Questions:
1. Discuss what is, and what is not, included in calculating GDP.
2. Why does investment spending not equal saving in the circular flow?
3. Why does the consumer price index exaggerate the inflation rate?
4. Discuss the limitations of national income accounting.
5. Why do total leakages and total injections have to be equal?
6. What is the difference between anticipated and unanticipated inflation? How do they differ in their effects on economic agents? Does inflation have no effects on the economy if it is anticipated? Explain
7. What is meant by "quality of labor"? How does improvement in the quality of labor affect economic growth?
8. Explain how the law of diminishing marginal returns is related to the per-worker production function.
9. What is meant by industrial policy? Discuss the strengths and weaknesses of an industrial policy.
10. Describe the four types of unemployment. How do the four types differ in their effects on the economy and on the unemployed?