Macroeconomics primarily studies ___ economic variables.

Aggregate

What distinguishes final goods from intermediate goods?

Final goods are meant for consumption or investment, while intermediate goods are used for resale or further production.

Explain the difference between stock and flow in economic terms.

Stock is measured at a specific point in time and is static, while flow is measured over a period and is dynamic.

True or False: The value-added method avoids double counting by summing the values of intermediate goods.

False; it avoids double counting by summing the value added at each production stage.

In the Income Method, national income is based on the incomes earned by residents through ___ services.

Productive

Fill in the blank: GDP at Market Prices includes taxes and subtracts ___ from the factor cost.

Subsidies

Riddle: I measure the value of goods produced but exclude income earned abroad. What am I?

Gross Domestic Product (GDP)

What is the significance of Real GDP compared to Nominal GDP?

Real GDP adjusts for inflation, providing a more accurate reflection of economic growth.

Explain how the GDP Deflator is calculated.

GDP Deflator = (Nominal GDP / Real GDP) × 100.

Fill in the blank: The circular flow of income shows the flow of ___ and ___ between households and firms.

Goods and services

What are positive and negative externalities, and how do they affect GDP?

Positive and negative externalities impact GDP.

• Positive externalities enhance welfare.

• Negative externalities create societal costs.

• GDP overlooks these effects entirely.

True or False: GDP is a perfect measure of a country's welfare.

False; it does not account for income distribution, non-monetary exchanges, or externalities.

Which method of calculating national income takes into account the final expenditures on goods and services?

Expenditure Method