Question 1 (2 Marks)

Is the value of goods and services produced in the "Underground Economy" included in GDP? Briefly explain, and provide one specific example.

Question 2 (2 Marks)

What is the distinction between Nominal GDP and Real GDP?

Question 3 (2 Marks)

"Expenditure on new financial stocks and bonds issued in a year directly adds to the country's GDP." Is this statement correct or incorrect? Briefly explain your answer.

Question 4 (2 Marks)

Provide a good explanation of the Lucas Wedge.Use a diagram to aid in your explanation.

Question 5 (2 Marks)

Can Potential GDP exceed Real GDP? Briefly explain your answer.

Question 6

"Real GDP gives a full and accurate measure of economic welfare". Do you agree or disagree with this statement. Briefly explain.

Question 7

State the law of demand.Provide an explanation of the two reasons a higher price reduces the quantity demanded.

Question 8

Assume country A and B both produce goods X and Y. Country A has an absolute advantage in the production of both goods. As a result, it cannot benefit from trade. Do you agree or disagree with this statement. Briefly explain.

Question 9

Define Opportunity Cost. What are the specific opportunity costs of you attending college?

Question 10

What is Allocative Efficiency and how does it relate to the Production Possibility Frontier?

Q 11. What determines whether an economic system is a free market or command

economy?

a)

Who owns and controls the factors of production

b)

Whether it is called capitalist or communist system

c)

Nothing. It is just created by

nature.

d)

Whether people are rich or poor

Q12.

What are some distinguishing features between a market and command

economy?

a)

In a command economy, the government owns the factors of production and

determines how they will be used

b)

In a free market or capitalist

economy there is individual ownership of the factors

of production

c)

In a free market economy, the government adopts a laissez fair or hands off

approach to the economy

d)

In a pure command economy there is individual freedom and choice

Which statement (s) be

st describe economic systems in today's modern

world?

a)

Most modern economies are mixed economies with some aspects of free markets and

government intervention.

b)

Most world economies are capitalistic.

c)

North Korea is close to a command economy while New Zealan

d is closer to a free

market economy.

d)

Most world economies today are command economies.

Why does GDP equal aggregate income and also equal aggregate

expenditure?

In 2018, Econoville had real GDP of $4.21 billion and a population of 2.98

million. In 2019, real GDP was $4.59 billion and population was 2.97 million.

What was Econoville's growth rate of real GDP in 2019?

Dring 2018, the country of Evetsville had real GDP of $115 billion and the

population was 0.9 billion. In 2019, real GDP was $105 billion and the

population was 0.85 billion. In 2019, real GDP per person was.