1. Explain the difference between GDP and GNP. Explain which one is the more appropriate measure of economic activity. (5 pts)
2. Identify the components of the expenditures method for GDP. Explain which component is the most important. (6 pts)
3. Explain what is meant by the business cycle. (6 pts)
4. Explainthe difference between the real unemployment rate and the standard unemployment rate. Explainwhich one is the better measurement. (6 pts)
5. Explain the natural rate of unemployment in the context of frictional unemployment, structural unemployment, and cyclical unemployment. (8 pts)

Explain the following terms that relate to inflation: 1) demand-pull inflation; 2) cost-push inflation; 3) hyperinflation; 4) disinflation; and, 5) deflation.