1.Distinguish between real GDP and nominal GDP? What is a potential GDP? Demonstrate different potential stages in the expansion phase of an economy. How and why countries can have a more GDP in values abut a less GDP per capita? Which is more important for a nation to understand its standard of living?

2. Explain with examples how are potential GDP and labor market equilibrium related. What is labor productivity? Show changes (with graphs) in labor productivity and equilibrium real wage rate when a. demand for labor increases with all other things unchanged; b. when both demand for and supply of labor increase while other things remaining unchanged