Use a simple mathematical expression consisting only of the measures of the major categories to describe how GDP is estimated.
What will be an ideal response?
Answer: The GDP of the nation = Consumption + Investment + Government Expenditure + Net Exports. It represents market value of all final goods and services produced within a country in a given year.
a. Consumption expenditure : It represents the goods and services purchased by households. It is the largest component of GDP of the nation.
b. Investment Expenditure : This includes spending by businesses on goods and services that will be used to produce other goods and services. It includes purchase of capital equipment, inventories, and other investments.
c. Government Spending: This includes purchase of goods and services made by all levels of government - federal , state and local.
d. Net Exports ; It includes spending in the international sector. It is the difference between value of exports of the nation and value of imports of the nation.
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A) $2,000. B) $750. C) $2,750. D) $1,250
What do you think about dollarization?
What will be an ideal response?
To convert a nominal GDP to a real GDP, you would use
A) the PCE deflator. B) the CPI measure. C) the GDP deflator. D) the PPI measure.
The annual interest payment divided by the bond's price is the
A. Current yield. B. Default value. C. Market price. D. Risk yield.