Economics 101Chapter02

Economics 101Chapter02 - 1 Objectives for Chapter 2...

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Objectives for Chapter 2 Economic Growth At the end of Chapter 2, you will be able to: 1. Define the term “Nominal Gross Domestic Product (GDP)” . 2. Explain the difference between a “final good” and an “intermediate good” . 3. Name the four groups of final users. In particular, define “consumption” , “business investment spending” , and “net exports” . 4. Explain why the Nominal Gross Domestic Product (GDP) is not a good measure of the true standard of living of the people of a country. 5. What is meant by the “underground economy” ? 6. Define “Real Gross Domestic Product (GDP)” . Why is it a better measure of aggregate production than Nominal Gross Domestic Product (GDP)? 7. Given a set of numbers, calculate the Nominal Gross Domestic Product (GDP) and the Real Gross Domestic Product (GDP). 8. What is meant by “Real Gross Domestic Product (GDP) Per Capita” ? 9. How is the rate of growth of Real Gross Domestic Product (GDP) from one year to the next calculated? What is the “Rule of 72” ? 10. What is meant by “National Income” ? Why is it equal to the Real Gross Domestic Product (GDP)? 11. Name the four factors of production . What is meant by a “capital good” ? 12. Explain the difference between “extensive growth” and “intensive growth” . What have been the most important sources for each type of growth? Which of the two has been more important in the United States in the past century? 13. Define "productivity" . How does it relate to the standard of living? 14. Name two aspects of the "productivity problem" experienced by the United States. 15. What effects has the "productivity problem" had on the American standard of living ? In what ways has this changed American life? 16. What factors might be responsible for the slowdown in productivity growth? 1
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Chapter 2: Economic Growth in the Twentieth Century (latest revision May 2008) Chapter 1 described the 20 th century as one that experienced the most remarkable growth in the production of goods and services (and therefore growth in the standard of living) in human experience. For the United States, the standard of living of the average person is now many times greater than it was a century ago. In this chapter, we will examine this experience is greater detail. First, we will describe and evaluate the measure that we use to determine just how much the production of goods and services has changed. Second, we will consider the reasons for the phenomenal economic growth of the 20 th century. And finally, we will consider the effects of the slowdown in economic growth that occurred from 1973 to the middle of the 1990s. 1. The Measure of Production of Goods and Services --- Gross Domestic Product As mentioned in Chapter 1, in this course, our consideration is with aggregates --- large groupings of people or things. Aggregate production would be the total production of all goods and services. Our problem is that, in measuring aggregate production, we can’t add up
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Economics 101Chapter02 - 1 Objectives for Chapter 2...

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