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Worksheet2Answers - Econ 2020-400 Principles of...

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Econ 2020-400 Principles of Macroeconomics Spring 2008 Recitation Worksheet 2 - Answer Key 1. Answer D. An underlying principle of the circular-flow diagram is that the flow of money into a market or sector must equal the flow of money out of that market or sector. GDP measures the value of final production in an economy during a given time period while GNP measures the value of final production in a country by its citizens no matter where they are located. 2. Answer A. Net Exports are defined as exports minus imports. Country A’s net exports equal ($100 million -$50 million) or $50 million. Country B’s net exports equal ($50 million -$100 million) or -$50 million. 3. Answer A. Since GDP is equal to the value of all final goods and services produced in an economy during a given time period, GDP for this economy can be found by multiplying the number of racquets produced during the given time period times their prices. This yields $5,000. Alternatively, one could add up the totally payments to factors of production:
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This note was uploaded on 02/25/2008 for the course ECON 2020 taught by Professor Kaplan,jul during the Spring '08 term at Colorado.

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Worksheet2Answers - Econ 2020-400 Principles of...

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