Problem 1: Explain why an economy's income must equal its expenditure.
Problem 2: Which contributes more to GDP-the production of an economy car or the production of a luxury car? Why?
Problem 3: Many years ago, Sophie paid $500 to put together a record collection. Today, she sold her albums at a garage sale for $100. How does this sale affect current GDP?
Problem 4: List the four components of GDP. Give an example of each.
Problem 5: Why do economists use real GDP rather than nominal GDP to gauge economic well-being?
Problem 6: Why is it desirable for a country to have a large GDP? Give an example of something that would raise GDP and yet be undesirable.