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Module-2
Q&A
Give an example that illustrates the difference between the Indian GDP and GNP. Suppose the GDP for a country is Rs 0. Does this mean that there was no productive activity in the country? Explain your answer.
Q&A
Describe the expenditure approach to computing GDP in a real-world economy. Will GDP be smaller than the sum of consumption, investment, and government purchases if net exports are negative? Explain your answer. If GDP is $400 billion, and the countrys population is 100 million, does it follow that each individual in the country has $40,000 worth of goods and services?
Real GDP
Real GDP is GDP adjusted for price changes. Real GDP is equal to the change in Base year prices multiplied by current year quantities. Annual economic growth has occurred if the Real GDP in one year is higher than the previous year.
If You Know the Price Index and GDP For A Year, Can You Compute Real GDP?
Real GDP =
What Does It Mean If Real GDP Is Higher In One Year Than In Another Year?
Recession
The NBER definition of a recession is a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income, and wholesale-retail trade.
Q&A
Suppose GDP is $6,039 billion in year 1 and $6,245 billion in year 2. What has caused the rise in GDP? Suppose Real GDP is $5,233 billion in year 1 and $5,267 billion in year 2. What has caused a rise in the Real GDP? Can an economy be faced with endless business cycles and still have its Real GDP grow over time? Explain your answer.