PRINCE MOHAMMAD BIN FAHD UNIVERSITY PM ECON1311iHomeworkAssignment-02. Due Date,

Question

PRINCE MOHAMMAD BIN FAHD UNIVERSITY PM ECON1311iHomeworkAssignment-02. Due Date, Mon., March 28 2016and Grade-4% Mid-Term Exam 11-Covering Chapters 21.22. 24, & 25 (Grade-20%) From Chapter 21-Measureing GDP & Econ. Growth bage yea 1. What is the distinction between hominal GDP and real GDP? 2. List and explain the three approaches to measuring GDP? . S. Define GDP and distinguish between a final good and an intermediate good. 4. Distinguish between real GDP and potential GDP 5. What is a business cycle and what are its phases and turning points? ( · Describe the alternative measures of unemployment. 2. What distinguishes an unemployed person from one who is not in the labor force? List, define and explain the various types of unemployment. A. How does the unemployment rate fluctuate over the business cycle? . What is the output gut gap? How does irap? How does it change when the economy goes into recession. 6. What is the price level? .What is the CPI and how is it calculated? 8. How do we calculate the inflation rate and what is its relationship with the CPI? 9. What are the four main ways in which the CPI is an upward-biased measure of the price level? Distinguish between physical capital and financial capital. , what is the difference between gross investment and net investment? . What are the three main types of markets for financial capital? what determines the demand what determines the supply of loanable funds and what makes it chan How do changes in the demand for and supply of loanable funds change the real interest rate and quantity of loanable funds? ,A, . What determines the demand for loanable funds and what makes it change? . Why do loanable funds flow among countries? 8. How is a government budget deficit financed in an open economy?

Explanation / Answer

Measuring GDP and Economic Growth:

1. Nominal GDP is the money value of final goods and services produced in a country. On the other hand, real GDP measures value of output adjusted for price level in the economy. As real GDP take into account the price level so it is better than the nominal GDP.

2. Three approaches of measuring GDP:

a. The Production approach - It measure GDP taking into account as sum of all value added at every stage of production in the economy during a year.

b. The Income approach - It measures GDP taking into account sum of all incomes from factors of production like rent, wage, profit, interest, etc.

c. The expenditure approach - It measures GDP taking into account the sum of expenditure on final goods and services in a year.

3. GDP stands for Gross Domestic Product. It shows total production of goods and services of a country. Final goods are those goods which are ready to consume and does not need further level of production. On the other hand, intermediate goods are those goods which does not cross the boundary line of production and not in a position to use it. Intermediate goods are used to produce final goods.

4. Real GDP - Production of goods and services using factors of production constitute real GDP.

Potential GDP - It is the value of real gdp where factors of production are fully employed.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.