General Instructions: Please provide your answers to the following in the spaces provided, and then upload your finished document to WebCampus. Don't forget to save a copy of your document before turning it in.
1. List the components of demand from the most important to the least. What component of demand fluctuates the most? Why does the government share of demand appear (perhaps) surprisingly small?
2. Describe whether each of the components of demand comprising GDP has become more important in the calculation of GDP, less important in the calculation of GDP, or has stayed at the same level of importance in the calculation of GDP over time. Please do so briefly.
3. List the components of what is produced in GDP from the largest component to the smallest component. Briefly explain how the components of what is produced have changed in importance in the calculation of GDP in recent decades.
4. What is the typical pattern of GDP from a long-run perspective? What about from a short-run perspective and this is historically speaking.
5. Please indicate from the following which are included in GDP and which are not.
A) The cost of hospital stays
B) The rise in life expectancy over time
C) Child care provided by a licensed day care
D) Child care provided by a friend or family member
E) The sale of a used car
F) The sale of a new car
G) Lawn care done by a hired company
H) Cost of a college education
I) A less equal distribution of income across the macro economy
J) Decline of crime in the 1990s
K) Buying a used textbook
L) Buying a new textbook
M) Cost of buying recycled material for a product you are making required by the government
6. Briefly explain whether each of the following would cause GDP to overstate or understate the degree of change in the broad standard of living:
Crime rate climbs
Environment becomes cleaner
A lesser variety of goods become available to consumers
Infant mortality climbs