Practice ch2 - Chapter 2 The Data of Macroeconomics Key...

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Chapter 2: The Data of Macroeconomics Key Concepts Measuring the value of economic activity: GDP The circular flow Stocks and Flows Rules of computing GDP o Adding apples and oranges o Used goods o The treatment of inventories o Intermediate goods and value added o Housing services and imputation Real GDP versus Nominal GDP The GDP deflator The component of expenditure o National income account identity: Y=C+I+G+NX Measuring the cost of living CPI o The price of basket of goods o CPI versus GDP deflator Measuring the joblessness Unemployment rate Practice Problems Fill in the blank: 1. When a firm sells a product out of inventory, investment expenditures _________ and consumption expenditures _____________. 2. Nominal GDP means the value of goods and services measured in ___________ prices, while real GDP measures the value of goods and services in ________ prices. 3. Assume that apples cost $0.50 in 2002 and $1 in 2007, whereas oranges cost $1 in 2002 and $1.50 in 2007. If 4 apples were produced in 2002 and 5 in 2007, whereas 3 oranges
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