Chapter+12+HW

1. Intermediate goods are products that are used to produce the final product. 2. GDP is the dollar value of all final goods and services produced within a country's borders in a given year. Gross national product is the annual income earned by U.S. owned firms and U.S. citizens. 3. Nominal GDP is expressed in current prices and real GDP is expressed in constant unchanging prices. 4. The economic activities that are not involved in GDP are activities that people do by themselves or create by themselves, and transactions that are not recorded or reported to the government. 5.If aggregate demand rises it causes the real GDP to fall, leaving the price levels to rise.
 * Answer Questions 12.1 #1-5**

1.The phase of a business cycle that can lead an economy into recession is the trough. 2. Interest rates can push a business cycle into a contraction when interest rates rise people are less likely to buy expensive products. 3. The stock market is considered to be a leading indicator of economic change because it often tanks before the recession just like a tsunami warning. 4. The Great Depression affected economists beliefs about macroeconomy because they came to the conclusion that if an economy drops it would quickly recover without help, they were wrong so it affected their beliefs. 5. I think that i would prefer to be in a trough in the business cycle so i could wait for the economy to come back up again.
 * Chp 12.2 #1-5**

1. (a)Economists measure the real GDP per capita because it's considered to be the best way to show a nation's individual's standard of living. (b)Real GDP per capita provides a better way of comparing the economies of two different nations than real GDP, this makes it so you can establish a basis for what the individual's living standards. 2. Capital deepening is the process of increasing the amount of capital per worker. This contributes to economic growth because as the capital per worker goes up, more money is able to be spent and eventually the GDP rises. 3. Saving plays a big role in economic growth, it takes time but savings usually go back into the economy helping it grow. 4. Patents encourage technological progress because it lets people to be confident with their advances knowing that they will be reimbursed for their work so they release it to the public.
 * Chp. 12.3 pgs 318-324 answer q 324 #1-4 Pg 326 #1-6, 8-11**

1. Intermediate goods 2. Business cycle 3. Gross domestic product 4. Capital deepening 5. Price Level 6. Recession
 * Pg 326 #1-6**

8. Three limitations of using the GDP as a measure of the nation's economy would be non-market activities, the quality of life, and the underground economy. 9. Four factors that keep the business cycle going are business investments, interest rates, credit, and consumer expectations. 10. Economists measure economic growth by using the real GDP per capita, which divides the real GDP by the total population, this equation shows the nation's standard of living. 11. Nominal GDP uses the actual prices of the products to determine itself, and the Real GDP uses a constant unchanging price.
 * 8-11**