MankiwReviewTest3

# MankiwReviewTest3 - Mankiw Review Test 3 GDP Chapter 10 1...

This preview shows pages 1–2. Sign up to view the full content.

Mankiw Review Test 3 GDP Chapter 10 1. Circular Flow Diagram – relationship between total income and total expenditures - Assumptions - Households- own all the resources - Spend all of the income - Buy all of the goods and services - Firms - Pay wages, etc. 2. Definition of Gross Domestic Product – measures total income of everyone in the economy and measures the total expenditure on the economy’s output of goods and services. - Income must equal expenditure 3. Calculation of GDP : GDP = C + I + G + (X - M) GDP = private consumption + gross investment + government investment + government spending + (exports - imports(net exports)). Exports minus imports is the same thing as net exports 4. Definition of final vs. intermediate goods : Final goods are what is sold to the consumer and intermediate goods are what is sold the the producer. I.e. tires being sold to a car manufacturer, but the entire car (including the tires) is sold to the consumer. What is calculated is the worth of the final good. 5. What’s included/excluded from GDP : Goods that are produced domestically are excluded from GDP and/or anything that was produced illegally. Only final goods are included so intermediate goods aren’t... 6. Definition of disposable income: income remaining after deduction of taxes and other mandatory charges, available to be spent or saved as one wishes. 7. Differentiate and calculate nominal and real GDP: The formula for real GDP is nominal GDP divided by the deflator, or Real = Nominal/D. - For example, if prices rose 2.5% since the base year, the deflator is 1.025. If the nominal GDP were 10 million, the real GDP would be 976,000 or 10,000,000/1.025 = 976,000.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern