I. GDP (gross domestic product) = Consumption + Investment + Government spending + (Exports
A. Government spending EXCLUDES payments made to individuals (ie., unemployment,
welfare, etc. (also known as entitlements)
Suppose that you take $200 in currency out of your wallet, purse or top dresser drawer
and deposit it in your checking account. Assuming that the required reserve ratio is 10%, what is
the largest amount by which the money supply can incr
The supply of money is a vertical line at some level determined by the central bank of the nation.
a) What happens to the interest rate if the central bank opts to increase the supply of
money? What happens to the quantity of money that indi
Professor Doug Bice
November 5, 2014
Economic Issues During the Great Depression
The National Bureau of Economic Research defines a recession as a period of falling
economic activity spread across the economy. Dur
1. Please find the following for the year you were born: the unemployment rate, the
inflation rate, real GDP, and real GDP per capita. Contrast them with current figures.
For the real figures, please indicate the base year (i.e., in XXXX dol
Capital facilitates productivity. What institutions explain why workers in some countries
have more capital than workers in other countries? Briefly explain.
1. Depending on how the government acts in a country can cause some counties to
Please list and briefly explain three limitations or drawbacks with gross domestic
product as a measure of national output.
a. Underground economy: illegal transactions are not counted in the GDP. Since its
illegal then its no
1. So, do you suppose that the rich countries are rich becaue they have more money?
a. No because what makes a country rich is the fact that rich countries have more
physical and human capital per worker. More skills, knowledge, expereience,
Name: _ Date: _
1. The difference between nominal GDP and real GDP is that nominal GDP
A) measures the total value of all final goods and services, whereas real GDP
measures the value of all goods and services, whether they are intermediate or
The subject known as economics is all about how we should decide to allocate scarce (not
infinite) resources. Its also about how incentives affect our behavior.
1. We face trade -offs.
Ex. Spend or save? Time: ski or stud
Chapter 3: Demand, Supply & Market Equilibrium
Drop Box Assignment
1. How will demand for all-electric cars change & which factor (p 54-56) causes this change,
given the following scenarios? (4)
a. Advertising for electric cars inc