Economics Case Gdp

Chapter 1

1. Microeconomic perspective is the branch of economics that analyzes the decisions that individual consumers and producers make as they operate in a market economy. It is applied to business decision making and called managerial economics. They key element is pricing especially in this perspective because this type is based on buying and selling of goods and services. Macroeconomics is the branch that focuses on the overall level of activity, changes in the price level and the amount of unemployment by analyzing the group or aggregate behavior in different sectors of the economy

3. The four major markets in microeconomic analysis are

1. Perfect Competition

2. Monopolistic Competition

3. Oligopoly

4. Monopoly

The key characteristics that distinguish these markets are:

1. He number of firms competing with one another that influences the firm's control over its price

2. If the products sold in the market are differentiated or undifferentiated

3. If entry into and exit from the market by other firms is easy or difficult

4. The amount of information available to the market participants

5. The five major categories of spending that make up the GDP are consumer spending (C), exports (X), imports (M), government spending (G), investments (I). Spending by all these sectors equals the GDP. GDP equals the sum of consumption spending, investment spending, government spending and export spending minus import spending.

Chapter 11

1. Government statistician's process of calculating GDP is a basic process and very straightforward. They calculate the total revenue earned by firms producing final goods and services and add them up. The concepts of output, spending and income are identical at this level. The process they use is called the value added approach, in which, only the value added in each stage of production is counted for inclusion in the GDP.

3. Transfer payments are payments that represent the transfer of income among individuals in the economy, but do not reflect the production of new goods and services. When it comes to Social Security and unemployment compensation, they are recorded in government budgets but they are excluded from GDP because they do not represent payment for newly produced goods and services.

5. The real GDP is a macroeconomic measure of the value of economic output adjusted for price level changes. The real GDP is considered a better measure of economic well-being that nominal GDP because increases in real GDP represent larger amounts