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Test 2 Review Questions - Test 2 Review Questions 1 Define...

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Test 2 Review Questions 1. Define and describe a recession. A decline in Real GDP. Two consecutive quarter declines in Real GDP. 2. Define disposable income. A portion of the income that can be used for saving or spending 3. Describe the expenditure approach to measuring GDP. The components are: consumption, investment, gov’t purchases, net exports GDP = C+I+G+ (EX-IM) 4. List the spending components of GDP. GDP =Nat Income 5. Define a base year. 6. Define personal income. – The amount of income that individuals actually receive 7. Describe the three ways of measuring GDP---the expenditure approach, the income approach, and the value added approach 8. Define GDP – the total market valure of all final goods and survices produced annually within a country’s borders 9. Define depreciation – capital consumption allowance—some capital goods used in production process through natural wear. etc. 10. Define a business cycle – recurrent swings up and down in Real GDP.
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