1. Describe the different components of GDP by using the Circular Flow Model. In your description be sure to note how the different components interact in the Product, Resource, and Financial Markets.
2. Why do we get the same number when we count the total output and when we count total income?
3. What would cause one of these components of GDP to decrease?
4. Why would a decrease in one of these components typically lead to a decrease in other components?
5. Why did traditional economics believe that the business cycle would automatically correct for a decrease in one of the components of GDP?
6. Why did Keynes believe that the business cycle would not automatically correct itself?
7. What could government do to correct the business cycle according to Keynes?