guide: Ch. 7

 

*Note:  You may skip reading about the “income approach” to GDP. (p118-119).

DUE THRUS

1. What is National Income Accounting?  Why is it performed?
2. What does Gross Domestic Product (GDP) measure?
3. Using the expenditures approach to GDP calculations, identify the types of transactions that are included and excluded from this indicator.
4. Why would counting secondhand sales and intermediate products be considered “double counting” to national income accountants?

DUE FRI

1. What are inventories (also called unplanned investment)?  Why are they counted toward GDP?
2. Briefly describe each economic indicator listed and explain how each differs from GDP:  Net Domestic Product, National Income, Personal Income, and Disposable Income.
3. Contrast Gross Domestic Product (GDP) with Gross National  Product (GNP).
4. What is the difference between Real GDP and Nominal GDP?  Which is a more useful measure to economists?
5. What shortcomings does GDP have as a macroeconomic measurement?

 

 

Vocabulary

You are responsible for all chapter vocabulary on page 128.