APMacro: GDP Practice FRQs


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In answering the questions, you should emphasize the line of reasoning that generated your results; it is not enough to list the results of your analysis.

 

 

 

“Identify” means to provide a specific answer that might be a list or a label on a graph, without any explanation or elaboration.

“Calculate” means to use mathematical operations to determine a specific numerical response, along with providing your work.

“Explain” means to take the reader through all of the steps or linkages in the line of economic reasoning. Graphs and symbols are acceptable as part of the explanation.


GDP Reminders

  • Gross Domestic Product (GDP) is a basic measure of an economy’s economic performance. GDP is the market value of all final goods and services produced within the borders of a nation in a year.
  • Intermediate goods, nonproductive transactions, and secondhand sales are purposely excluded in calculating GDP.
  • The expenditures approach to GDP sums the total spending on final goods and services: GDP = C + I + G + X
  • Nominal GDP is output valued at current prices. Real GDP is output valued at constant base-year prices.
  • GDP price index compares the price (market value) of all the goods and services included in a give year to the price of the same market basket in a base year.
  • Nominal GDP can be transformed into real GDP by dividing the nominal GDP by the price index expressed in hundredths.

Arrows-02-june

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