1. What is the gross domestic product? A gross domestic product is “the total market value of final goods and services produced within an economy in a given year”. 2. Do increases in gross domestic product necessarily translate into improvements in the welfare of citizens? Yes, an increase in GDP improves welfare of citizens because if U.S exports are increased it will increase U.S GDP and reduces unemployment in the short run. This would be an improvement for welfare citizens. 3. What is unemployment? Unemployment is people who do not currently have a job but are actively looking for employment. Why can't it be driven down to zero? It cannot be driven down to zero because the lower the unemployment rate is the harder it is for businesses to hire new employees. This makes businesses more competitive and causes high wages. 4. What is the Consumer Price Index and how is related to the cost of living? “A price index that measures the cost of a fixed basket of goods chosen to represent the consumption pattern of a typical consumer”. It is related to the cost of living because economist compares the price certain goods each year apart to measure the change in prices and determine how much more money people need to uphold their previous standard of living. 5. How does increased immigration affect wages and the level of output in the economy? Increased immigration affects wages by increasing it. American workers with high education increases the labor force so many so business owners can’t meet the expense of employing the immigrant workers. There would be competition between the educated and uneducated for jobs. The economy’s output will increases because the increase in supply and demand. 6. What are the benefits of increased investment?
7. Do trade deficits help or hinder economic growth? Explain. 8. What factors determine technological progress?
9. How do we define a recession?
10. Why doesn't the economy always operate at full employment? 11. Why do...
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