Question

1.

Suppose that nominal GDP Increases to $85,000, and the GDP deflator increases to 104. What is real GDP? Round your answer to the nearest cent.

2.

Which two of the following are not included in GDP? Select all that apply :

business investment

intermediate goods

non-market activities

net exports

3.

While may occur with relative ease, are few and far between

Select the correct answer below:

hiring new employees, wage increases

corporate layoffswage decreases

wage decreases: wage increases

wage increaseswage decreases

Answer 1

1. (Nominal GDP/Real GDP)*100=GDP Deflator Hence, Real GDP = NOminal GDP*100/GDP Deflator=85000*100/104=$81730.8

2. GDP calculation does not include the intermediate goods as those are not the final output and only final output is used in GDP calculation, similarly non market activities are also not included as those are not part of formal economy and are not accounted while measuring GDP.Rest all are included while measuring GDP

3.Wage increase happens generally as inflation increases so does GDP whereas wage decrease happen during recessionary cycle or large slowdown which are fewer and happens far between. Hence, wage increase ,wage decrease is correct answer.