1. When comparing the USA and China: China has (1) as many natural resources as the USA and also has (2) far more labor resources than the USA. So why is output/GDP so much higher in the USA than in China?

2. Explain how a government failure can produce a macroeconomic “non-optimal output mix”. Include a real-world example in your explanation. Also include a graph of a production possibilities curve to illustrate your answer. (Develop your own graph/curve; do not copy/paste from another source.

3. Explain why the legal system represents a critical “economic” role for the government.

4. Why is “Real GDP” considered an important measure of a nation’s economic well-being? Why is it also considered to be of "limited" value as a measure of a nation’s economic well-being?

5. Internet Question www.bea.gov (Links to an external site.) First review this website and the economic information it offers. The BEA is a primary source for key economic data that is (1) current and (2) statistically reliable. Next I want you to research and analyze current data on macroeconomic output and growth. Under “Economic Accounts - National”, click on “Gross Domestic Product”. From this location click on and review “News Release: Gross Domestic Product”. Refer to the menu on the right side of this webpage and open up the “Full Release and Table”. Now review the summary and the data in the tables. Now answer these five questions:

a. What was the Real GDP growth rate for the most recent quarter?

b. What economic factors contributed to the changes in GDP growth for the most recent quarter?

c. What is the current dollar value for the nation’s GDP (seasonally adjusted) as of the most recent report?

d. What was the Real GDP growth rate for the past four quarters? (hint: compute an average for the past four quarters of real GDP data)

e. Most economists agree that a nation should aim for maximum Real GDP growth that is consistent with price stability. Why is this the goal? Do you think we are there?