Student Chapter 12
Gross Domestic Product and Growth
Section 1
Gross Domestic Product
pg. 301 – 308
1. What is national income accounting?
2. Define gross domestic product (GDP).
3. What is the difference between intermediate goods and final goods?
4. What is the expenditure approach in calculating GDP?
5. Compare durable and nondurable goods. Give examples.
6. What is the income approach in calculating GDP?
7. Define nominal GDP.
8. Define real GDP.
9. What economic activities are not included in GDP? Give examples.
10. Define gross national product (GNP).
11. How does gross domestic product (GDP) differ from gross national product (GNP)?
12. Define depreciation.
13. What is net national product.
14. Page 306 Figure 12.4 Measurements of the Macroeconomy Why might economists
track so many different indicators of the nation’s economic health?
15. Define market supply.
16. Define price level.
17. Define aggregate supply.
18. Define aggregate demand.
19. What is the wealth effect?
20. Page 307 Figure 12.5 Aggregate Supply and Demand Explain what the positive
(upward to the right) and negative (downward to the right) slopes of these curves
mean.
21. Page 308 Figure 12.6 Equilibrium Aggregate Supply and Demand If a country goes
to war, causing an increase in government demand for durable and nondurable
goods, how might real GDP and price levels be affected?
22. Page 309 Predicting Consequences Answer questions under 1 and 2. 1(a) What
information does this table give you for each year? 2(a) In which year did the U. S.
economy grow most quickly? (b) How did the interest rates in 2001 compare with
rates in other years? (c) What is a possible relationship between interest rates in
2000 and economic growth in 2001?
Section 2
Business Cycle
pg. 311 – 316
23. Define business cycle.
24. Describe the four phases of a typical business cycle.
25. What is a recession?
26. What is a depression?
27. Define stagflation.
28. Which phase of a business cycle can lead an economy into recession?
29. What four main economic variables affect business cycles?
30. How can interest rates push a business cycle into a contraction?
31. How can consumer expectations help bring on a contraction?
32. Give an example of a negative external shock that would affect aggregate supply.
33. Define leading indicators.
34. Why is the stock market considered to be a leading indicator of economic change?
35. How did the Great Depression affect economists’ beliefs about the macroeconomy?
Section 3
Economic Growth
pg. 318 – 324
36. Define real GDP per capita.
37. Why do economists measure real GDP per capita?
38. Page 319 Figure 12.12 Economic Health of Selected Countries (a) How does the
economic health of the United States compare to that of the other countries shown
here? (b) What countries seem to have the most-healthy and the least-healthy
economies?
39. What is capital deepening and how does it contribute to economic growth?
40. Define saving.
41. Define savings rate.
42. What role does saving play in the process of economic growth?
43. How can the government affect capital deepening?
44. Define technological progress.
45. What factors influence technological progress?
46. How do patents encourage technological progress?
Study Guide Chapter 12
What is national income accounting?
Gross domestic product
Difference between intermediate goods and final goods
Durable and nondurable goods
Why income approach in calculating GDP
Real GDP
Gross national product
GDP vs GNP
Depreciation
Net national product
Aggregate supply
Aggregate demand
Wealth effect
Page 307 Figure 12.5 What positive and negative slopes of these curves mean?
Four phases of business cycle
Contraction
Trough
Recession
depression
Stagflation
How do fears of future economic problems affect GDP?
Positive external shock effect on aggregate supply
Leading indicators
Capital deepening
Technological progress