Worksheet 3, chapters 6 and 8.docx

Worksheet \#3, Week 4, Chapters 6 & 8 This is a longer worksheet. You will not get full credit unless you give every question a good try! It will help you do better on the quiz. 1. In your own words, describe GDP. The sum of all the goods and services that are produced within a country w...

Worksheet \#3, Week 4, Chapters 6 & 8 This is a longer worksheet. You will not get full credit unless you give every question a good try! It will help you do better on the quiz. 1. In your own words, describe GDP. The sum of all the goods and services that are produced within a country within a particular time. Mostly occurs in a year. 2. Which of the following terms could possibly be a synonym for GDP, and why? a. International trade b. Total sales c. The total budget of the US government d. Production I would say production because "product" in "Gross Domestic Product" is another way of saying production, which leads to GDP being the total amount of goods and services produced. 3. What is the difference between GDP (nominal) and real GDP? Real GDP (Gross Domestic Product): is within a certain time period, usually and year, within a country\'s borders that measures the value of final goods and services produced or created. 4. What is economic growth? Is it long run or short run? It is in the long run. Economic growth can be an increase in real GDP or real GDP per capita. It causes the production possibilities curve to shift outward, but not necessarily with more supplies or improved technology. Generally, economic growth means that there's an increase in the capacity to produce because the economy is not performing to its full potential due to unemployment or low spending. 5. What is the difference between economic growth and economic performance? Essentially, economic growth is an economy's increase in its capacity to produce, while economic performance is how well the economy is performing (particularly in the short run). 6. What does the "Business Cycle" show us? Is it in the long run or the short run? The business cycle shows the peak, recession, trough, and expansion phases over some periods of years, with the increasing and decreasing of economic activity. In the long run, economies typically prefer growth that has higher output and standard of living. 7. What is the "rule of 70?" It helps people understand economic growth. It determines the number of years for a measure to double with the annual percentage rate that increases. Essentially, just divide the number of years it takes for a certain price to double with 70 and the percentage. Formula: approximate number of years to double DGP= 70/annual percentage rate of growth Ex. A 5 percent annual growth rate will double real GDP in about 14 years (Approximate years: 70/5=14). 8. Which of the following factors contribute to economic growth and why? a. Taxes b. Immigration c. Labor productivity d. Investment in new capital e. Technology Technology contributes to it. It is the key factor to economic growth because it allows for the production of goods (products) or services to be produced more effectively and allow the economy to flourish and thrive.