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After reading this chapter, you should be able to:
- List the three main macroeconomic goals government policy is
concerned with, describe what they are, and explain why they are
important. (Section 5.1)
- Give the general definition for the Gross Domestic Product and how
it can be calculated using the expenditure approach, and explain what
is included in its measure and what is not included focusing
especially on financial transaction, intermediate goods (section 5.2),
and the underground economy (section 5.3).
- Explain in detail what is meant by and is included in the following
two categories of the expenditure approach: 1) consumption; and 2) investment.
(Section 5.2 and the Appendix)
- Explain in detail what is meant by and is included in the following
two categories of the expenditure approach: 1) government purchases; and
2) net exports. (Section 5.2 and the Appendix)
- Show how to calculate GDP using the income approach, explain what is
meant by the value added approach, and discuss the difference between
GDP and GNP. (Section 5.2 and 5.3 and the Appendix)
- Explain the differences between Real GDP and Nominal GDP and how
they are related. (Section 5.3)
- Describe the phases of the business cycle, and how it is defined.
(Section 5.4)
- Define what is meant by leading indicators, lagging indicators, and
coincidental indicators. (Section 5.4)
- Discuss what the fiscal imbalance is, and
explain the debate between those who support static scoring and those
who support dynamic scoring. (Section 5.5)
- Knowledgably discuss the details of the National Income and Products
Accounts. This is found in the on-line appendix
to Chapter 5; a link to this material can also be found in the Course
Documents folder of Blackboard.
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