1. Explain nominal GDP and real GDP respectively. What is the difference between them?

2. What is the definition of economic recession?

3. The following is information from the national income account for a hypothetical country:

GDP $8,500

Gross Investment 1,000

Net Investment 400

Consumption 5,000

Government purchases of goods & services 2,100

Government budget surplus 50

Based on these data, what is the country's:

(a.) NDP (Net Domestic Product)?

( b.) Net exports?

( c.) Government taxes minus transfers?

(d.) Disposable personal income?

(Note: Please recall the definition of disposable personal income. Disposable personal income = NDP-T)

(e.) Personal savings?

4. In the national income accounts, what is the difference between

( a.) A car selling firm buys an automobile for an executive and the firm paying the executive additional income to buy the automobile herself.

(b.) Your hiring your spouse (who takes care of the house) rather than having him or her do the work without pay?

( c.) Your deciding to buy an American car rather than a German car?