Problem
A. How good is the GDP at actually measuring our true economic well being? Does growth of the real GDP translate into an improved well being for all citizens in a country? Explain.
B. "The trade deficit reduces our GDP."- explain.
C. What is the difference between nominal and real GDP? Which is more useful?
D. What are the 3 primary goals of any economy?
E. Why is investment spending more volatile than consumer spending (more prone to large swings)?
F. Why is consumer confidence such a closely watched indicator? What do you think is needed to get consumers to be more confident so that they make spending decisions on houses, cars, etc?
G. What measures do economists use to calculate when we are actually in a recession? How is a recession defined?
H. Why is increased labor productivity a key component of economic growth?
I. Why must economic growth rates exceed population growth rates for a country to progress?
J. What policies can the government of a free-market economy implement to stimulate economic growth?
K. Why does stagflation create such a dilemma for policy makers?
L. What is the Underground Economy?
M. Why does the existence of the Underground Economy distort the GDP figures?
N. Why are people so willing to be participants in the Underground Economy?
O. What is the estimate as to the size of the Underground Economy?