1) Explainwhy economists use Real GDP as the preferred measure of economic activity

insteadof nominal GDP. What are the major limitations of using nominal GDP as a measure of

economicactivity?

2) Describe why a common method for measuring a business cycle is from one peak phase to the next peak phase.

3)Identify the major differences between short-run and long-run employment.

4) Within the context of unemployment, explain the significance of the natural rate of unemployment.

5)Describe the difference between interpretation of an individual consumer price index (CPI) coefficient and the computation of the inflation rate.

6) Describe the importance of the civilian labor force participation rate as an indicator of labor market(s) performance

7)Describe the temporal impact savings rate has on consumption in the short-run and in the long-run.

8)Describe the difference between autonomous consumption and induced consumption in the Keynesian consumption function.

9) Compute the estimated impact on the economy assuming a decrease in consumption spending of $17million and the national savings rate is 5%

10) Describe the relationship between the marginal propensity to consume (MPC) and the marginal propensity to save (MPS)

11) Assume marginal propensity to save is .08; investment spending in the economy increases by approximately $115 million; compute the impact on the economy